Choosing to rent or buy your home is a major decision that affects not only your lifestyle but also your financial health. Real estate ownership is touted as an investment that is likely to build equity and a source of tax deductions. Renting also has its advantages, including little to no responsibility and flexibility. Both of the investment plans are liable as the pros of owning a home are the cons of renting a home and vise versa. There are some major factors that we often don’t consider while deciding between owning a home and living on rent, they are as follows:

Property Value: If the property values are falling drastically in that area then the owner has to face a lot of worries while selling that property. In the rent system, a tenant does not need to worry about the property values in that area as the payable rent amount will still be the same as decided.

Need Of The Hour: Recently the stamp duty and property registration charges which used to be around 8% of the total amount of house have been reduced. Thus, currently, this is a very good opportunity to go for buying a home instead of putting effort and capital into renting.

Alternative Investment: Purchasing a home requires a lot of financial capital and therefore, the owner is usually not left with much bigger funds to invest in other things. But renting paves a way for the tenant for alternative investments like mutual funds.

5% Rule: The 5% rule of real estate is that the annual unrecoverable cost of owning a home is approximately 5% of the property value (whether you have a mortgage or not). If your rent is lower than that for a comparable home, you should keep renting. If rent is higher than that, you’re probably better off buying a comparable home.

Planning: Rented house involves a deposit amount and monthly payment of rent. But we can adjust that rent amount as an EMI and a bit more capital and own the property ourselves.

Ownership and renting, both have their pros and cons as both the factors are profitable in their ways. Ownership involves stability, right of customizing, one-time investment, and renting involves small capital, fewer efforts, and flexibility. However, for people who can afford to buy a house, the choice between buying and renting is always a tough one. So what are your views on this?

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