Why buying a house feels better than renting one?

Buying a home offers financial and emotional benefits such as wealth creation and stability over renting a house

Buying a house is a significant investment for most of us. Looking at the long list of expenses that add to the original purchase cost, many prospective home buyers turn to the rental market instead. Renting a house, after all, involves just one recurring monthly cost: the rent. Additionally, homeownership entails many other expenses: property tax, maintenance cost, registration costs, financing costs (if the house is bought with a home loan), etc. 

However, buying a house comes with several benefits that might justify the high upfront expenses over the longer term. A house is an asset, often appreciating over time. It offers a sense of stability and gives its owners a safe space to raise their families in. Before making a buy or rent decision, you should go through the following arguments for why buying a house might be a better, safer bet than renting one:

1. It builds wealth for the future

Buying a home at the right time in the right market can help owners build wealth as the value of that property appreciates. By investing in a house and then selling that house at an appreciated value, homeowners can build wealth that allows them to upgrade to their dream house

2. It increases the owner’s net worth

Buying a home increases its owner’s net worth substantially. Homes are big-ticket investments with relatively stable values. Home owners’ balance sheets are thus significantly fortified by their property purchases. A rented home is not an asset; in fact, the rent one pays is an item of expenditure. Homeowners can leverage their increased net worth in several ways, including taking out loans against the property.

3. It leads to lower living expenses

Homeownership can lead to lower living expenses over the long term. The most prominent cost element of homeownership is the purchase price of the house. Once the home loan has been paid off, the only remaining expenses attached to homeownership are recurring ones like property tax and maintenance. However, these regular expenses are inevitably going to be much lower than the rent for a comparable house in a relative location. By buying a home, you can look forward to living rent- and mortgage-free – an alluring proposition at the very least.

4. It offers an opportunity for Passive Income

Owned homes are assets that can generate income if the owners so desire. If you decide to stop living in an owned home, you can still use it to create passive income through short- and long-term rent. With the proliferation of short-term rental services like Airbnb, homeowners can generate revenue from their properties whenever they are not occupying them. Some homeowners might also rent out a part of their property while continuing to live there. Rent is an excellent form of income because it can be earned passively. 

5. It does away with rental hikes

With rental properties, landlords usually have the option to increase the rent periodically or every time the lease is to be renewed. This makes renting an incrementally expensive option for tenants. Homeownership is free from such inflationary pressures; your home loan repayment schedule and amount are fixed, and your property itself is likely to only appreciate over time.

6. There’s no fear of eviction

With rental properties, the landlord not only holds the right to increase the rent, but they can also evict tenants by serving them a notice period dictated by the lease contract. Landlords can evict tenants if the latter is not willing to pay the hiked rent or sell the property. This places the tenant in the difficult position of scrambling to find an alternative house in what is usually a short time. On the other hand, Homeowners need not worry about having their property sold out from under them.

7. You can do up your home as you like

Rental contracts often restrict tenants from making extensive changes to the house. With an owned home, owners are free to renovate or refurbish the house and make it an expression of themselves in any way they please. Owners know they are going to occupy their homes for several years, even decades, so they might feel comfortable investing in doing it up properly. 

8. It offers a degree of stability

Homeownership provides a sense of stability that encourages people to settle down, maybe start and raise families. With the fear of rent hikes and eviction eliminated, along with the freedom to design the house in their preferred way, homeowners can start building a life in their home and give their children a predictable, stable environment to grow up in.

From a fiscal and emotional perspective, homeownership offers many advantages over the rental model. IDFC FIRST Bank provides home loans with interest rates as low as 8.75%  per annum and tenures as long as 30 years, so everyone can buy a home of their choice and live their dream!

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.