Why Should One Buy a Home Instead of Live on Rent?

August 1st, 2018

Traditionally, in India, ownership of a home is long cherished dream of every individual. It is associated with a sense of security and achievement for home buyers. However, consumers are often at crossroads while determining either to buy or rent a home, as it is one of the biggest financial decisions for them.

Let us look at some of the reasons that make buying a home a better choice over renting.

  • Safe Investment: Buying a home not only offers one a permanent residence, it is also one of the safest long-term investment options, as it assures return without any risk attached. Owning a house translates into creation of personal wealth, which is only expected to augment with price appreciation over a period of time.
  • Affordable Home Loans: It is perhaps one of the best periods to make a real estate purchase. Despite a slight surge in the home loan interest rates due to increase in the repo rate, it is still  one of the lowest if seen in the long term. This makes home loans affordable in the present times.  Additionally, under the Pradhan Mantri Awas Yojana (PMAY), the Goods and Services Tax (GST) rate for affordable housing is now 8%, which makes it even more lucrative.
  • EMIs Replace Rentals: Ownership of a house means that the rentals paid each month can be now be used to pay EMIs. Rentals are essentially a form of expense that do not translate into any returns or come back once the rental period expires. These rentals escalate by a certain percentage each year, increasing the expenditure further. Besides, one often tries to compromise on various aspects such as size, locality and amenities to fit the rental budget.
  • Freedom From Deposit: Often while renting a house, one has to pay a certain amount as security deposit. This amount is usually returned after deductions towards the repairs and maintenance of the house once the tenant vacates. The amount varies from city to city. For instance, in Bangalore, this amount is equivalent to the amount of monthly rent multiplied by 12 months. This is a huge amount of outgo which does not earn interest.
  • Security: To have a home of your own gives security and freedom. This means that unlike a rented house where one is not allowed to make any modifications, you are the king of castle – make any change as per convenience and choice as long as it is within the limits/norms of the local regulatory authorities. Neither does one require permission from the landlord nor does one have to depend on him for any repairs. Buying a home gives you independence from all of these.
  • Tax Benefit: Another equally important reason is the tax benefit, which is not available on rented houses. These benefits are available on the principal amount as well as the interest paid.

In the long-term, buying a home is certainly a smart investment decision, especially in the era of reforms which make it a home buyers’ market.

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