Every person dreams of having his own house where he can live comfortably. Buying a home or renting, both these options have become very important decisions for people these days. It is very important to make this decision not only on the basis of emotions but also on the basis of thinking. The debate of home loan vs rent has become more common than ever.
Buying a home is a long-term investment in which you invest your money and become the owner of your property. But buying a home often requires people to take a loan, which has its own burden, which has to be repaid through EMIs every month. Renting on the other hand is not restrictive in the sense that you do not have to shoulder as much responsibility and you can comfortably move as you plan.
However, it can cost you a lot in the way of rent, since it is not your money. Both variants are characterized by their advantages and disadvantages, and your decision should be made only after you realize your own financial position, salary and further intentions. When you decide something having full know-how of the situation, then it will help you. In this article, we are going to do an in-depth study of each of these two options to assist you in making the right choice depending on what best fits you.
What is Home Loan EMI?
Home loan EMI implies that you borrow funds to purchase your home using a bank. This money is advanced to you however you are supposed to repay this loan in time. This payment is carried out in monthly installments i.e. EMI. You will pay the bank a certain amount fixed per month which will comprise both of the amount you borrowed and the interest rate thrown on it. Paying EMI on time is of paramount importance, lapse in this leads to payment of fine or other penalty to the bank and this creates a big burden to yourself.
EMI is a long-term commitment. In the process, it takes you quite a long time to own your house. This system also grants you rights to your property and the value of the home improves with time and so it is also a good investment. This however requires proper planning and responsibility. Failure to come up with a payment plan after getting to know your financial status might cost you.
Some Important Aspects of Home Loan EMI:
- After taking a loan from a bank, you have to pay a fixed EMI every month.
- EMI includes both principal and interest.
- Gradually the mistress of the house will be found.
- Home values increase over time, which is beneficial for investment.
- Planning and accountability for repayment is very important.
- Late payments can damage your credit score.
- Financial stress increases if you cannot afford EMI.
- Maintenance and repairs are also your responsibility.
Thus, taking a home loan EMI is a well-thought-out decision that helps you get your home but requires you to keep your finances strong.
What is the rent?
Renting is easy, you pay the landlord a monthly amount and live in the house. This money is never yours. The rent goes up every year, but you don’t own your place. Renting means you don’t have to worry about debt or interest and you stay flexible. But in the long run it proves costly as your money is not invested. So renting is better for a short term plan.
Advantages of EMI
The biggest advantage of taking EMI is that you get your own home. A home is an asset that increases in value over time. Saves you money, which helps you in the future. Through EMI you have rights over your property, which is a means of protection for you. You have control over your space and can sell it if you want. Buying a home is a long-term investment that benefits you and your family.
Disadvantages of EMI
Interest is attached to the loan, which you must pay. This increases the total payout considerably. If you don’t pay on time, it feels right. Your monthly expenses are covered through EMI, making other expenses difficult. If income is unstable, paying EMIs can add stress. You will also be responsible for maintenance and repairs. If the loan is delinquent, the credit score deteriorates, which creates problems in the future.
Rental benefits
Renting is flexible, you can change location anytime if you want. Liability is less, the landlord bears the burden of maintenance. No need to take loans, which keeps you financially independent. For some people who plan to stay for a short period of time, renting is better. Paying rent is easy and doesn’t require a lot of planning. You can invest your savings wherever you want.
Losses of rent
The rent keeps increasing every year which becomes expensive in the long run. Money is never yours, it goes to others. There is no security in not owning your space. Sometimes landlord rules can be tricky. The problem is when there is a shift, there is no stability for the children. Rent money goes to waste because it is not an investment.
Which one is better?
You should decide according to your income and lifestyle. If your income is stable and you can save, Your home provides you with protection and investment. Rent is preferable in case you are flexible and you need short term plans. Needs and situations vary with everyone, and hence you should make a judgment on your financial status.
Conclusion
Investing in a house, whether you want to buy or rent it, is your choice. Each of them has some positive and some negative sides. Your decision is to be reached taking into consideration your income, life and perspectives. Through planning, you will be able to sustain the financial well-being of yourself, as well as that of your family. All decisions have to be made with caution in order not to regret. Identify how you can get your dream right.