Whether to 'buy a house' or 'stay on a rent' is a very complex decision that affects a person both emotionally and financially.
This is a common pressure for many of us who are either married or staying on rent since long time, or moving to a different city or place.
We need to take a lot of factors into consideration while thinking either to become a house owner or continue to pay rent for the place where we stay.
Usually, anybody would say having your own house saves you from several headaches. Because for rented accommodation you have to pay right from television bill to the property rent. You also burdened with rent-agreement that needs to be kept in check.
Therefore, getting a house of your own is a profitable proposition, but it also brings short-term pain which at times becomes very stressful.
Zeebiz.com, citing a BankBazaar report, said that you should keep a list of things in mind, if you plan to buy a house or stay on rent.
Want to purchase a house?
If you are planning to purchase a house, the questions that you need to ask yourself first are, what's you financial condition, are you in position to take loan, where can you afford a house, how will you manage down payment, how much is your savings, till how much time you will take to repay a loan if you don't have enough saving, what kind of houses you are looking for.
Cash to spare
Houses or in other words apartments are usually come very expensive especially in metro cities and financial hubs of India, and if you don't have enough savings with you, then other option is always opting for home loans.
Home loan interest rates are currently lower and are being charged in the range of 8.30% to 10% by many banks. But the loan which a bank sanctions is not the actual value of the house. You can only get around 80% to 90% of the cost of property. Remaining 10% or 20% you will have to spare from your pocket. So always ensure that you have enough cash available with you.
This ratio measures the individual's ability to manage monthly payment and repayment of debt from the proportion of your income. Most of the time lenders look at this ratio to make sure that you won't default on your loan amount and other debts. Generally, your debt-to-income ratio should be below 50%.
While purchasing a house, a list of other expenses always gets add-on in the process. You also have to think about expenses like property tax, insurance, annual repairs, maintenance and other costs.
Last but not the least, taking a house means shift in your mobility. You might be able to afford a house in one area, but there is always an uncertainty if you shift jobs and your new office is located in another city.
Stay on rent
If you choose to stay on rent, then you should be asking questions to yourself like how much rental income you can afford from your salary, what are you daily expenses, till how long you plan to stay in that rented house, etc.
Here are a few things you should take into account, as per BankBazaar.
- The security deposit to be paid to the house owner.
- The monthly rent you pay.
- The shifting and brokerage charges you will have to incur every time you shift your house.
- The annual increase in rent and the hassles of shifting frequently.
One disadvantage of renting would always remain if you are a salaried employee. You will receive a House Rent Allowance benefit when you pay rent under the Income Tax Act. But will not reap the benefits of appreciation in real estate prices, as you do not own an asset.
So the decision to rent or buy a home actually depends on an individual's economic condition.