Should you buy or rent a house?

Buying one’s own home is a dream come true for most of the people as owning a house offers stability, security and peace of mind. But considering the insecurity of professional life and the skyrocketing prices of real estate, buying a house may not always be a practical and sensible option. So, how does one decide whether to buy a house or settle for a rented accommodation? Let us find out.

The first and foremost factor to consider is the cost of buying a house. If the cost is prohibitively high and if buying would strain your financial resources to the limit, the better option would be to rent a house rather than buying it. If the annual rent works out to less than 2-3% of the cost of property, it makes sense to stay on rent.

The second most important factor to consider is the stability of your income. If your income is erratic, seasonal or uncertain, there is no point in buying a house as you may not be able to pay the home loan EMI on a regular basis. Renting out a home is an ideal choice in such a situation as one need not make a lump sum investment in buying a house and paying home loan EMI thereafter.

The third factor to consider is the stability of your career. If your job involves frequent transfers from one city to another or if you are in the habit of hopping jobs and cities frequently in pursuit of better career prospects, it makes sense to rent out an accommodation as one cannot keep buying and selling house every time you change your job or get transferred to another city.

Also, it may be better to rent a house close to the place of work as staying near the office or factory offers the convenience and makes one’s life easy. On the other hand, buying a house that is quite far-off from the place of work can be quite troublesome due to the hassle of travelling to and from the place of work every day.
However, buying a house makes eminent sense if the cost is within your budget, you have stable source of income, your job is not subject to frequent transfers and the location of your house is close to your place of work or it is convenient to travel from your residence to your place of work and back on a daily basis.

Also, buying a house offers tax benefit in the form of exemption on repayment of the principal amount of home loan as well as exemption on interest paid on home loan, subject to the specified limits. More importantly, buying a house creates a solid asset that is life long and appreciates in value over time.