Should you rent a home or buy a house with a home loan?

Buying a home is a lifetime purchase for many of us. Of course, several factors like better salaries, congested communities, traffic during home to office commute, etc., have the potential to make people sell a house that they possess and buy a new one as per their convenience. However, without factoring in ancestral property , most middle-class families have the purchasing power to be in possession of only one new house at any given time. It is assumed that those who possess more than one new house at a time, have the financial prowess to not be besieged by a dilemma that we plan to address here – Is taking a home on rent better, or is it better to buy a house with a home loan?

Most people prefer being confined within their comfort zones – often, even at the cost of their money. Having lived in a rented house, people tend to get comfortable and also a tad lazy (we dare say) – so much that they look upon acquiring their own home as a tedious and cumbersome process. Here are a few reasons why:

• The initial investment required to rent a house isn’t very high.

• The process of getting an approval from the home owner (or land-lord) is rather simple.

• The person taking a house on rent doesn’t have to worry about getting inherent repairs (fixing taps, basins, cupboards, repainting, etc.,) until they leave the house.

• General discomfort and incumbent myths about home loan procedures.

• Monthly EMIs are almost always higher than the amount one pays for rent.

However, most people who correspond to the aforementioned category do not consider the proposed benefits that getting your own house are accompanied by. Some of these are:

• Acquiring a home gives one his/her own property – a capital gain.

• Home loan EMIs are for one’s very own house – not rent to live in someone else’s house.

• You have the freedom to decorate, model, design and plan your house the way you want to.

• Having your own house gives you a level of security – financial and emotional.

• With timely payments, a home owner stands to improve his/her CIBIL rating, thus making himself / herself credible for future loans.

• The tax benefits are also immense.

Having established the benefits of buying your own house by taking a loan, it is also important to understand that buying a house is not a decision one must take on a lark. Affordability is paramount. You need to reason that you would rather pay money toward a home loan, than spend money on rent every month. However, affordability is paramount. Your present household income, CIBIL rating and other factors need to be carefully pondered upon before you acquire a home loan. From a financial standpoint, acquiring your own house via a home loan is a recommended action, but only after you are confident of being able to ensure affordability and the monthly installments.

*NOTE: The views expressed here are those of the author’s and do not necessarily represent or reflect the views of Octopus Loans.