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3 Reasons why you should Purchase a Home Vs. Renting One

Reena and Rahul had been scouting for a new home on rent for a few weeks now. This is the 5th time in 4 years they would be changing their home. 3 out of 5 times they changed their home as their landlord wanted to sell it off to another buyer. Seeing the trend of people buying their own homes, the Jaipur based couple started evaluating whether they too should now think of purchasing their own house near Jaipur.

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They decided to speak with their friend who had recently purchased a home. He shared with them how he and wife researched and then with sound logic arrived at their decision.

He explained, “So, what’s there not to love about renting a home? Apart from the emotional satisfaction of having a home you can call your own, here are a few logical reasons that helped me and my wife agree upon purchasing a home.”

#1: Numbers Don’t Lie.

Case 1 – Let’s assume that you rent a 3-BHK home for rent of 20,000 rupees per month. This is way below the actual rental values in cities and other residential suburbs. And, let’s assume the average house rental value increases at 5% per annum. Again, this is way lower than norms.

Case 2 – Let’s assume that you buy a ready-to-move 3-BHK home for a cost of 40 lakhs. You take a home loan for twenty years.

Here’s a look at the figures in both cases.

Case 1 – Rental Home
Expenses Calculation
Rent per month 20,000 INR
Rent appreciation PA 5%
Total Rent Amount paid after 20 years 80 Lacs
Asset Value after 20 years 0
Case 2 – Own Home
Expenses Calculation
Loan amount 40 lakhs
Tenure of the loan 20 years
Interest rate 9%
EMI during the tenure 36000 INR
Total amount paid after 20 years 86 Lacs
Asset Value after 20 Years at 10% appreciation Per Annum 2.69 Crores

As you can see, in this example, when you take a house on rent, you end up paying almost the same cost as owning a house . However, when you buy a home, you are building an asset that increases your wealth.

#2: Freedom

When you live in a rented property, you have to follow the rules and regulations set by the landlord.

Here are some of the common rules set up by landlords in India – no tacking nails to the walls, no drilling holes, no entertaining guests late at night, no house parties, no cooking/eating non-veg at home – the list of no’s, keep on going.

When you live in your own home, you are truly in control of your life’s choices.

#3:It Makes Better Sense

Reena and Rahul thought about what Raman shared and then did their own calculations. They realised that apart from the above three reasons, purchasing a home offers other myriad benefits like – tax savings, sense of emotional and social security, hassle-free living, no need to frequently shift their residence again and again, and more.

Reena concluded, “Clearly, this is why buying a home is considered as laying down one’s roots.”

Invest in a home today and provide your family with a secured life.”

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