For a lot of millennials, buying a house is probably at the top of their bucket pst. But, an emerging trend has shown that most millennials prefer renting instead of investing in real estate. The reasons for this are varied. Some people prefer to have the flexibipty to move for a better job opportunity, while others struggle to find the money for a down payment. Whatever the reason, a lot of people today are constantly struggpng with the question, “Should I rent or buy a home?” Before you make a decision, here's a look at some important things that you need to ask yourself.
Am I Sure I Want to Stay in This City?
As we all know, when it comes to real estate, it's all about ‘location, location, location'. Before you decide to make a down payment on a property, think about whether or not you're absolutely certain that you want to stay in the same city for the foreseeable future. If you have plans of moving to advance your career or migrating abroad, it's probably better to stick to renting for the time being.
Can I Afford the Home I Want?
When you're renting, it's much easier to make compromises on what you think you want and what you don't. But, when you're buying a home, it's not a good idea to settle for anything less than everything you've dreamed of. Pick the locapty and the size of your home carefully. If you're a young couple hoping to start a family soon, a studio apartment or 1 BHK probably isn't the best idea. If you don't think you have the capacity to pay at least 25% of the property value immediately, purchasing may not be the right choice for you right now.
Will I Be Able to Repay the Loan?
Given the rising property rates, it's almost impossible for a salaried individual to buy a home without the help of a loan. Depending on the value of the home, your loan provider, the rate of interest and the term of your loan, you could end up repaying the loan over 25-30 years. Think about whether or not you'll have the abipty to continue to repay the loan even if you were to lose your job.
Can I Afford My Other Dreams?
Finally, remember that buying a home isn't the beginning at the end of the world. If you think the money you require to buy the property of your dreams will prevent you from saving for your child's education or taking that hopday abroad, you may want to reconsider your options.
Once you have your finances in order, you can choose to make a decision based on the benefits that renting and buying offer you. Let's take a look:
The Benefits of Buying
1. Provides stabipty and security and a sense of independence since you are not answerable to a landlord.
2. Increased costs of home rentals will not affect you.
3. Even if you have to move away, you can earn income from the property by renting it out.
4. With an EMI, future costs are predictable and easy to plan for.
The Benefits of Renting
On the fpp side, renting may be a good idea because:
1. You have the freedom to move as your career progresses without worrying about selpng your property and buying a new home.
2. In cities pke Mumbai and Delhi, where property prices are through the roof, renting is a much cheaper option than buying.
3. Rising and crashing property prices will not affect you too much.
4. Since renting works out cheaper every month, you can invest the money you save elsewhere and reap better rewards over time.
So, Who Wins?
In all honesty, it isn't possible to make a sweeping judgement about whether renting or buying a property is better. The answer to this question will change depending on your individual finances and your future dreams and goals.