Owning a house is a dream for every Indian household typically, however, the question often asked is should I buy or stay in rent? Both options have their ups and downs, ultimately your choice boils down to your finances. Then again, for the interest of the article, we assume that for households that can afford a home, the choice between buying and renting becomes a tough one.

Spiraling housing prices especially in the metro cities have often led people to pull the plug on their homebuying dreams. However, finances should alone not be seen as a factor in deciding whether to buy or to rent. Your decision can boil down to several lifestyle considerations such as whether you want flexibility or stability, what your career goals are, and whether you want a place to truly call your own.

The ongoing pandemic has led to many families realising that owning a home most of all provides a sense of security above all. As per experts, the unprecedented ripples of the pandemic have led real estate prices to see a sharp fall in the last five years. Along with this the low-interest-rate environment and the increased transparency in the housing market following the implementation of the RERA act hint at homebuying as the ideal choice to make in the current situation. To make things better, the reduction in stamp duty prices and the galore of discounts offered by developers and builders have made buying a home a preferred choice.

But then again having said that, it is important that an individual also analyses the expenditure home buying leads to i.e EMI and what he pays as rent, before zeroing in on a decision.

If you are caught betwixt and between buying or renting a home, read on to find out what you need to know before you make a start.

Renting Pros And Cons

Pros

• Freedom to move around i.e you don't have to settle at one place
• Maintenance charges are taken care of by your Landlord
• No fluctuation in monthly housing expenses

Cons

• You don't have the sense of security
• No or very little ability to customise your living space
• Rent usually goes up every year
• Your landlord wants to sell the house

Buying Pros And Cons

Pros

• Home buying is an investment above all
• You will most likely get a higher resale value
• You will get tax benefits on your home loan
• Unlimited freedom to customize your living space
• Sense of security

Cons

• Maintenance of the house is often hefty
• Restricted mobility

Now that we have seen the advantages and disadvantages of renting and buying, let's look at some questions you should answer before making your decision

Do you want to settle in a particular location?

Have you decided to put down your roots in one place? If your answer is yes and you plan to stay at one place for at least 5 years, buying a home makes much more sense than renting. However, if your career goals might take you to better locations with bigger opportunities? You should consider renting as that way you wouldn't have to go through the hassle of selling your home and redecorating. Also, financially it would not be worth it because you will again have to shell out a lot of money for renovations before listing your house on sale.

Have you assessed the cost of renting vs buying?Deciding on buying a home only by assessing the ability to make EMI repayments alone is not enough. Apart from EMIs, one needs to also be prepared to take care of down payments, stamp duty, moving costs, renovation costs, and more. All this might make you feel that renting is way cheaper, but it also depends on whether it is better to invest what you would have paid as rent on a down payment. Buying a home may seem costly upfront, but over the long term, it becomes cheaper. Consider using a mortgage calculator to estimate your monthly payments as well as how much you can afford.

How To Calculate Renting Vs. Buying A Home

Whether you would save more by renting or buying can depend on a few key factors. One is your location and the prices of other homes or to-let houses in your area. Once you have done that, you need to consider your credit score and if a lender would find you creditworthy. Eligibility for a home loan is banked upon various factors, including the applicant's age, income, and capacity to repay. Getting a home loan, which typically has a longer tenure may be difficult for a person above a certain age, as compared to someone who is much younger. Along with this one also needs to have a stable income source to meet the additional expenses.

In Conclusion

The answer to buying or renting a home is not always clear. It is important to understand that whether a person wants the house as principal protection even if the property gives lower returns for the initial years or one is looking for a higher return on investment are some of the points to look at before taking the plunge. Depending on one's current personal and financial situation, the answer to the question may keep changing. However, whether you are choosing to buy a home or rent one, it's crucial that you make an informed decision.