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.
While buying a home has many advantages, buying or continuing to live on rent is totally dependent upon your circumstances. If you think you have settled in your life and earning enough to easily afford the EMIs to a lender, it is certainly prudent to try and buy a home for your family. On the other hand, living in a rented place is advisable if you are young and still hoping for a better job and career. You can always think of buying when you have found a good-paying job and started on your family.