Is buying a house better than staying on rent?

Should you buy a house of your own or continue to stay on rent? This is the million rupee question that you might be facing every day. Any decision on this should take into account some important factors. Let’s look at what these factors are and how these will impact you.

Duration of stay: The first and the foremost factor that needs to be taken into account is for how long you would be staying where you are staying. If your stay is going to be short, say for 5-8 years, it would be a wise decision to stay on rent rather than buying a house. In large metros such as Mumbai, Delhi, Bangalore, Hyderabad, Chennai, Kolkata, Gurgaon, etc. the cost of houses are quite high and investing a huge amount in buying a house for a short duration does not make sense. Besides, if you are going to buy the house on a home loan, the interest expended on the loan would be probably less than or equal to the rent you might pay for a similar house.

However, if you have to stay for a long duration, say, for 10 years or more, it would be a wise move to buy a house, instead of renting one. This is because the interest expended on the home loan would be less than the rent you would have paid if you had stayed in a rented house. Moreover, the property prices tend to appreciate over the long term and your investment in the house property would have appreciated too, so when you decide to sell off the property, you would have made capital gains too.

Level of income and savings: This is another important factor to consider while deciding whether to buy a house or stay on rent. If you are buying a house with your own savings, it would be a prudent decision as the interest that you would earn on your savings is likely to be less than the rent you would be paying for a rented accommodation. On the other hand, if you are buying a house by taking a home loan, you need to make sure that the EMI you would be paying for the home loan would leave a decent amount in your hands to take care of all your household expenses. So, depending on the level of your income and the amount of EMI you need to pay for the home loan, you have to decide whether to go for the outright purchase of a house or opt for a rented one.