Buying vs. renting a house - Financial planningSubscribe

  Team Orom 2023-01-24 5 Min
               

For Indians, owning a home is a deep-rooted dream. Buying a property kindles various types of sentiments in a buyer. But deciding about buying or renting a house is more challenging than it seems. Buying a house requires meticulous financial planning, from searching for decent locations to managing finances, home loans, etc. Whether buying or renting a house, both need a steady flow of income. Buying and renting a house has pros and cons of its own.

If you are fascinated with buying a house, consider its advantages and disadvantages first.

Pros and cons of buying a house

Pros of buying a house -

1) Privacy - One of the foremost advantages of owning a house is privacy. Unlike renting, where you must seek permission from your landlord for any minor to a major decision, owning a house grants immense privacy. For instance, if you own a house and wish to renovate your home as per your lifestyle, you don't need to ask your seller. Liberty to create a garden bed, owning pets, noise, everything comes under your privacy.

2) Emotional attachment - When you purchase a house, you instantly get attached to it. The gratification of owning a home is incomparable. Moreover, buying a house provides emotional security to your family. You provide your family with a secure & cozy space of their own. After an exhausting day, you won't have to come home worrying about the rent or moving elsewhere. You can unwind in your sweet home when you return from work.

3) Your preferences - When you go for the renting option, your initial focus is to pay less rent, so you will eventually compromise with location, house size, amenities, etc. But when you buy a house, your main focus is to purchase one that satisfies your expectations.

Cons of buying a house -

1) Maintenance fees - If you have purchased a townhouse or a condo, you will be expected to pay annual or monthly maintenance fees, which help maintain community amenities like pools, gym, etc.

2) EMIs - Though the advantages of buying a house are plenty and it is a secured treasure for your future, you will have to compromise with your current spending. The EMI of buying a house is larger than the rent. For instance, the average rent is 15,000 per month, and your EMI for buying a house will be 30,000.

3) Paying for upkeeps - As a homeowner, you have to pay for the repairs and maintenance of the house. Unlike a rented apartment, your landlords won't be taking the responsibility on their shoulders.

Pros and cons of Renting a house -

Pros of renting a house -

1) Renting budget - Renting is cost-effective. You can look for houses that fit well into your budget without taking away a significant chunk of your salary/ savings.

2) Maintenance responsibility - Unlike owning a home, you don't have to take responsibility for repairing anything. The property owner takes care of all the damages, from leaky faucets to damaged fans; everything is your landlord's responsibility.

3) Flexibility - If you are uncomfortable with the neighbourhood or people in your society, you can switch to another location as you have plenty of apartment options.

Cons of renting a house -

1) Adjustment - If you opt for renting options, you should be fine with adjusting. You can't modify the house to your taste. For every change you want to make, you will have to seek permission from your landlord.

2) Rent increase - Rents can increase when your lease comes in six months or a year. You might be comfortable with a fixed budget every month, but you must have a financial backup or other options if you are not comfortable paying extra.

3) Bad credit score - When you buy a house, paying a mortgage on time improves credit scores, but you won't get the same in a rented house.

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Financial Planning

Family