Skip to main content

Buy or Rent a House?

 

Buy or Rent?

 

Buy a house or rent a house? This is one of the biggest decisions of an individual's life. As you get ready to take this decision, you need to consider what is more suitable to your needs - buying a house or taking one on rent. Both buying and renting have their advantages as well as disadvantages and you need to weigh them both based on your personal needs and more importantly your budget.

Why do I need a house?

The first question you need to address is why you need a house. If your requirement is an accommodation in a particular area or city for a certain period of time as you might move to another city or area, then renting becomes a good option. However, if you are looking for stability and freedom or for pride of ownership, then you should consider buying a house.

Owning a house means there's no landlord to take care of the routine maintenance and utilities. You as house owner will be responsible for every aspect of maintenance - from leaky faucets and electrical short circuits to whitewashing. You need to carefully ponder the responsibilities that come with ownership of a house before taking the final plunge.

To make the decision of whether to buy or rent a house simpler, refer to the advantages and disadvantages listed below. Weigh the pros and cons and see which ones are valid in your situation.

Advantages of Renting

Advantages of Buying a Home

  • Initial money required is less.
  • Flexibility to move house as per requirement.
  • No need to worry about maintenance of the house.
  • No capital at risk.
  • Property tax to be paid by landlord.

 

  • A house helps to build equity.
  • When property values appreciate, an asset is built.
  • Certain tax benefits can be availed.
  • Freedom to maintain your house as per choice.
  • Sense of stability and community.
  • Experience the pride of ownership.

Disadvantages of Renting

Disadvantages of Buying a Home

  • Rent money can be money wasted as neither any returns can be availed nor will an asset get created in hand.
  • Accommodation may not be as per personal desires or needs.
  • Rents are bound to increase on a yearly basis.
  • Periodical shifting at expiry of lease will necessitate house hunting on a regular basis.
  • Sizeable amount of funds required for initial down payment.
  • Equity built in home may decline.
  • Time and effort for maintenance will become necessary.
  • Need to sell existing house may arise if there is a requirement to shift house and purchase another house. If unable to purchase or sell, a house may have to be taken on rent, adding to your costs.

Do I have the budget?

Buying a house may be an essential requirement as per your needs but this parameter is not enough to decide if buying is the best option for you. Buying a house may not always the best financial choice. Before you take the plunge, you need to pause and reflect on what it really costs to own a home and if you can truly afford it.

The first thing to consider is if have the funds to purchase your house or will you need a loan. If you have your own funds, then the next step would be to determine whether a house of your needs fits with the equity you have in hand. If you opt for a loan, will you turn to family and friends for funds or will you seek commercial lending institutions?

Whether you pay from your own funds or you opt for a home loan, you need to budget for expenses like property tax, home insurance, stamp duty, registration cost, maintenance, etc., which are additional costs over and above the basic price of a house. While stamp duty and registration costs are one-time expenses, remaining are recurring costs which may be quarterly, monthly or yearly, According to housing finance industry experts add around 20 per cent additional cost to monthly home loan EMI for the actual cost of owning a house. Once you have worked out the expenses, compare them to the budget available. Housing Finance Companies will offer loans based on repayment capacities and even then you will require equity to meet initial down payments. Do you have the necessary budget available to take care of the complete house owning cost? If not, then renting might be a wiser choice till the time your financials situations meet your housing needs.

At the end, the decision of whether to buy or to rent a house rests entirely with you. – You are the best judge of your financial resources and your personal factors. So take an objective look at all the factors before making the final call.

Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saving Mutual Funds to invest in India for 2016 or Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

Popular posts from this blog

Birla SunLife Manufacturing Equity Fund

The Make in India program was launched by Prime Minister Naredra Modi in September 2014 as part of a wider set of nation-building initiatives. It was devised to transform India into a global design and manufacturing hub. The primary motive of the campaign is to encourage multinational as well domestic companies to manufacture their products in India. This would create more job opportunities, bring high-quality standards and attract capital along with technological investment to bring more foreign direct investment (FDI) in the country.   Why India as the next manufacturing destination?   The rising demand in India along with the multinational's desire to diversify their production to include low-cost plants in countries other than China, can help India's manufacturing sector to grow and create millions of jobs. In the words of our Honourable Prime Minister- Mr. Narendra Modi, India offers the 3 'Ds' for business to thrive— democracy,...
Read more

Total Returns Index brings out real Equity Funds Performers

From February, equity mutual funds have to change their benchmarks to account for dividend payments. Until now, funds used price-based benchmarks alone. TRI or total return indices assume that dividend payouts are reinvested back into the index. What this does is lift the overall index returns, because dividends get compounded. For example, the Sensex TRI index will consider dividend payouts of its constituent companies while the Nifty50 TRI index will consider dividends of its constituents. Using TRI indices as benchmarks comes on the argument that an equity funds earn dividends on the stocks in its portfolio, which they use to buy more stocks. Therefore, using an index that also considers dividend reinvestment would be a more appropriate benchmark. Shrinking outperformance With a stiffer benchmark, it is obvious that the margin by which an equity fund outperforms the benchmark would shrink. Rolling one-year returns from 2013 onwards, the average margin by which largecap funds out...
Read more

Kisan Vikas Patra - KVP

  Kisan Vikas Patra (KVP) First launched in 1988, the Kisan Vikas Patra (KVP) is one of the premier and popular saving scheme offering from the Indian Postal Department. This product has had a very chequered history- initially successful, deemed a product that could be misused and thus terminated in 2011, followed by a triumphant return to prominence and popular consumption in 2014. The salient features of KVP are as follows- The grand USP- Money invested by the applicant doubles in 100 months (8 years, 4 months). KVPs are available in the following denominations- Rs.1000, Rs.5000, Rs.10,000 and Rs.50,000. The minimum purchase value for the KVP is Rs.1000. There is no maximum limit. KVPs are available at all departmental post offices across India. These certificates can be prematurely encashed after 2 ½ years from the point of issue. KVPs can be transferred from one individual to another and from one post office to another. ----------------------------------------------------- Inve...
Read more

Mutual Fund Review: Reliance Regular Savings Equity

    Despite high churn, Reliance Regular Savings Equity has managed to fetch good returns   In its short history, this one has made its mark. Though its annual and trailing returns are amazing, the fund started off on a lousy note (last two quarters of 2005). It managed to impress in 2006 and was turning out to be pretty average in 2007, till Omprakash Kuckian took over in November 2007 and wasted no time in changing the complexion of the portfolio. Exposure to Construction shot up to 28 per cent with almost 21 per cent cornered by Pratibha Industries and Madhucon Projects . Exposure to Engineering was yanked up (18.50%) while Financial Services lost its prime slot (dropped to 6.69%) and Auto was dumped. That quarter (December 2007), he delivered 54.66 per cent (category average: 25.70%).   When the market collapsed in 2008, thankfully the fund did not plummet abysmally. But even its high cash allocations could not cushion the fall which hovered around the category average. ...
Read more

Health for Wealth - How to buy Health Insurance ?

Tax Saving Mutual Funds Online Current open Infra Bond Application form   HEALTH insurance is a relatively new phenomenon in India. Hence, it is not on the top of the mind for most people to make a conscious commitment towards health insurance. However, it is imperative for each one of us to plan for better health for our families and ourselves. There's no better way than to start with making health your top priority this year. So, your health insurance resolution charter would look something like: ■ Invest in health for wealth: Timely investment in health insurance can help build a security net and hedge sudden dilution of another financial asset class in the event of a health emergency, making it imperative to opt for a comprehensive health insurance plan. ■ Buy a comprehensive health cover that fu lfills your health needs for life: Buy a personal health insurance cover even if you have an employee cover because 'employer provided' health insuranc...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now