Buying or renting a home: Key factors to consider before deciding

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For many Indian households, whether to rent or purchase a home is one of the most significant money choices they will ever make. Since property prices are increasing in most cities and rental yields are staying moderate, the best choice depends on your financial independence, lifestyle needs, and future wealth goals.

The closest comparison is to the EMI on your home loan and the rent you pay for an equivalent property. In large Indian cities, EMIs tend to be 30-50% higher than rent on similar homes. Even if renting keeps your monthly expenses down, you end up creating an asset through purchase over a period. The decision is based on your cash flow and whether you are willing to invest funds for years together.

Home ownership is a type of forced saving. If you repay the loan, your equity in the property is enhanced. Over 10-20 years, rising house prices may also make you wealthy. Renting leaves money available to be invested in equities or mutual funds, which historically have yielded more than property.

Renting gives you flexibility to relocate—you can move closer to the workplace, move cities, or upgrade your standard without being bound to a single property. Purchasing, though giving security and personal assurance of your own abode, binds you to a single location unless selling or renting out the house.

Homebuyers provide for maintenance, repairs, property taxes, and society charges. Rental tenants provide mainly the monthly rental and utility charges. After decades, all these concealed costs can come to a huge figure and need to be factored in the decision to buy.

Buying a house on a loan allows you to claim tax deductions under Section 24(b) and Section 80C of the Income Tax Act. However, with the recent modifications in income tax regimes, all taxpayers do not gain equally. Tenants, though, can benefit from House Rent Allowance (HRA) exemptions according to their pay structure.

In cities, buying is typically cheaper in the short run because EMIs on expensive properties are much greater than monthly rent. But in 15–20 years, it may be cheaper to buy if property value appreciates.

Yes. For those with transferable jobs, irregular income, or more profitable investments, renting is better. Money saved on EMIs can be invested in stocks or mutual funds, which provide greater long-term returns.

Needs of lifestyle are significant. If stability, ownership pride, and control over your surroundings are your priorities, buying is preferable. If mobility, flexibility, and low upfront cost are crucial, then renting is the best option.