Buying or Renting? Find out What Works Best for You!
When you think about buying a home, lot of questions come to your mind. Do I really need to buy a house? Should I pay rent or use that same money to own a home? Have I got enough money saved? Will my money grow? A Lot of factors influence your decision to rent or buy. So, before you decide, we list before you the pros and cons of both renting and buying.
Advantages of Buying a Home:
Ownership and Creative Control: The biggest advantage is that you own the home, and it will have your name on it. The benefits of ownership are many. You can renovate, decorate and furnish it as per your wish. You also have the freedom to buy expensive furniture as you don't have to shift very often. While without ownership, you can't alter a rented home without landlord's permission.
Lifelong Asset: Your home can be a lifelong income source. You can put it up for rent and receive regular income which can cover up your post retirement requirements. It can prove to be a profitable asset when needed, and can also be passed on to the next generation when needed.
Tax benefits: Home owners get tax rebate against their property loan. You can avail tax benefits on both the principal and interest paid against the loan from the bank. Tax exemption of approx. Rs 2 lakhs is available on the principal amount and Rs 1.5 lakh on the interest paid against the loan.
Disadvantages of Buying a Home
Finances You need to be sure about your future earning potential and budget, as it is going to create a financial crunch on your bank balance. If you avail a home loan, you have to make sure you maintain a contingency fund for emergency crisis and have to cut down on some discretionary expenses. Moreover, you need to have a good financial reserve as you also need to pay for all the maintenance costs of your home.
Immobility It reduces your flexibility to some extent. For instance it's not easy to sell a house when moving from one city to another and you might end up selling it in a lower price.
Advantages of Renting a Home
Lesser Responsibility When you rent a house you tend to have lesser responsibility when it comes to maintenance of the house. If anything needs repairing or changing, it's the builders or landlord's responsibility.
Lower Costs Renting pinches a little less on the pocket. Apart from the rent and maintenance cost you don't need to pay much. From the inexpensive repairs like the broken toilet to expensive repairs like replacing tiles, landlord is responsible for all maintenance related work. In fact, a careful reading of the rent agreement is needed to know about the different clauses mentioned. Moreover, you do not have any financial liability and you don't have to pay for stamp duty and property tax.
Flexibility Rental lodging offers more flexibility when you have to shift from your current location. It gives you the freedom to live in a place of your choice that is closer to your workplace and save travel time.
Disadvantages of renting a house:
No Ownership No matter how much money you spend, you can never call this house your own. Neither you can renovate nor can you decorate it as you wish. Also you are under constant fear, that the landlord may ask you to leave giving you a one month's notice is not all a good idea.
Landlord Hassle If the landlord is not cooperative then even small repairs and damages may be time consuming. Also, he might be interfering, if he is staying close by or in the same apartment.
Extra Costs When renting a flat you need to pay large amount as security deposit, which may be equal to the rent of two or 12 months. This amount may not be refundable and the landlord might keep the entire amount stating requirements like damage repair etc. This is not the only loss, you cannot even avail tax benefits from it.