The attitude of Indians towards savings and investments has undergone a phenomenal transformation. Options offering better, inflation-adjusted returns such as online investing, active share market investments have become the preferred choices, especially in the light of the pandemic of COVID-19. Many conventional beliefs are also being questioned such as whether you should buy your own house or rent one.
Here are some of our investment calculators that can help you take better financial decisions:
Owning a house has been a top priority in the investments checklist for any traditional Indian household. However, rising real estate prices, increasing relocation following various career opportunities, and aspirational standards of living are the major factors behind the gradual shift in the mindset showing a preference for rental accommodation over owning one.
Two significant factors influencing your decision to buy or rent a house in India would be the location of the property, and the price of the property. You would see that the prices of real estate in prime locations of any city are skyrocketing. While you may easily rent a house in these locations, buying a house would severely strain your budget. Thus, you have to choose between owning a house away from your preferred location or renting your dream house, at least in the initial stages of your life.
🚪🚶 Renting vs Buying – What is Better?
Pros and Cons of Renting a House
| Pros of Renting a House | Cons of Renting a House |
| By paying a stipulated rent per month, you can use all the benefits of accommodation without any hassles of maintenance, property tax, etc. | Rent is a sunk cost with no benefits in the long run. |
| High flexibility as you can move out of the house at any time | You have to be prepared for frequent shifting as per the terms of the rental agreement. |
| In the initial stages of life, you can choose to build upon your investment portfolio. | Home Loan EMIs become burdensome in the later stages of life considering the need to save for children’s higher education and your retirement. |
Pros and Cons of Buying a House
| Pros of Buying a House | Cons of Buying a House |
| By paying Equated Monthly Installments (EMIs) every month, you are building a very valuable asset for a lifetime | EMIS can be a huge burden, especially in the initial stages of life when you have just begun your career. Due to lesser savings, the loan amount and the resulting interest is very high. |
| You get to enjoy a secured home with a feeling of belonging to a community | By paying a major chunk of your salary towards EMIs, you may not be able to take advantage of other investment opportunities such as share market and mutual funds. |
| The value of the real estate appreciates over the years, hence adding significant value to the investment portfolio. | Real estate investment is generally considered an illiquid investment. You may not be able to sell it off readily in case of need. Also, the property taxes, maintenance costs need to be paid on regular basis. |
After carefully analyzing the factors given above, you may take a decision as to renting vs buying a house based on your life circumstances, income, and aspirations.
You can also read Top 10 Personal Finance Lessons for Self. Here are some more helpful articles on personal finance which will help you with managing your finances.
Happy Investing 😇
Disclaimer: This blog is not to be construed as investment advice. Trading and investing in the securities market carries risk. Please do your own due diligence or consult a trained financial professional before investing.
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