From Equity to Responsibilities: Navigating the Advantages and Disadvantages of Homeownership

To rent or buy a house - over the past few months, this debate has finfluencers (financial influencers) of social media divided right down the middle. Many have created metrics and spreadsheets to help users compare different scenarios and determine the best option. However, it is essential to understand that there is no one-size-fits-all solution.

In India, buying a house has been a traditional sign of success and financial achievement. Like gold, real estate has been considered a legacy asset that can be passed down generations. But is investing in flats and apartments in major cities like Mumbai a wise financial decision? Let’s consider the advantages and disadvantages of owning a house before you make this all-important decision.

Why should I consider buying a house?

• Real estate can be an outstanding financial investment, especially during times when equity and financial markets are highly volatile and commodities are also unpredictable. Investing in real estate has proved to offer excellent growth in asset value to investors. If you purchase a house and lease it out, it can generate a return on investment (ROI) in the form of rental income.
• Buying a house is a good idea is a great idea when you plan to put down roots. Living in a community can help you build strong bonds. However, it is important to consider long-term needs and requirements when you buy a house. Investing in a family-friendly neighbourhood with a robust social infrastructure can help your children and family live comfortably for several years.
• When you start to enlist the advantages and disadvantages of owning a house, taking stock of the future is a good idea. Moving houses regularly, explosive increases in rental expenditure, and the hassle of dealing with landlords add to the stain of living in a rental property. Add to this the lack of choice when it comes to remodelling or customising your living space, and there is a solid case to be made in favour of buying a house.
• Buying a house is creating a financial asset. While the EMI outflow is a monthly commitment that may last years, spending nearly the same amount on rent is an expenditure without any returns. Additionally, the tax benefits that you stand to gain are also worth considering. You can claim a tax deduction of up to INR 1.5 lakh per year on the repayment of the principal amount under section 80C and up to INR 2 lakh per year on the repayment of the interest of your home loan.
• Owning your own house is a significant financial decision but also an emotional one. Transforming a new house or apartment into your dream home with your family is one of the most beautiful experiences. You can buy and model your home to reflect your personality and make space for your hobbies and passion projects.

When is it not worth investing in a house?

• Buying a house or a residential apartment is a financial commitment that requires you to make a major investment. Even if you are eligible for a housing loan or financing, you will be required to put in at least 20 per cent of the property value as a downpayment. If you are a young professional at the start of your career or have major financial commitments that do not allow you to save up as much as you may want, this can be a challenge.
• It is only practical to own a property if you are committed to living in a particular city or town. This means that if you are in the early years of your career and are open to moving to a different city or even a different country for better job opportunities, you may want to hold off on buying a house. Similarly, if you are in a transferable job and move every couple of years, you may decide to buy a house at a later time.
• Buying a house involves several recurring costs, such as property taxes and maintenance and repair costs. Living in a rental property frees you from most of these. The landlord or the property owner is liable to pay all the taxes and also undertake repair work when needed.

In conclusion

The decision to buy a house or live in a rented apartment must be made after carefully considering the advantages and disadvantages of owning a house. However, as we have seen, the decision is a very personal one and should be made after careful evaluation of the financial and emotional aspects and one’s life goals.