By Ravi Garg
A home is the fundamental necessity for human beings. It provides shelter, safety and privacy which are essential for human survival and well being. But the cost of acquiring one is huge and people are always confused whether they should buy a house or just take it on rent. Before taking such a decision, one should weigh the pros and cons of both the options. Pro of one option is con for the other.
Pros for buying a house
- Investment- Buying a house can increase the net worth of an individual. As land is a scarce resource, its valuation is always increasing (except for few situations). Therefore, if you buy a home, your valuation will increase over a period of time with increasing value of your home. On the other hand, rent is an expense which caters to your need for shelter and does not add any value to your net worth.
- Removal of stress for future generation- As land is a limited resource, its price will increase tremendously by the time your children grow up. Therefore, it will become more difficult to buy a house for them at that point of time. Therefore, if you buy a house now, it will remove a challenge for the coming generation to buy a home. On the other hand, if you decide to rent a house, your offspring will have to struggle to arrange the amount of rent every month.
- Control- When you buy the house, you have full control over it and you can modify it as and when required according to your needs. When you rent a house, you may not be able to make the changes as per your needs without seeking permission of the owner.
Cons for buying a house
- Higher Upfront Cost- To buy a house, you need significant cash outflow upfront. One also may consider taking a housing loan to buy a property but it increases your future liabilities. On taking a property on rent, no upfront amount is required to be paid except Security, which is refundable.
- Repair & Maintenance- When you own the house, repair and maintenance is your responsibility. It is a costly affair to maintain the property considering inflation as well. In renting the house, you may maintain the property for your living needs but the major cost of repair and maintenance lies with the owner only.
- Flexibility- When you buy a house, you are tied with one particular location. You become unable to move to a new location or new job. On the other hand, it is easy to move your location when you take a home on rent.
Before making an investment on buying a new house, or before taking a home on rent, one should weigh both pros and cons as mentioned above and take a wise decision that fits your situation well.