Till the beginning of 90s, the standard Indian family dreamt of a home of their own, only when they had enough savings to buy one or if they had wealthy relatives and friends who could lend them money. Till that time, the only way to get a roof on one’s head was to rent property which seemed a decent option and possibly the only one.
With the arrival of home loan companies, the Indian rental customer now had an option and could dream of a home of his own. The borrowing from friends and family was now replaced by a home loan company that kept the home agreement with them till the loan was paid off. The only difference was that the monthly instalments began immediately and went on for a real long time (20 years is an eternity, isn’t it?). All those individuals who had a dream but could not afford buying one kept on looking for place with affordable rent till the time to buy one was right.
The Eternal debate- Buy v/s rent
This scenario continue till date and thus arises the eternal debate of buy versus rent. With the rise in disposable income, the real estate market too rose significantly and there were many opportunities to lend property, buy it for self-use or simply invest in one for future use. On strict financial terms, it always makes sense to stay on rent than investing in your own home.
Let us look at a few advantages and disadvantages of owning a home v/s renting a place:
• Paying for a home builds equity: When you rent property, it is like a futile expense that does not contribute anything towards our financial stability. The entire rent amount goes to the property owner since you are using his/her premises as a home. The amount that is paid towards a home loan EMI contributes towards the principal and interest amount and is creating an asset for us.
• Income Tax savings advantage: By purchasing a home, you become eligible for tax savings advantages that can be used while filing annual tax returns. This can be done year on year which is a great incentive for buying homes in India. The early years of paying interest are somewhat made bearable due to the deduction of this interest amount from your taxable income.
• Feeling of independence and freedom: This is possibly the best reason many individuals opt for purchasing a home than to rent property as it gives a more stable sense of living. The freedom of being answerable to the landowner is an unmatchable feeling.
• Repairing and maintenance: As a home owner, you are responsible for any repairs or breakages that occur in your home, while renting, one is freed of such responsibility.
Buying a home can certainly give a feeling of security but you could get locked in the Home EMI but this is not the scenario during renting as you could move into a rental home with affordable rent in case of reduction in income. Whatever the case, it is prudent to weigh the pros and con according to your situation and take a decision.
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