After working for a couple of years, as soon you enter your late 20s, a question arises in one’s mind. Should you continue living on rent or buy a house? Obviously, the answer is not that easy. Although the best thing would be to buy a house as soon as you can, it is easier said than done. As you build your career, you start saving money and may choose to buy a home. But if you are a person who thinks buying a house at this point of time does not make sense in your life then you should evaluate the costs, pros and cons of owning a house and renting a place.
Before evaluating your financial health and whether you are ready to don the homeowner’s hat, think of how you foresee your career. If you wish to live in your current city forever, it would make sense to invest in property. However, if your job requires you to constantly change base, it would be prudent to not invest until you are more geographically stable.
Be sure to have a stable job in case you are thinking of investing in a house. Banks do not give home loans without checking an applicant’s employment stability. Your EMI also sets to increase if the rates go higher so be sure about the future and how much salary hike you may get over the years. Your financial position also helps you make a decision to buy a house or staying on rent. Given below are some of the main differences in owning a house and renting a house.
Choose the best option which suits your needs, situation and specially finances. A variety of factors like the ones mentioned above matter a lot in making the tough decision. Always remember, do not buy a property just for having it in your investment portfolio. You should determine completely if you need to buy a house or you are really happy with paying a monthly rent and saving side by side.
Before evaluating your financial health and whether you are ready to don the homeowner’s hat, think of how you foresee your career. If you wish to live in your current city forever, it would make sense to invest in property. However, if your job requires you to constantly change base, it would be prudent to not invest until you are more geographically stable.
Be sure to have a stable job in case you are thinking of investing in a house. Banks do not give home loans without checking an applicant’s employment stability. Your EMI also sets to increase if the rates go higher so be sure about the future and how much salary hike you may get over the years. Your financial position also helps you make a decision to buy a house or staying on rent. Given below are some of the main differences in owning a house and renting a house.
Maintenance & Tax benefits:
When you own a house a monthly or yearly maintenance cost applies like painting, repairs and also renovation if desire. But when you rent a place, these maintenance cost are not applied and are almost nil. Owning a house also has tax benefits. Under Section 80C of the Income Tax Act, the deduction to claim a principal repayment is only available for up to Rs. 1,50,000 within the overall limit in FY 2014-15.Time Duration & Choice of Locality:
By being the owner of a house there is no time period for you to stay there. You own it which means you stay as long as you don’t sell it but when you stay on rent, it is the landlord who decides the time-period for renting his home to you. Another difference is when you are on rent, you can decide change the location to rent next time you shift and you have no problems in doing it. While on the other hand when you buy a house, you have no flexibility left for choice of location.Depreciation, Long Term Benefits & Payout-fee:
The value of your home may depreciate over the course of time due to weather changes, repairs etc but these costs do not count when you are staying on rent. Another difference between owning a house is the payout charges that you are charged are minimal and only in case of a floating housing loans. Whereas a home on rent usually have an increase of 10% on the monthly rent.Proper Research of the Market:
It is best to go with each and every detail thoroughly before making a decision. Go through the advantages and disadvantages of buying a house or rent one such as property rates, the home loan interest rates and how the housing is market responding at the present time.Monthly Savings:
Make sure about your savings and financial needs. If your monthly income after all the deduction is not enough to pay the EMI for your home loan then there is no point of paying an extra amount leaving you almost with nothing at the end of the month. It is also because investing and buying a house is a long term investment and commitment. While your monthly rent would be far less than your loan EMI, it would also allow you to save money as well as give you time to think about owning a house or not.Choose the best option which suits your needs, situation and specially finances. A variety of factors like the ones mentioned above matter a lot in making the tough decision. Always remember, do not buy a property just for having it in your investment portfolio. You should determine completely if you need to buy a house or you are really happy with paying a monthly rent and saving side by side.
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