Which is the better financial bet? To buy or rent out a house?
Buying or Renting, both have some merits and demerits. Here are a few points to consider while deciding whether buying a house or renting makes better logic for you.
Reasons to rent
- Flexibility: Renting allows you to be flexible to explore an area before settling down.
- Career or Income uncertainty: If you think that you might have to move to other place in the near future for your career, or if you are thinking for a job switch or if you somewhat uncertain about you future income, you should go for a rent.
- Bad credit
- No maintenance expenses
- Utilities Charges (sometimes) included. In some cases, the landlord pay for many utilities such as water, sewer, and garbage charges.
But there is a disadvantage, too. You may have no control over the fluctuation of your rent, sometimes shifting the costly furniture often becomes cumbersome.
Studies show that, with the increasing rental prices in most cities in India, there may be a high chance that you might end up paying more than you might have expected initially.
Reasons to Buy:
- Asset: Buying a house is equivalent to owning an asset. Real estate in the form of your primary residence is likely the single largest asset in your portfolio. So it is a very good investment.
- Equity: The money you pay towards mortgage or repaying the loan goes directly toward building equity in your home. You will have to pay money towards the rent. Home equity can serve as security for a loan, enabling you to convert the equity into cash.
- Tax Benefit: You can get an additional tax benefit on the home loan.
Although proper planning and calculations should be done before buying a home. Because buying a home is the biggest financial decision in the lifetime.
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