Renting vs Buying a House

Most adults at some point in their lives come face to face with the challenging decision of renting vs buying a house. Buying a house is a huge decision for any first-time home buyer. Everyone wants to have a piece of property that they can call their own, but is it financially viable? If you’ve been living in rented houses all your life, then you might be wondering if it’s finally time to make the jump. However, coming to a decision isn’t completely straightforward. If you’re in the confused state-of-mind of renting vs buying a house, here are a few things to consider.

You can enjoy tax benefits

Undoubtedly, one of the biggest advantages of owning a house is the tax deductions that come with it. Under section 80C, the principal amount on a home loan is eligible for tax deductions. An interest payable of up to Rs. 2 lakhs is also eligible for tax deductions. If you are taking the home loan together along with your spouse or siblings, both of you can claim tax deductions against the interest paid.   

This is why in the debate of renting vs buying a house, people prefer the latter so they can take advantage of the tax benefits.

You need to have sufficient savings

If you’re wondering if you should continue to rent or buy a house, your savings can help you decide. Paying the entire amount for a house upfront is unrealistic, which is why so many people opt for home loans. But a common misconception people have is that a home loan will lend you the full amount for your house. Most loans only give you 80-90% of the total amount of the house. You need to pay the remaining amount from your own savings. If you haven’t saved up at least 10% of the house’s total value, then it makes more sense to wait first.

The value of real estate will appreciate

Buying an apartment is also an excellent decision from an investment standpoint. Real estate, especially in areas experiencing rapid growth, appreciates at a very quick pace. The speed at which it is appreciating also means that property prices even in developing areas won’t stay low for very long. This is why it makes sense to invest in real estate at the soonest so you can reap maximum gains later on. If there does come a point when you want to sell it, you will only have to pay a capital gains tax of 20%.

Paying EMI is better than paying rent

If you have to spend a good portion of your income every month on either paying rent or your EMI, then EMI is undoubtedly the better option. When you pay rent, that money isn’t going towards an investment. However, by paying an EMI, you’re channelling that money towards ownership of your own assets. Paying rent, in the long run, is also not financially feasible for many reasons. First, rent is soaring, particularly in central areas of the city. Soon, you might end up paying more in rent than you would for an EMI. Second, paying rent might not be practical once you stop working. So from a long-term perspective, if you’re wondering whether to rent vs buy a house, investing in a home is the best option.

It can be a secondary source of income

If you aren’t planning on moving into your apartment straightaway, then renting it out can be a way to earn additional income. This is why location is so important when you’re planning on investing in an apartment. An apartment that is located in a prime industrial area or next to major offices will make it very easy for you to find tenants. Finding tenants for your apartment is also an easy way to help pay the EMI on your home loan.

You have greater control over your home

Living in a rented house comes with dozens of rules and restrictions set by the landlord. Breaking any of these conditions accidentally could have you forfeiting a chunk of your security deposit. When you buy your own home, however, you don’t have to live by someone else’s rules. Being a homeowner gives you greater room in terms of doing up your interiors without the fear of losing your security deposit. You can paint the walls, add shelves, change the fittings; anything you feel will add the charm of thoughtful design to your house. Since the house belongs to you, you’re free to do whatever you like with it.

Buying an apartment is a huge milestone in every person’s life. At Legacy, we understand the dilemma of renting vs buying a house and try to make the process as smooth for you as possible. If you’re a first-time homebuyer, our Bengaluru Homebuyer’s Checklist 101 will come in very useful for you. For beautiful apartments that will be loved for generations to come, visit Legacy for ultra-luxury homes in some of Bangalore’s finest addresses.