Renting Vs Buying a House Dilemma

I recently read an article in Economic Times. It talked about virtues of buying versus renting a house. Here is a sample calculation done by the author. I fail to understand that why everyone talks about buying a house as biggest thing in your life. In India, parents or peer pressure causes each individual to think on the lines of getting their first house as soon as possible. You finish your education, get married, buy a house, have kids so on and so forth. Some things remain same. Times are changing and so should the needs and priorities.


If you are an individual who has been pressured into buying a house to "build an asset", dont panic. Think really thoroughly before jumping into the buying spree. Here are few questions you can ask yourself before you think of buying a house:


1) Will you be changing the city in few years owing to greater opportunity? If yes, postpone the buying idea.


2) Do you want to settle abroad in coming few years, or you think your spouse might get an opportunity to do that, postpone buying. Everyone now a days wants to settle outside India.


3) Do you or your spouse, wish to pursue higher education (usually MBA), then wait for the house. A higher education can cost a handsome money.


4) Can you really afford the EMI without sacrificing your other needs? There are lot of people (middle class) who want to see the world. You can't do that when you are old and your body doesn't help you. Life is short, enjoy it.


5) Are you thinking of starting your own company? Most of the people don't start companies since they never come out of rat-race. The vicious cycle of adding responsibilities, liabilities and then never able to coming out of it. Think seriously.


Tips:

• There is no major income tax advantage with buying Vs Renting for the salaried.

• Buying a house would imply less money in hand for other needs/enjoyment in life

• Rent will always be less than the EMI you shell for the entire life typically in a metro

• A house is usually an asset for you when you retire and have no income. Then it saves your monthly outgo for rent. But with your old age, there are chances that your children will no longer be in India or in the same city. So why purchase a big house which you cannot maintain.

There are so many better avenues to put your hard earned money and getting much better returns that you can think of putting your money for them for long term. Once you are settled in a city, then you can think of encashing that money for buying a house.


If you still think buying a house makes lot of sense, buy a house in a city where you want to retire and stay for rest of your life.