Is it Better to Buy a House or Rent One?

The ease of obtaining a home loan to purchase a house has struck a dilemma in most people’s mind. Is it better to buy a house or rent one? Although buying a house is a huge financial burden, does it make of for the rent paid over a long term?

Buying a house, although expensive, is a very good investment. History has taught us that real estate prices are bound to go up even if the realty market dips every now and then. The value of appreciation is well worth the initial financial burden that one must go through to purchase the house. However, one must keep a lot in mind before choosing to invest in a house, like the market rates, location of the property, etc. Buying a house by availing a home loan helps an individual attain tax benefits.

Renting a house may help an individual save on down payment for a house, EMI, etc., but the rent paid may be exhausting him/her financially depending on how long the individual has been renting a house. Rather, an individual could invest money that he may have for a down payment on mutual funds, PPF, or other such investments until he/she receives a sizeable return. This money can then be used to make a larger down payment which will then in turn help the individual save on interest while obtaining a home loan. However, in case of urban areas where prices of houses are extremely high, a case could be made for renting a house as opposed to buying one. Also, relocation would be easier in case of a rented house.

Benefits of Renting a House

• Renting a house can help an individual potentially build a higher bankroll by investing the money he/she would have invested towards down payment of a house.
• Renting a house is sometimes more effective in urban areas where property prices are high.
• Relocation in case of a job change, etc. can be easier in case of a rented house.

Benefits of Owning a House

• Owning a house gives an individual more freedom as he is not liable to an owner.
• A house is an asset that acts as financial security to protect you and your family.
• It is a good investment to own a house as it is bound to appreciate in the future.
• Home loans can help you avail tax deductions, helping you save a sizeable amount of money.
• The EMIs on home loans tend to remain stagnant throughout the tenure of the loan, while the rent payable increases every year.

Factors to Consider Before Making your Decision

• Consider the possibility of you changing your locality
• Use a EMI calculator and estimate if you will be able to afford a home loan

Buy vs Rent Calculator

Many online portals have buy vs rent calculator that accurately provides you the total expenses of buying a house or renting a house. All you have to do is enter basic details of the home loan, rent, etc., as requested by the portal and click on submit. The portal will then provide you with the total buying cost and total renting cost for a particular duration.