Why Buying a Flat is Better Than Renting OneWritten by paarthinfra on Thursday, 21 July 2016 12:00 am
Hefty upfront costs are associated with purchasing a home. This is the reason that most young people begin their independent lives renting an apartment. As they hone their skills, make a career, save money, and start families, many choose to buy a home. There are pros and cons to renting a property, just as there to owning a home. Although renting allows you more expendable money in the short term, owning a house gives one the sense of security as it is considered a long-term investment. Read on to find out why buying a house or flat is better than renting it.
Cost of Ownership
Many people think that the cost of ownership for buying a home is more. However, it is easier to buy a home and reap benefits from it. There are instances in which the cost of ownership can be less than renting. The buyer has control of the property and realizes that the acquisition of the home is a capital gain.
The buyer experiences tax advantages. Property taxes and interest can be itemized for tax deductions. Thus, one can save some amount of money and make an asset side by side.
When you buy a house it becomes your legal property, which allows you greater freedom in its use without restrictions often enforced by a Landlord. The buyer experiences personal freedom by being able to redecorate, remodel, or make improvements as they see fit. Fewer restrictions are there when one buys a flat rather than renting it. The only rules that the homebuyer must abide by, are restrictions as far as pets, children, and noise.
Long term benefits
Owning a home offers the long-term benefits of security, equity and potential growth in personal wealth.
Better Credit Rating
When mortgage payments are made on time, the homeowner can achieve a better credit rating. Not only will you have a large investment to your name, but paying your monthly bond repayments on time increases your credit score.
One has the option of buying to rent which enables a Homeowner to generate income from renting out the property. This income can be put towards the home loan or can be a side income and can even be a relief in the old age. Also, the value of a home will appreciate over time and if you decide to sell, you can earn a profit off the sale.
The deciding factors
Two factors should be consider while deciding to whether buy or rent a house.
- How much the homeowner expects the home to appreciate
- How long the homeowner plans to stay.
A homebuyer usually needs to stay in the home for at least three years to make up the costs. Staying for five years is a more preferable timeframe. However, the homeowner may need to stay longer to be ahead compared to renting, which depends on the part of the country one resides. Affordability must be taken into consideration when deciding to buy or rent, despite the plans of a person to stay in a home for a long time. Many financial experts suggest that buyers keep their monthly residential payments at 33% or below their gross monthly income.
Disadvantages of renting a home
- A Tenant is bound by the rules of the lease agreement, thus there is no freedom for renovation, etc.
- When renting, you will often have to deal with a Rental Agent who will then be the liaison between you and the Homeowner. This can result in issues taking longer to resolve since there is a 3rd party involved.
- Renting offers no wealth creation or return on investment since the property will never legally belong to the Tenant, and instead, the Tenant is paying towards the Homeowner’s home loan.
- When renting a property, you will have no control over annual rental fluctuations which are directly affected by inflation.
Now, if you are convinced, then do consider the flats for sale in Lucknow. Lucknow is bound to be a great real estate investment area and early investments can lead to better returns.
Summary Buying a house has always been a better option than renting one. One has freedom for making changes and an asset is developed for financial stability.