Owning a home or living on rent?

In the long run, which option will prove to be beneficial for me?

How will the finances work out on both these options?

These are the burning questions that we will look to answer through this post!

For working professionals, buying a home has been one the biggest decisions of their lives. This is precisely for what they utilize their hard earned savings.

Burying many-a-dream with the goal of putting a permanent roof over their heads!

The decision to buy or rent a house is a crucial one for you, both financially and emotionally, and should be taken up after lot of careful deliberation.

In fact, many of the experts would argue that there is no one definitive answer, and to say that one is better than the other would be detrimental to the property market.

We will try to de-bunk this dilemma by giving you a sneak peak on both sides of the coin!

Buying a house

Isn’t it a wonderful feeling to know that the house you’re living in is truly yours?

Let’s give it a moment to let that feeling sink in!

You’re living in a house you can truly call “HOME”. Nothing beats that feeling 🙂

There is a sense of freedom associated with living in your own house as compared to renting. Isn’t it?

Experts at Viluva Property Consultants feel that “if you are certain of staying in a particular city and that stable cash flow isn’t a problem , then you should definitely look to buy a house.”

Owning a house forces savings in the form of monthly EMI payments, which you would have otherwise spent if you were renting.

“Owning a house safeguards you against inflation.”

It also provides you with a sense of financial security, post retirement. You are not burdened with the tension of paying rent and a possibility of moving out when the lease agreement ends.

Consider this :

You loose out on your job, your only source of income for paying the rent.

What do you do?

This will pinch, loosing out on a job whilst paying monthly rent can sting!

Owning a house gives you a sense of emotional fulfillment; a feeling of pride and stability.

From a more technical viewpoint, we all are aware that the value of property increases over time. It turns into a strong asset over time,which can be sold when you’re under the weather or left for your loved ones as a nice little nest egg 🙂

Now, let’s look at the flip side of the coin : Renting a house.

Renting a house

For those living a nomadic lifestyle, renting a house will seem a far better option than buying one. People who have to move around due to work commitments, renting is ideal.

Renting a house comes with a sense of flexibility, you are not tied down to a particular property for life.

With the addition of flexible leases, it has become all the more easy, to pack your bags and move on, when you’re not happy. The added benefit being that in case the house requires any maintenance or repair, you need not be worried, as it is the responsibility of the landlord to get it fixed and not the tenant.

Now, moving onto the most important aspect of decision making : the financials.

buyingvsrenting-calculator

Consider this :

Case Study 1 : Ramesh has bought a 3-BHK home on rent @Rs.20,000. Let us consider the rental appreciation be 5% per annum.

FinancialsCalculation
Rented Home
Assumed rent (per month)Rs 20,000
Rent appreciation (per annum)5%
Expected rent after 20 years (per month)Rs 40,000
Expected rent after 40 years (per month)Rs 80,000
Amount paid in 40 yearsRs 2.9 crores

 

Case Study 2 : Ravi has bought a 3-BHK home for 40 lakhs on home loan for 20 years.

FinancialsCalculation
Own Home
Assumed home loan amountRs 40 lakhs
Tenure20 years
Interest rate8.3%
EMIRs 34,200
Total amount paid in 20 yearsRs 82 lakhs
Rent amount saved by a home owner who lives for 40 years (i.e., excess amount paid by the tenant in the last 20 years)Rs 2.1 crores

From the above 2 tables, the cost of living on rental property for your whole life would be much higher than living in your own house. Moreover, the capital value of a home also increases over a period of time, whereas, there is no such benefit in a rental home.

Whichever way you look at it, there are pros and cons to both sides of the argument. That being said, your own preferences are likely to be influenced by factors like individual circumstances , personal opinions and experiences.

No matter which side of the bridge you’re on, there is never going to be a dull moment in the world of property!

If you feel the need for guidance or advice on property buying or just looking to have a casual talk on the real estate market, do get in touch with us at Viluva.

We’d be happy to clear all your doubts. Our team of  property advisors and real estate consultants will be happy to help you search your dream house.