Renting V Buying Your Own Home

By Author: KeyaHomes
Total Articles: 6
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As time comes to move out on your own and live by yourself a pertinent question that springs up is the question of choosing between rented accommodations and buying a property for yourself? On the face of it, from a traditionalist point of view – you never pick up a property unless you have all the means to pay for it. However, in our credit-driven economy it is easy to plump for a home loan and buy yourself a place to call your own. Often the grave question is not affordability but the cost per month – both real and nominal – of renting and purchasing a house.

Your current financial strength, stability of your existing income and projected income and the ease of disposability for a property you plan to acquire are some of the basic factors one must consider.

The simple mistake any first time home buyer would make is to simply compare the monthly home loan EMI to the rent payable and arrive at a positive or negative conclusion. If the EMI is higher, it would appear that renting is easier on the monthly budget and vice versa. However, the choice isn’t that simple. One must factor in several other parameters ...
... to arrive at the real cost of purchasing your own property vis-à-vis renting.

Home buyers must factor into account property tax, monthly and annual maintenance, depreciation and other incidentals to arrive at the true cost of owning the property. These should be weighed against the liberty that a rented place does not provide – option to customize, choice of location, sense of ownership and accomplishment.

Renting v buying debate is also influenced by the location one is considering. For example for a city like Bangalore it is cheaper to rent than to own a home for middle income earners in the INR8-14 lakh per annum income level for those on a higher side it appears ownership is a better option, says a study conducted by financial planning firm Arthayantra.

The trend seems to resonate across the country, but locations such as Kolkata and Hyderabad have more affordable ownership options even for lower income levels while Mumbai makes it rather difficult even for those earning in the INR25 lakh per annum level.

Suresh Parthasarathy of the Hindu Business Line opines, “Renting a home is the best bet for those of us who seek affordability and flexibility and can invest our savings quite actively. It is also the best option for individuals who would like to stay within city limits and avoid a long commute to work.”

On the flip side of the equation is the fact that rents have continued to escalate with rising inflation and capital appreciation in real estate has been a constant in the country. The sense of accomplishment and safety of having your own is also a great comforting factor.

Therefore, the true cost of both renting and owning a property needs to be accounted in both monetary and emotional terms – after all, a home is much more than just a place to stay.