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A Complete Overview of RENT OR BUY: Making the Right Choice in 2024.
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Complete Overview of RENT OR BUY: Making the Right Choice in 2024.
Did you know that 80% of Indians face a dilemma: Whether to Rent or Buy, especially for first-time buyers or during substantial lifestyle transition? In India, homeownership is often valued, but renting can be your soulmate if you embrace the stay-at-home lifestyle. Feeling unsure? No worries; we all have been there. In this guide, you are going to learn about the pros and cons of each option so that you can make your way out easily without breaking the bank.
MARKET ROADMAP
Property prices in the Indian real estate market are 7% higher annually by 2024. Rents in major cities like Delhi-NCR and Bengaluru have gone up considerably from ₹38,000 to ₹45,000. Backed by government schemes like the PMAY or Real Estate Regulatory Act, it could be a good time to buy a home but that calls for a significant financial outlay. Renting, on the other hand, offers flexibility—but rents in many urban areas are through the roof.
BENEFITS AND DRAWBACKS OF BUYING AND RENTING IN INDIA
Pros of Buying a House
Pros of Buying a House
No Annoyances from Landlord: When you own a home, you’re in full control. Renting is terrible in so many ways, having to rely on the landlord for water, electricity, and almost all other maintenance.
No Uncertainty: When owning a property, you will not face the uncertainty of the landlord terminating the lease at any time. Added to it, this saves the hassle of negotiating the renewal of the rent and lease annually.
Tax benefits on home loans: As a homeowner, you get favourable tax treatment of your mortgage interest, which reduces the burden. At the same time, the cost of living on rent is higher since you are not earning any interest on the deposit amount paid to the landlord (which is quite high in premium locations) throughout the lease term.
Building your own asset: You can pay the home loan EMI by building your own asset over time. Rather than just paying the rent, which is a pure expenditure. In reality, your home's equity increases with each EMI you pay.
Home as an investment: Owning a home can provide peace of mind and comfort when you know that the likelihood of staying in one place for an extended period is high. As Real Estate value increases, it gradually entails an increase in wealth.
Cons of Buying a House
Financial commitment: When you purchase a home, it is very much a long-term investment. Down payment, moving costs, and the regular monthly payments to keep up with (mortgage payment + property taxes/insurance over time). It's like paying rent to yourself with greater responsibilities.
Market fluctuations Real estate markets are unpredictable: If you are selling your home when the values are low, it is a huge loss, of course. What about the 2008 financial crisis? It was during this time that one could make a home investment and many did only to see the market crumble.
Pros of Renting
Flexibility: Renting allows you to move more frequently as it is a short-term investment. For instance, renting would be flexible if your lifestyle changed or if your job required you to relocate.
Lower upfront costs: Renting generally requires a security deposit, which is much smaller than a heavy down payment during a home purchase.
Cons of Renting
Limited Control: Want to paint your walls with your favourite colours or install that dream kitchen you've been drooling over? For that, you need your landlord's permission first. It sometimes feels like choking while at someone else's house with their set of rules and restrictions.
No House, No Wealth: Renting means paying someone else's mortgage. Without property ownership, you miss out on opportunities for potential appreciation, which makes renting seem less secure.
Rental Increase: Rents can rise unexpectedly, making it difficult to plan for expenses like vacations.
So, assess your finances carefully before you decide whether to buy a house or rent it.
FINANCIAL COMPARISONS
The decision to rent versus buy a house depends on your financial situation and the relative costs between them, taking into account long-term consequences. Here are the key financials to consider.
1. INITIAL COST
| Cost Component | Buying (for ₹30,000,000 Home) | Renting (for ₹150,000/month) |
|---|---|---|
| Down Payment | ₹900,000 to ₹6,000,000 | N/A |
| Closing Costs | ₹600,000 to ₹1,500,000 | N/A |
| Security Deposit | N/A | ₹150,000 to ₹300,000 |
| Application Fees | N/A | ₹4,000 to₹8,000 |
| Moving Costs | Similar for both | Similar for both |
2. MONTHLY COST
| Cost Component | Buying (for ₹30,000,000 Home) | Renting (for ₹150,000/month) |
|---|---|---|
| Mortgage Payment | ₹1,50,000 | N/A |
| Property Taxes | ₹20,000 to ₹41,667 | N/A |
| Homeowners Insurance | ₹5,000 to ₹10,000 | N/A |
| Maintenance | ₹25,000 | N/A |
| Monthly Rent | N/A | ₹150,000 |
| Renter’s Insurance | N/A | ₹800 to ₹1,500 |
| Utilities | N/A | ₹8,000 to ₹24,000 |
3. LONG-TERM CONSIDERATIONS
| Factor | Buying | Renting |
|---|---|---|
| Equity | Builds equity over time | No equity built |
| Tax Benefits | Deductions for property taxes and mortgage interest | No tax benefits |
| Market Risk | Values can fluctuate | No market risk |
| Flexibility | Less flexible | More flexible |
| Predictable Costs | Potential for unexpected costs | More predictable costs |
LIFESTYLE CONSIDERATIONS
1. Travel and Job Security: Homeownership leads to financial gain and peace of mind while renting allows preservation for more mobile folks with new jobs or changes of scenery. While moving, short-term leases can also serve as a bridge between ownerships.
2. Remote Work: As remote work becomes the norm, renting provides an opportunity to shop around different neighbourhoods or rural locations with no long-term ties—a useful way for you to ease into your new home working life.
3. Schools and Community: The quality of schools and local amenities also plays an important part, especially with families with children. If you have good schools nearby, buying a home to live in is often thought of as one of the best long-term investments out there.
4. Financial Readiness: Buying a house represents an important financial decision in which, obviously, one must be financially ready. Renting can be a more practical way to ease into homeownership, especially if you are not quite ready.
The decision to rent or buy a home is typically contingent on personal trade-offs as opposed to something that has one clear answer. In the end, pick which one suits you better.
So What’s Your Next Move?
The decision to buy or rent in 2024 will depend on your budget, lifestyle, and long-term plans. If you are buying, go with a homeowner loan flexible to adapt to changes in future income. It has the benefit of flexibility and keeps inconvenient initial costs low. One possible implication of delaying a purchase is that the cost could be higher and you may have paid more rent.
Get in touch with Realezi today and find out what will work best for you.
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classes control the overall appearance, as well as the
showing and hiding via CSS transitions. You can modify any
of this with custom CSS or overriding our default variables.
It's also worth noting that just about any HTML can go
within the
.accordion-body, though the
transition does limit overflow.
This is the third item's accordion body. It
is hidden by default, until the collapse plugin adds the
appropriate classes that we use to style each element. These
classes control the overall appearance, as well as the
showing and hiding via CSS transitions. You can modify any
of this with custom CSS or overriding our default variables.
It's also worth noting that just about any HTML can go
within the
.accordion-body, though the
transition does limit overflow.
This is the third item's accordion body. It
is hidden by default, until the collapse plugin adds the
appropriate classes that we use to style each element. These
classes control the overall appearance, as well as the
showing and hiding via CSS transitions. You can modify any
of this with custom CSS or overriding our default variables.
It's also worth noting that just about any HTML can go
within the
.accordion-body, though the
transition does limit overflow.
This is the third item's accordion body. It
is hidden by default, until the collapse plugin adds the
appropriate classes that we use to style each element. These
classes control the overall appearance, as well as the
showing and hiding via CSS transitions. You can modify any
of this with custom CSS or overriding our default variables.
It's also worth noting that just about any HTML can go
within the
.accordion-body, though the
transition does limit overflow.
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