There are obvious benefits of owning a home such as pride of ownership, status symbol, creation of asset and wealth, privacy, and feeling of freedom to customize according to your own liking. However, buying a home is a massive financial decision involving lots of money and a long commitment to a lender. Therefore, large numbers of individuals and families continue to live on rent. Here are the pros and cons of both owning a home and renting.
Pros of Renting
- You pay a small amount of money upfront and enjoy living in a home.
- You have no responsibilities towards upkeep and maintenance of the rented home.
- You can easily move out and rent another home. Relocation is easy when you get a better job in another city.
Cons of Renting
- The landlord can increase the rent every year.
- Moving from one place to another can be difficult and costly.
- You have less privacy and little freedom of personalizing the space.
Pros of Buying a Home
- Pride of ownership
- Lots of privacy
- Freedom to update and renovate according to requirements.
- No one can kick you out of your home.
- You’ll enjoy the equity even if you cannot pay the mortgage under financial stress.
- Ownership is a form of forced saving that allows you to create wealth.
- You enjoy tax deductions when filing income tax returns.
- Your home grows in value over a period.
- You become rent-free after you have paid the mortgage.
Cons of Buying
- Relocation becomes very difficult. You cannot move to a new place because of your commitment to the lender.
- You need a large amount of money to pay for the down payment.