Buying vs Renting a House

Buying a house is often a sentimental decision for every Indian as a self owned house is a matter of pride and  security. As a matter of fact most are dreaming of the day when they will own their own place.This is a dream that starts from childhood so the idea of buying a house is deep rooted in the mind of most of us.

As renting a house comes as an option, the cost and the flexibility of changing houses that  renting provides buying will no provide and buying might not be the most economical and logical option available for everyone !

Before giving a straight away  verdict on the matter a detailed study about the cost of renting and the cost of mortgaging a house along with many other factors must be closely analysed.Renting and buying both have their pros and cons as with all the things in the world.

Renting a house

Taking a house on rent has many advantages for a person  who is a working professional as renting a house will feel lighter on the pocket.The responsibility of maintenance is also off your head and that would be one thing less that you have to be worried about.You have the choice of shifting the rented house and being close to work and needn’t worry much about hiring a person to overlook the house while you are gone for the holidays.If you want to buy a house in the vicinity it might be a good idea to rent a house first.You have the option of avoiding an asset whose value is depreciating regularly.

If you are capable of buying a house but instead are willing to live in a rented house then you can invest into avenue that are more liquid and profitable such as in the stock market or business but it is only advised if you have proper knowledge about these otherwise buying a house might be a better option.

However while staying in a rented house you might often  have to deal with the neighbors and the house owner.The increasing demand for deposits is also making renting a bit less cost effective.Owning a house gives you some flexibility too  as you had the option of upgrading your house and using it as you wish to use it their are no such restrictions which  cant happen in a rented house.Moreover you don’t get an tax benefit which can be deducted against the mortgage interest payments.

Buying a house

The common wisdom for decades was to buy a house as soon as you can as it is a good investment lasting for a long term.Being a home owner  isn’t for everyone but there are some financial and emotional advantages for owning a house.A house can be proven valuable when their is a crisis in the market and as people get unemployed and unable to pay rent,having a house can be proven very crucial in one’s survival.Along with this the freedom of using the house as per your convenience and tax benefits are also some attractive points about buying your own house.

However the downturn is that you have to spend to maintain the house and it becomes a safe but ill-liquid asset.The house losses some value over time and requires a surplus cash supply.Property taxes makes houses less affordable for people and if you are going to build it  form bottom to top you have to spend a lot of time on it along with a lot of fees.

the idea of buying or selling remains to be a matter of preference and capacity of each individual.However renting a house and then using the surplus to invest can be a very good idea.Many businessmen live in rented house and reinvest money to increase their returns.This seems to be a very good strategy but has to be used carefully as the risk associated is high.Buying a house still remains the best option for people who aren’t much knowledgeable about other investment avenues or want to mitigate their risk as much as possible.

I personally feel that renting while you are a young adult and buying a house and settling down as time goes by seems to the most favorable option which also matches the risk appetite a person will have in the respective  age segment as well.

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