Buying a House or Rent a House: Which One Is Right For You?


hardik, April 23, 2019

Buying a House or Rent a House: Which One Is Right For You?

Deciding between buying a house and living in a rented apartment is a tricky decision. The former seems cheaper but doesn’t culminate in an asset, while the latter requires a huge investment and enhances your net worth.

Moreover, renting oftentimes seems to be a simpler process as compared to buying a house. So it’s important that you weigh the pros and cons as well as your own requirements thoroughly to arrive at a decision that’s right for you.

To do this successfully, here’s how you can compare the two options.

Based on your financial standing

You can’t buy a house on a whim, because apart from the price of the home you’ll have to pay for a range of other related expenses such as property tax, stamp duty and registration, maintenance charges and parking fees.

On the whole, this comes to a tidy sum. When you lease property, on the other hand, you have to concern yourself with paying a refundable deposit and rent, as well as bearing costs to draw up the agreement.

Thus, it is important to see whether you can afford the total cost before you commit to buying a house. While most of them are one-time expenses, they shouldn’t strain your finances. Buy a house only when you can afford every cost including EMIs, or else rent an apartment as per your tastes.

Additional Read: Real Estate vs Mutual Funds

Based on the mobility you seek

If you are well-settled as a production manager in Hyderabad, happy with your career and want to start a family, for example, then look for a home that works with your growing family’s needs and invest in property.

Projects like Provident Kenworth, for example, will suit your budget and needs well. Apart from serving as an investment, it will help you build a permanent base for you and your family.

However, if you are in a transferable job and constantly move from one city to another, it may be a better idea for you to rent a home. Optionally, you can buy a home but view it solely as an investment that will give you rental income.

Based on appreciation benefits

Buying a home is also beneficial when the market is doing well as its value will increase and fetch you good returns as and when you decide to sell it. In the meanwhile, it doubles up as living quarters thus saving you an extra expense.

However, in the case of a rented house you are devoid of any capital appreciation. That means the money you are paying as rent will always be an expenditure. Moreover, there is no chance of yielding any returns from the hefty sum you pay as rent.

Additional Read: Benefits of RERA for Homebuyers

Based on tax implications

When you buy a house using a home loan, you are eligible to claim deductions for the principal and interest repayment you make. As per the Income Tax Act, you are eligible to claim up to Rs.1.5 lakh every year basis principal repayment and up to Rs.2 lakh basis interest repayment under Section 80C and 24(b) respectively, subject to certain conditions.

On the other hand, if you live in a rented property, you can claim partial or complete tax exemption under House Rent Allowance (HRA) to reduce your tax liability. However, given that your rent increases every year you will only be able to claim a certain amount. Typically, in this regard, a home loan offers better benefits.

So, if you do have the finances for it, by all means, consider buying a home. Whether you stay in it yourself or rent it out, it will help your finances in the long run. Regardless of whether you decide to buy property in Hyderabad, Bangalore or Mumbai, make sure that you make the process simpler by availing a home loan from Bajaj Finserv Homes & Loans.

It offers funds of up to Rs.3.5 crore with benefits such as property search assistance, in-person site visit assistance, and help with documentation. Check your pre-approved offers to get the finances instantly, without any hassles.