Live in Own vs Rented House

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Devarsh is a software engineer working in Ahmedabad. He is soon going to get married with his colleague Riya. Till now, both were living in two separate hostels. Now, they need to move into a new house.

Should they purchase a new house or start a search for a rented accommodation?

To help Devarsh and Riya to take better decision, let’s understand the pros and cons of living in own house as well as rented house:

Advantages of Living in a Rented House

1. Heavy investment is not required.
2. Surplus money for other investments.
3. Relatively lesser responsibility of the house.
4. Flexibility in shifting to a new house and location.
5. No need to worry about annual property tax & other expenses.

Disadvantages of Living in a Rented House

1. Landlord gets rental income, hence no return on investment.
2. Forced to follow the rules of landlord.
3. Not eligible to get the benefits of loan against property.
4. Restrictions to do modifications as per own choice.
5. Uncertainty related to renewal of rental agreement.

Advantages of Living in Own House

1. Greater privacy.
2. Emotional security and satisfaction of having own home.
3. Benefit of appreciation in property prices over years.
4. Tax benefits on repayment, if you have taken a home loan.
5. Freedom to do all kinds of renovation / modification as per your choices.

Disadvantages of Living in Own House

1. Can’t move to a better location in short run.
2. Need to pay heavy property taxes every year.
3. Left with very little money for other investments.
4. Huge investment is required to acquire own house.
5. In case of a transferable job, then managing own house is a tough task.

Conclusion

Buying a house is once in a lifetime decision for most of us. Factors such as financial affordability, property valuations, interest rate scenario and job stability helps us to decide whether to live in rented or own house.

If you believe that you are going to stay at the same place for at least 10 years and have favourable cash flow, then you should consider to own house. If your stay is short-termed, then it is better to move into a rented accomodation. As for Devarsh & Riya, after understanding pros and cons of both options, they can decide what would be better for them based on the circumstances and possibility in near future.

We hope that this article has solved most of the queries related to living in own house vs rented house. For more information, you can get free consultation at CapitaWorld.


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