Buying a Home versus Renting

There are obvious benefits of owning a home such as pride of ownership, status symbol, creation of asset and wealth, privacy, and feeling of freedom to customize according to your own liking. However, buying a home is a massive financial decision involving lots of money and a long commitment to a lender. Therefore, large numbers of individuals and families continue to live on rent. Here are the pros and cons of both owning a home and renting.

Pros of renting

You pay a small amount of money upfront and enjoy living in a home
You have no responsibilities towards upkeep and maintenance of the rented home
You can easily move out and rent another home. Relocation is easy when you get a better job in another city.

Cons of renting

The landlord can increase the rent every year
Moving from one place to another can be difficult and costly
You have less privacy and little freedom to personalizing the space

Pros of buying a home

Pride of ownership
Lots of privacy
Freedom to update and renovate according to requirements
No one can kick you out of your home
You’ll enjoy the equity even if you cannot pay the mortgage under financial stress
Ownership is a form of forced saving that allows you to create wealth
You enjoy tax deductions when filing income tax returns
Your home grows in value over a period
You become rent-free after you have paid the mortgage

Cons of Buying

Relocation becomes very difficult. You cannot move to a new place because of your commitment to the lender.
You need a large amount of money to pay for a down payment

While buying a home has many advantages, buying or continuing to live on rent is totally dependent upon your circumstances. If you think you have settled in your life and earning enough to easily afford the EMIs to a lender, it is certainly prudent to try and buy a home for your family. On the other hand, if you are young and still hoping for a better job and career, it is advisable to live in a rented place. You can always think of buying when you have found a good paying job and started on your family.