Buy or Rent Home - Personal Finance

When it comes to one of the most common yet the most debated financial decision of an average Indian earning member of family, that is, "Buy or Rent home", it is quite evident that most of them would opt for buying home instead of living on rent.

But, in this article, I would like to present my views on how the decision to buy or rent  home is influenced by many factors and my views on it.

First and foremost, the decision to buy or rent home in India comes more from family or peer pressure instead of a self choice.

Although this may seem to be a very odd reason, yet this is one of the most obvious reason why most of Indian household earning member decides to buy home.

Now, if one goes deep down to the reasons for this parental or peer pressure towards the decision of buying home, one will come to know that the decision for buying home is a culmination of various factors listed below:

1. Constant Harrasment from Landlord for increase of rent or demanding landlord.
2. Security purpose ( Everyone want their own home as a security for next generation i.e thier children).
3. Peace of mind and freedom to do interiors home as per your wish.
4. Sense of belonging and confidence in life of owning a property

Above mentioned are the main factors as to why an individual eventually decides to buy home instead of living in a rented home. There are additional factors like Tax deduction for interest and principal repayment of home loan which also is a potential influence on the decision to buy home, however these factors are always secondary.

Having said this, there is also a second thought process which many of people nowadays have in their mind, that is, why to spend so much on buying house when you can easily live on a rented house at almost one fourth of the cost. 

There are two sets of people who generally have this thought process:

Firstly, one set of people are mainly those people who have shifted to metro or non metro cities from their native place due to job demands and for them paying rent is more viable option since their major deciding factor is always staying close to the job location so as to save time on travelling.

This thought then stays with them for a longer time, even after knowing that they have the option to own a house in their own native place but eventually then they decide to live on a rented house throughout their life considering it to be a cheaper option since it is close to their job location.

Then, there are second lot of people who always believe that they will never buy home and always live on rent or in their existing family home since for them, the thought of buying home is itself a painful procedure  which involves looking after so many residential projects, doing due diligence , deciding on a good builder and then committing to a decision which is irreversible which may or may not be a good investment decision.

"Decision which is irreversible "

This is the main factor which keeps most of the people away from the decision to buy home.

Here are my thoughts on the topic:

Firstly, the decision to buy or rent should be decided by an individual based on the city in which they think they will be ready to live for a long period of their life. Once the city is decided, then the person should evaluate the tangible and intangible benefits of owning v/s renting a home in the city.

Owning home has tangible benefits like security, income tax deduction (if loan is taken), chances of redevelopment, proximity to schools and colleges and intangible benefits like peace of mind, confident life of having secured the life of the next generation by atleast giving them a house.

Renting home has benefits like substantial savings, not committed to a decision, flexibility to move to different locations and proximity to schools and colleges.

Considering the fact that the main deciding factor here is the blocking of your hard earned funds if owning a home is a decision, then renting a home becomes a viable option. However, one must think actually whether he/she can stay without owning his/her own house for long term in his life without following the herd mentality or depriving of the feeling of pride of owning a home.

So, in my opinion, Buying home is an emotional decision. It is one of the basic fundamental requirements of one's life which anyone will feel, sooner or later point of time in their life. So, one should always think of buying home as a long term option and it should be thoroughly a well thought decision since the decision is irreversible.

And this is the exact reason why lots of builders flourish with their business of building residential projects because they always market their product as if they are selling you a dream product.