Blog

Home Loan EMI vs. Renting: Which of Them is More Advantageous?

Submitted by admin on July 29th, 2024

Purchasing a home or living in a rented house is an emotional choice regardless of how much effort one can put to reason. Selecting a home to live in or deciding of where to live by renting a house is a decision that is normally made emotionally no matter the best efforts taken to be rational.

The term Home is known to be a relative term since it has different meanings to different people. Daughters and sons of defence personnel might be forced to shift from one city to the next in the next few days. Thus, they would like to acquire a house as quickly as possible and maybe start a family.

On the other hand, a person who spent his or her whole live in one city may desire to move round different cities and thus such a person will not wish to be restricted to one city.

Thus, the matter can be solved in accordance with your age, current income and investments, obligations, job opportunities and perspectives, and your outlook on life.

Here are some of the factors to show you how you can determine if you must purchase the house through home loan or rent an apartment.

Advantages of purchasing a home through a home loan

Here are a few benefits of buying a home:

Asset Creation

The strongest reason one could provide for taking a home loan is that one is buying an asset.

Stability

The second feature is stability All of these factors are extremely vital to the effective operation of a business organization. Being a home owner entails that one has a predictable environment that can easily plan for his or her life like children’s school and other activities.

Inflate in the Rent of House/Flats in Metro Cities

Many of us know situations or have witnessed that the rents have increased in the past few years, more specifically this year due to the pandemic.

Good for Retirement

If one borrows a home loan in his or her mid-thirties or early forties, one can clear the home loan before they attain their retirement age. This will mean that you do not have to concern yourself with rent cost once you are retired and or out of employment.

Inheritance

It also gives a home aspect that can be transferred to the coming generations. Therefore, if your child is comfortable and residing in his or her city of choice, then there is no pressure on him or her to acquire a home. They can use their money to fund them go further and invest in their business exploits.

Emotional Benefits

This is especially so since people will have a feeling and a pride in being able to own a home than in renting a house. Regarding the matter, living in a home allows an individual to change the structure of the house as they look fit and feel like the house belongs to them.

Reverse Mortgage

A Reverse Mortgage is the reverse of a loan in the sense that instead of the borrower paying equal monthly instalments to the lender; the lender pays the borrowers equal monthly instalments. Here, you can get cash a while against the security of your home and you get a steady amount of money, fixed by the bank. On the end of the loan or in the case of death of the last surviving spouse distribution of all the property through the probate court results in the bank repossessing the house.

Benefits of Renting

In this essence, the following are the benefits of living in a rented house;

Flexibility

Leasing is may suits you better if, for instance, you are in a position where you have to move around a lot. Leasing can also work if one does not intent to be resident in a particular city for more than seven years.

Lower Initial Costs

Renting is usually cheaper than owning a house since no large cash amount is required to be paid at the onset than the down payment plus closing cost of purchasing a house.

No Maintenance Costs

When you rent, the landlord usually handles maintenance and repair costs. While these costs might seem negligible at first, closer inspection shows that these small costs have become substantial over the years.

Conclusion

Choosing between renting and buying depends on your current financial situation, future plans, and personal preferences. Hence, it is important to consider these factors before deciding.