Buying or renting a home, is the biggest financial decision in life. But before making any final decision about renting or buying a home, take a moment and consider the advantages and disadvantages of both, which are:
Advantages Of Renting
- Relocating Is Easy
In renting, relocation is easy. Renting offers more leasing flexibility as most of the leases are for 12 months. After completing the lease term, renters can move to another place easily. So, renting is great choice for those where moving frequently is need of a job.
- No Responsibility Of Maintenance
Renters are free from the worries of ownership responsibilities such as maintenance and repair work on the property. Whenever an appliance stops working or a pipe bursts, all they have to do, just give a call to the landlord.
- Some Utilities May Also Include
Renting a home is cheaper than owning a home because sometimes the rent may also cover the cost of some other utilities like bills or cable television.
Disadvantages Of Renting
- No Equity Building
The one of the biggest disadvantages of renting a home is that every single rupee a renter pay is gone forever. So, no matter how long a renter stay in the rental unit, there is zero return on his investment for rent payments.
- No Tax Incentives
There is no tax break in renting, so a renter can’t claim any housing-related tax credits and deduction which a homeowner can enjoy.
- Limited Security
In renting, renters are bound by the owner’s rule, so, they may have limited or no ability to personalize their living quarters according to their living style. Moreover, there are no such hard and fast rules for eviction. A homeowner may evict a tenant just by giving a short notice.
- No Fixed Housing Costs
There is no fixed housing cost in renting. So, most likely the rent will increase year to year.
Advantages Of Buying A Home
- Good Investment With Greater Privacy
Buying a home is considered as the fulfillment of a dream as it is a lifetime investment. Home ownership offers greater privacy, stability, creative freedom and hedge against inflation.
- Sweat Equity
Homeowners enjoy the opportunity of building equity over time. So, one of the major benefits of home ownership is that every single rupee a homeowner pays for the home will likely to boost the value of his property.
- Tax Benefits
Unlike renters, a homeowner can enjoy several tax benefits. Property tax and interest of mortgage payment is tax deduction.
Disadvantages Of Buying A Home
- Responsibility For Maintenance
Home ownership comes with the responsibility of maintenance and repair work that cost heavily.
- Potential For Financial Loss
Although home ownership builds equity, but in case if the value of home decreases or may not increase, then there are more chances of financial loss when the homeowner sells.
- High Upfront Costs & Mortgage Payment
Buying a house can cost heavily on your fiancés as it includes down payment, closing costs, moving expenses and mortgage payments (which are usually fixed, but higher than the rent payments).
Buying a home is a long term financial commitment. The homeowner has less flexibility because if he wants to move to another place, it will be difficult to suddenly pick up and leave.