Owning a home versus living on rent is an age-old debate. People in favour of renting argue that a rental home costs less in the long term as compared to owning a home. On the other hand, people who are in favour of owning a home cite the emotional bonding, price gain, and freedom that it offers.
While owning a home is believed to be synonyms with financial stability for many, the sky-rocketing property prices and always moving bases have led people to weigh down the benefits of renting a property than buying.
However, in reality, no one argument can put this debate to rest. The pros and cons of both are situational. If a person is particular about the city where he/she is going to stay for the long term and have necessary funds for the down payment, buying a house is a good idea. On the contrary, if a person has just started a business and is not sure about stable future cash flows, it does not make sense to take the additional burden on monthly EMIs.
Benefits of owning a home
- The pride of owning a home
- Financial security to face the unknown
- No hassles of dealing with the landlord
- The money being paid towards EMI is helping in building a property
- Long term investment and capital gains
- Flexibility to change the interiors as per your taste
Who should buy a home?
If you are in your early 20s, still single, and willing to stay in a city for an extended period, it is a good idea to buy a house. People who buy a home early in their career are often happier considering that they don’t have many financial obligations of their parents, spouse, or kids.
Although the EMI may look difficult to manage initially, it becomes easy after a couple of years as your salary increases. Also, the rate of the property increases over time, giving you good returns on your investment.
At a time when most landlords have put a restriction on the number of years a tenant can live in a property, most people are forced to change home every couple of years. Not only does it create a lot of hassle, but it also cost a lot to move houses.
The financial benefit of owning a property
Let us consider that you have a salary where you can afford to pay rent or EMI of 20,000- 30,000 per month.
Let’s assume that you are living in a rented property and paying a monthly rent of Rs 20,000. Considering that there is a 10% hike every year, by the end of 20 years, you will end up paying something around 65 Lakh. On the contrary, if you buy a property worth Rs 50 Lakh and take a loan of Rs 25 Lakh, your EMIs would be about Rs 22,000 per month. Thus, by the end of 20 years, you will have paid about Rs 52.8 Lakh.
So, after 20 years, not only will you be saving around Rs 13 Lakh, you will also have the home to your name.
