Since last year, home loan rates have rapidly risen, challenging existing and new borrowers. Many fence-sitting borrowers are now in the dilemma of whether to continue renting, which is relatively cheaper, or go ahead with their decision to buy their own house. What is financially feasible may depend on a person’s financial stability. However, both buying and renting a house have their pros and cons.
When home loan rates are rising, renting can have several benefits, including:
Lower monthly payments: Rent payments are typically lower than mortgage payments, especially when interest rates are high.
Flexibility: Renting allows you to move more easily and quickly than owning a home, which can be beneficial if you need to relocate for work or personal reasons.
No property taxes: As a renter, you do not have to pay property taxes, which can be a significant expense for homeowners.
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No maintenance costs: When you rent a home, you do not have to pay for repairs and maintenance, as those are the responsibility of the landlord.
No down payment required: Renting does not require a down payment, which can be a significant obstacle for many people who want to buy a home.
No need to worry about property values: As a renter, you do not have to worry about fluctuations in property values or the housing market.
Access to amenities: Many rental properties come with access to amenities such as a pool, fitness center, or clubhouse that may be expensive to own and maintain.
No risk of foreclosure: Renting eliminates the risk of foreclosure, which can be a devastating financial and emotional experience for homeowners.
Reduced financial responsibility: When you rent a home, you do not have to worry about homeowners’ insurance, HOA fees, or other expenses associated with owning a home.
More disposable income: Renting can provide you with more disposable income, which you can use to pay off debt, save for retirement, or invest in other assets.
Some key benefits of buying your own house:
Building equity: When you buy a house, you are investing in an asset that can appreciate over time. As you pay down your mortgage, your equity in the home increases. This can be an important source of wealth and financial security.
Adhil Shetty, CEO, Bankbazaar.com, says, “Buying your own house needs you to be financially disciplined to pay your EMIs on time. Renting is easy but gets more challenging later in life, and buying will shock your finances now but get stronger with time as you build equity into your home. Living in your own house gives you and your family freedom and safety besides capital appreciation. It is your property, and you can enjoy it the way you like it.”
Greater control and privacy: Owning your own home can provide a sense of control over your living space. You can make changes to the property as you see fit, and you don’t have to worry about a landlord’s restrictions. Additionally, homeownership can provide greater privacy than renting, since you don’t have to share walls or common spaces with neighbours.
Potential tax benefits: Homeownership can provide some tax benefits, such as deductions for mortgage interest and property taxes. While these benefits may not be as significant as they once were, they can still provide some financial relief for homeowners.