Putting money into a home purchase is a terrific method to develop long-term wealth. But thinking that renting is a waste of money is a myth. Nobody can definitively determine whether a person should buy or rent a home/property because it relies on several things, including their finances and way of life.
Pros of renting a home
- Easy moving
Are you tired of your once charming neighbourhood? You can move to a new place whenever your agreement/lease is up without worrying about mortgage payments or selling your house.
- Value deprivation is not your concern
Buying a property can be risky, as the real estate market is unpredictable. However, you are not the one who bears the risk if you rent the property. A property consultant in Mohali will help you find the ideal house for renting or buying.
- No repair cost
Your landlord will be responsible for repair and maintenance costs, from electricity to air-conditioning, which will help you save money in the long run.
- No property taxes
Your landlord will not tell you to pay the property tax, but he/she will adjust the money on your rent or security. And if you think you are paying too much, consider moving out. The bottom line is that you don’t need to pay property taxes.
Cons of renting a house
- No Equity
Your monthly payments will not help you build equity and will make you feel like you are wasting money.
- You have no control
Your house belongs to someone else, so you can not make changes to it. So, whether you want to add a hot tub or update the wall colour, you need to take permission from your landlord.
- Rent increases
Your landlord can increase your rent after six months or a year, making it difficult for you to manage your budget. Moreover, if the real estate price increases, you may have to pay high rent.
- Bye to tax benefits
Homeowners receive several benefits that decrease their tax liabilities, such as mortgage interest and property tax deductions. Renters are not eligible for these tax benefits but are eligible for deduction for some expenses, including utility, repair and maintenance costs.
Pros of buying a home
- Build equity
When you buy a property in Mohali, you are creating a valuable asset that will help you increase your wealth over time through capital growth and recurring rental income.
- Stable housing costs
You have to pay a fixed interest payment to the bank or any financial institution from which you have taken the loan. However, with renting a home, you could have to bear the increase in the rent payment after a year or two.
- Customize your space
Whether you want to change the wallpaper or add wild plants in your backyard, you need not take permission from anyone as it’s your own house.
- More community involvement
Voting, helping at schools and having a strong sense of civic duty go hand in hand with home ownership. So, owning homes allows you to establish and build strong roots with those in your neighbourhood.
- Give you a proud feeling
You require a great deal of hardship to own a home, from saving money to maintaining and improving a property, which gives you a sense of accomplishment and pride.
Cons of buying a home
- Higher upfront costs
You need to have enough savings to pay the upfront cost of a house/property. These costs include a down payment, closing costs and other costs.
- Maintenance and repair cost
Being a homeowner, you have to bear all the unexpected expenses, whether a broken air conditioner or a leaking pipe. These expenses can be high, especially if there is a major issue.
- Less flexibility
When you rent a property, you can move whenever you want, but ownership makes it difficult. You need to market the property and wait for a perfect offer to cash out your hold equity, which can take longer depending on the market.
- Risk of decreasing value
The real estate sector is not free of risks, and you may end up buying a home in a period when there is economic decline resulting in lower home value. As we know, it is hard to predict the real estate market’s future because it depends upon several factors- a downward trend can affect the value of your house.
Which is better?
Though money plays an essential role when it comes to deciding whether to buy or rent a property, many other aspects can influence it, including how long you want to stay in a location, your ambitions, and your age.
If you have already built a career in a location and want to settle there with your family, consider buying a home but ensure you have enough money to pay the upfront costs. But if you are unsure about your career choices or want to see the world, go with renting- as it will provide you flexibility.