Renting a property in the city is usually considered the easiest decision when starting out a career in a city until you realise that buying the house could lead to a decent investment than just a drain on your finances. However , it has been a long-standing debate among those who want to stay free from long-term financial commitments. The first reason anyone considers real estate as a safe investment is the return on investments – capital gains from the appreciation in home prices or rental income. But many other factors also weigh in when it comes to decision-making over a house. Real-estate expert, Ashwinder R. Singh has some suggestions to help you weigh your options:
Consumption of savings
Most monetary institutions provide around 80 per cent of the property cost. However, one has in order to finance the rest 20 per penny. This often involves extracting all available savings to make the particular down payment. So, at the time of making a decision on a house purchase, one must make a fair assessment of current and future economic goals. Some questions one can ask are:
Will I be able to manage my expenses?
Do I have the surplus to spend in an EMI?
Do I have any other major upcoming expenses?
Should i possess a financial backup for contingencies?
What is my future earning potential? Will I be able in order to sustain my finances?
Can I afford to lock in a fixed amount associated with my earnings to finance a house?
Factors involved in renting property
You have to put together a security deposit which can be anything from one month to 11 months’ worth of lease depending on the town you wish to live in.
Calculate if the money you are spending on rent will be higher than the EMI that will you can pay for the particular purchased house. If the EMI is lower than the rent, purchase could be good option.
Staying on lease means having to frequently pay brokerage charges plus shifting costs.
Annual increase in rent is usually another consideration that 1 must create while planning to rent.
Stability of owning a house
Buying a house instills a sense of financial security.
It leads to a guaranteed return in the long run. Real estate prices, mostly keep going up. Seldom does one incur a loss while investing in home?
Tax exemptions are an added benefit of buying the house whenever you avail of a home loan.
Owning a house leads to long-term growth inside personal wealth.
Your own house gives a person the freedom of usage as well as creative freedom about how you want your premises should become.
Long term commitment
Owning the house is a ‘big’ financial decision because this usually involves a long-term commitment of paying a significant amount of your income every month towards EMI.
The home loan can become the liability if your monetary planning does not work out as planned. Volatility in the employment market could lead to added problems in case you have got purchased a house through a home mortgage.
Advantages of renting
You can live where you want to suit your changing residential requirements.
You are able to enjoy a high-value property inside a prime location of the city with a small rent.
You can upgrade in order to better houses as and when you would like.
(Ashwinder R. Singh is a real property expert. He is the author of The A to Z associated with Residential Real Estate .