To rent or to buy? It’s a question that has been plaguing potential homebuyers for a long time. And there’s no correct answer. There are definite pros and cons to both options. While renting is a less capital-intensive decision, buying a home will help you build wealth and equity. However, that’s not where it ends.
Here’s a comprehensive overview of renting vs buying and which option you must go with.
Renting vs buying – Flexibility
Both renting and buying come with their own degree of flexibility. Renting a house offers you the convenience to move. So, if you’re someone whose job sends them to different corners of the country, buying a property in one location won’t be of much help.
On the other hand, buying a house offers you the flexibility of customisation. As a homeowner, you can make as many ergonomic and aesthetic upgrades to your house as you want, something that a rented property doesn’t allow. Or at least not as much.
Also, homeownership protects you from the risk of eviction, as you have complete control over when you leave your home if you ever do.
Renting vs buying – Wealth generation
When you own a home, you not only have a considerable asset to your name but an asset with a gradually increasing price tag. In some cases, real estate price appreciation can provide you with a hefty return on investment.
That said, wealth generation isn’t completely off-limits to renters. However, it isn’t automated as in the case of homeownership. If buying is more expensive than renting, you can increase your corpus size by investing the difference.
Additional Read: Renting Vs Buying a House in Metro City: Know the Pros and Cons
Renting vs buying – Costs
As mentioned earlier, homeownership is a capital-intensive decision, for which, nine times of out ten, you need to take a loan. And apart from the monthly EMIs, you also need to take of your home’s maintenance, taxes, insurance, etc. The additional costs certainly make homeownership more expensive than renting, even when you leave out the mortgage EMIs.
When you rent the house, you only need to pay the rent and utilities. The homeowner takes care of the miscellaneous costs. Though landlords require a security deposit, it’s refundable, so you’re not really losing money.
Renting vs buying – Responsibility
Other than monetary commitments, homeownership also comes with other responsibilities, such as maintenance. It means you either have to look after the upkeep yourself or hire a professional to do it.
Typically, landlords take care of the bulk of upkeep if you rent a house. However, if it’s damage that you caused, you might have to pay for it.
Additional Read: Home for Renters: Is It a Good Idea to Invest in a Rental Property
Renting and buying – both are viable options depending on your situation. If you’re not willing to take a loan, or if your job requires you to switch locations frequently, renting may be the right option for you.
But if you’ve got a family with a stable income and job, buying the house might be the right choice, as you not only have a place you can call home but also a high-performing asset that can reap you phenomenal returns in the long run.