The rent versus buy question remains to perplex many people among salary brackets. What should unchangingly be kept in mind is that you should not follow a one-size-fits-all approach.
With housing prices rationalizing, coupled with the reduction in home loan rates of interest, the discussion of rent versus buy has picked up momentum. Without a lot of steps taken by the government to streamline real estate, millennials are fighting the need to buy a home.
A lot of people will come and tell you that you can stay at lower rent then what is the need to buy? However, the scenario is that if you do not buy a house now, you may not buy it simply due to higher prices in a few years.
Buying a house is one of the biggest financial decisions one takes in a whole lifetime and the dilemma of ‘rent versus buy continues to perplex many people.
Millennials are realizing this as they are constantly working on their finances and weighing the option of owning a home that will help them build a property, which can grant them good returns moreover in case, they want to sell within a few years.
HOW LONG DO YOU PLAN TO STAY:
Before you spend any more time thinking regarding whether you should rent or buy your home, review your short-term plans. Are you willing to spend at least the next 5 years in the country? With everything that’s involved in the ownership of a property, you have to consider whether you’ll be here long to rationalize owning a suite or villa.
If you’re planning to stay only for a couple of years, or aren’t sure about your plans yet, renting a property might be better suited for you. It allows you more flexibility in terms of moving to a different country and is often a good option if you like to play it by the ear and need freedom. With a short 3-month notice, you can vacate the property and head off to your subsequent adventure.
The major factors that can help a person living in a rented house to take a proper visualization whether to protract living in a rented house or to buy her of his own house, lifestyle, remoteness from vital requirements for life, financial viability and affordability, worthiness to repay wall loan, location and price risk, etc. are all important factors that one must think off surpassing deciding to move from a rented house to buy one’s own house.
Holistic choice:
When it comes to deciding on where to live many factors come into the picture such as lifestyle, closeness to the place of work, schools, hospitals, etc. and personal preferences. Then the choice to rent or buy moreover depends on the investments required and the funds available at hand.
Down-payment factor:
A lot of people contemplate that they just have to make a 10-20 percent down payment and the rest will be given by the bank. However, experts say that until and unless you are capable of making a down payment of around 40 percent of the house cost, the risk is too high. With large disposable income, millennials have started working on arranging the maximum down-payment to cut down on EMIs, and they are keeping it at a level that is lower than the rents in good locations of the country.
Financial choice:
When you buy a house you have a responsibility towards it and it is not only the payment of EMI but moreover the maintenance charges. You have to manage expenses so that you meet the demands of owning a house, unlike the time when you live on rent. It is prudent that you make an estimate of how much you can manage to pay for and do not just limit yourself to an interpretation of EMIs but other expenses too.
The location:
The foremost thing to judge how a particular location is going to develop in the future surpassing making a decision. In metro cities where there is a space crunch most of the development is happening in the suburbs and thus this consideration is of utmost importance. Millennials moreover want to stave the pain of shifting time and then from the rented flat. The mind-set that is working is that once you own a house, you automatically get settled.
Price risk:
When it comes to ownership, it is indeed a big issue. This comes up in case prices are expected to fall in the near future. If you are deciding to live in the property then it might not hurt but in case of investment, this factor comes as a great shock. So if you have to keep a tab of the price trends and the likelihood of movement of prices when you decide to buy a property. However, when renting this risk is minimal as you can unchangingly move to a place that is increasingly financially suitable for you.
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