Owning a property makes more sense than staying on rent

Whether to buy a property or rent one is an age-old debate and it is unlikely to be settled in a hurry. One can do very sophisticated calculations to show that renting is a smart option. Some equally valid and complicated calculations will show that buying makes more sense. A lot of calculators are available that will assist you in taking this decision.

The more sophisticated among them will take into account the possible appreciation in the property if you buy it, maintenance costs, the potential increase in rent if you rent it out, etc.

Unfortunately, the decision is rarely so straight forward. Firstly, most calculators don’t tell you that this is rarely a one-time decision and it is only as good as the assumptions made. If the assumptions change, your decision should change, too. Unfortunately, while you may put in a lot of research and effort in doing the calculations the first time around, most people are unable to devote the same amount of time on a regular basis to check if their initial assumptions still hold true. More importantly, what most calculators also miss are the intangible benefits of owning your own house.

In a house of your own, you can make personalised changes. Then owning your own house (even with a loan on it) imparts a sense of security to the household. Whilst it is difficult to put a dollar value to such intangible benefits, these are clearly significant.

Take this quick test. Conduct a straw poll in your office or among your friends or your family circle. You are unlikely to find many people who regret having bought a home.

I am sure you will definitely find a few who will talk wistfully of the opportunities missed to buy their own home when it was still affordable and within their reach. In fact, I know of some extremely smart and publicly well-regarded professionals who passed on an opportunity to buy homes being sold by their own employer (after doing some very fancy calculations on paper since it was the pre-computer era). Their other less gifted colleagues did not have the ability to do such calculations and, hence, bought the houses and within just 5-7 years their decision was proven right.

The point I am making is that it is not advisable to do a lot of complicated calculations to decide whether to buy or rent your home. As long as you have made a reasonably long-term commitment (at least 5 years) to the city you reside in and have the necessary down payment amount and your income can afford the EMIs, you should go ahead and buy your home. But before I am accused of being an agent for thereal estate industry (disclosure: most largehome loan lenders advertise on Apnapaisa as also some large realtors, and both together constitute a significant portion of our income), let me quickly add some caveats.

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