One of the major decisions every new family has to make is whether to buy or rent a house. While renting a house might seem like a simpler thing to do, buying a house has major benefits in the long run. Let us take a look at both the scenarios based in the city of Hyderabad.
In Hyderabad, if you are looking to rent a 2 BHK (Bedroom, Hall & Kitchen) house in the west part of the city close to the IT hub, it might cost you around Rs. 25,000 per month based on the location and amenities of the community. And to buy a similar apartment in the same part of the city is going to cost somewhere upwards of Rs.60,00,000. With the low interest rates and easy availability of loans, you might have to put down a down payment of Rs.12,00,000 and a monthly EMI of Rs.36,497 for a tenure of 20 years. This might look like you are paying more for living in the same apartment but that is only because you are not looking at the bigger picture.
Financial Benefits:
According to the RBI housing price index, Indian housing market has seen an increase of around 12% year over year. This means, the house prices double every 10 years and in the case of Hyderabad market, it is going to be much quicker as we are making up for the slow growth in the last 10 years compared to other metropolitan cities. This results in high appreciation of your property value and you will enjoy the fruits of your investment while living in it. Apart from this, you will also save money on your income tax when you go for a housing loan. This is not possible when you rent the same house, the monthly rent you pay will count towards your landlord’s returns and you will not get any returns on this amount. You can read more about the benefits of buying a house in our article.
| Buying a House | Renting a House |
|---|---|
| Down payment and monthly EMI payment | Security deposit and monthly rent |
| Monthly EMI payment is fixed | Monthly rent might increase |
| Around 12% Return on Investment year over year | No return on rent paid |
| No lease agreement | Renew lease agreement every year |
| Customization of house | No customization allowed |
| Investment beats inflation due to property appreciation | Security deposit depreciates due to inflation |
| Long term investment | Flexibility in moving locations |
| Ownership satisfaction & freedom | No ownership of property |
Emotional Benefits:
Buying a house is not just a good financial investment, it is an emotional investment as well! Renting a house has several restrictions and conditions that you may have to adhere to, whereas, buying a house gives you the freedom to live in your home on your own terms and customize the house based on your needs. Rental agreements have to be renewed every year with an increase in rent up to an average of 5% and you have to move houses based on the landlord’s demands. The hassle and loss of time is something you don’t have to worry about when you own a house.
Renting a house might be a good choice for you if you are not ready to settle down and need flexibility in changing locations. Once you decide to settle down in a city, the best option would be to buy a house from a reputed builder in a good location. This will lead to good return on your investment.
RV Nirmaan has been in the construction industry for over 30 years with more than 40 completed ventures under its wing. Our projects include Apartments and Villas in prime locations of Hyderabad like Miyapur, Kismatpur, Kompally and Kondapur. Click here to learn more about our current ventures.
