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Affordable Housing Finance

Why owning a house is better than staying on rent.

01 March, 2018      New Home Buyers

 

In a life of constant dilemma, one question which increases our heartbeat and stress is "Should I go for buying a house for myself or live in a rented place". This question is not merely a question, one wrong decision can hamper your dreams of

Own Home VS Rented Home
 

 

There is always a constant pressure from the family side after the couple is married that they should prefer to own a house rather living on the rent. Another scene can be of any person who just wants to move out of their parent's house, there can be many examples where you would have to face the uncertainty of buying or living in a rented house. But there another question arises as to how should the decision be made without overlooking any factors? All your queries are going to be solved while reading this article and we are going to lay every aspect which you should consider before making the decision which will impact your whole life.

Benefits of buying a Home

Benefits of buying a home could be many and it will definitely differ from one person to another but here we are going to discuss some of the points:

1) Buying a home gives you the sense of belonging and the security for the future.

2) It will prove to be a long-term investment which will give you the best returns in future.

3) You will not have to face the tension of increasing rentals, instead, the EMI which you will be going to pay will transform your hard earned money into a fruitful investment.

4) Irritating landlords would not be there.

5) Interference of unwanted people will be minimized in your life.

Deciding whether to purchase a Home or live on Lease:

The decision to go for buying or living on a lease is purely dependant on your willingness to stay in the town or in other words we can say that as how much time you had planned to stay in the town. If you are planning to commit more than 10 years to a city for the living then it is advised you should opt for buying your own house instead of living on a rent. Tenants are always scorching for the peace which unfortunately they had sacrificed themselves as landlords are always on the verge to exploit your earnings with rigorous increment in the rent. And it is generally seen in most of the states that the landlords are bound to restrict the tenant from occupying their house for multiple years because of the inefficiency of our laws to safeguard the landlord. Falling interest rates and various schemes run by the government for owning an affordable house at subsidized interest rates for first-time buyers has made owning a house a lot easier.

After the decision is made second most crucial step is to recognize the cash source which will help you to fund your dream home that you are going to purchase. Owning a home in metro cities is somewhat costly if you are short on savings and there is no in your circle who can help you in arranging the funds. At this time the financial institutions come to save our soul where you can opt for a home loan. One thing you should keep in mind before opting is that the financial institutions will only fund 80 to 90% of your property rest you have to arrange.

Home Owning versus rented home: Financial implications

Let's consider some scenarios:-

a) Suppose there is a person who wants to purchase a house amounting Rs 20 lakh and the EMI which he is going to pay is 15000 p.m. for the time period of 20 years.

In this scenario, if that person opts for the loan his monthly installments will set up at the amount of Rs 15000 p.m. and for the year this person will be going to pay is Rs 180000. The amount which he will be paying is 36 lakhs but looking from the investment point of view the amount which he pays for owning the house will be quadrupled as the land rates would always move in the upward direction. Taking the example of Delhi NCR area the rate of return garnered by the landowners are stupendously mindblowing.

b) Suppose there is a person who rented a 2 BHK flat with a rent of about Rs 20000  with an appreciation of 9 percent per annum.

This person is going to pay a hefty fine of his life without incurring any return he is going to pay Rs 40 lakh if supposed he stays in there for 20years and the amount which he pays is rs 20000.

As seen above, one should see from many dimensions which choice will go a long way for his better future. However, buying a house is great for the investment purpose but the person should consider many points before buying a house. A detailed study should be performed by the potential buyer to know his current financial condition, as the amount which you will be paying is not small and it should not impact your daily life.