Did you know that in 1961, 54% of Indians lived in rented houses? In 2017, just 28% of the urban population lives in rented homes, according to the 2017-18 Economic Survey. The Indian government is aiming to reduce the number of people living in rented homes even further with its “Housing for All” mission. Under this mission, the government aims to build more than 30 lakh homes in urban India alone.
The increasing homeownership is a great sign of improving living condition and affluence among the masses. But is buying a house the best course of action for everyone? Are some people better off just staying in a rented house? Well, here is how you can decide.
Why You Should Rent a House
The benefits of renting a house are:
- Rents are a lot lower than the EMI of a house. In most metros, a house that has a value of ₹50 lakhs has a rent value of around ₹10,000 to ₹15,000 per month. In case of home loan EMIs, it would be around ₹35,000 per month. This is because of the 20% down payment is required since a home loan gets you up to 80% value of the property, plus the interest rate is 8.6% and a maximum tenure of 20 years. In addition, you do not have to take care of things such as house tax and other legal issues. This difference of ₹20,000 can be make a big difference to your lifestyle or which school you send your children to.
- Another benefit of renting is that there is more freedom. In case you get a job someplace else, you can rent there. If there is a great school you want your kid to enroll in, you can rent a place close to the school as well. In simpler terms, you are not stuck with the house.
Why Buying a House Can be a Great Idea
Here are some of the reasons to buy a house:
- It has become a lot easier to buy a house. Even if you cannot make a lumpsum payment, there are lots of amazing home loans available in India. You can get home loans from ₹3 lakhs to up to ₹5 crores. The documentation requirements are very simple as well. The best home loan company can give you a loan even if you cannot provide income proof documents, such as ITR. But you should have a good history of repayment.
- Another reason to buy a house is that a gives a sense of pride and ownership. Along with this there is security. When you are renting a house, your landlord can ask you to leave at any time. Plus, most landlords do not allow tenants to stay in their house for a long period. And this change of houses is not only a hassle, but a blow to savings as well.
- In addition, you get tax benefits when you buy a house. There are chances of appreciation of the value of your property too, which means that your investment will bring returns.
Whether it is better to buy or rent a house, depends upon your particular situation. But in most cases, it is better to buy. This is because even if you think renting is better today, someday you would want to have a home of your own.