Should You Take A Home Loan Or Live On Rent?
One could feel accomplished, secure, and at ease in their home. However, purchasing a home requires a sizable down payment and a sustained financial commitment. Therefore, knowing what makes the most sense for you when deciding whether to buy or rent a home is critical.
Pros and Cons of Buying a Home Vs Renting a Home
Despite being a significant life decision, purchasing a home has several advantages.
- One asset that increases in value over time is a house. It raises your net worth and offers you a sense of stability.
- You won't have to live constantly fearing being evicted from a rented property.
- Section 24B of the Income Tax Act provides tax benefits if you purchase your home with a home loan.
- If you consider renting out your house, it also boosts your passive income. Furthermore, unlike rented property, you can remodel your house whenever necessary.
- Contrast this with renting a home, which might seem ideal at first.
You will eventually understand that a lump sum amount is being deducted from your monthly budget without producing any new assets. Additionally, you will be responsible for paying the annual rent increase that drains your bank account. It doesn't assist in making any value for you.
Tenancy agreements typically last for 11 months. Should the landlord decide not to extend your lease, you may have to move, which could be arduous.
On the other hand, renting might make it easier for you to live close to your place of employment and give you the freedom to relocate as needed for work.
Things to Know Before Buying a House
You should have a checklist before spending your hard-earned money on the property purchase to make the final decision.
Earmark a Budget
A property should always be purchased within your means. Avoid overspending as it could lead to financial strain. When you reserve the property, you should also carefully review any additional or hidden fees the developer may request.
Location of the Property
Every member of the family should find the property's location convenient. Perform a SWOT analysis on the site before making a decision. Remember that public transportation should be accessible, and the neighbourhood should be connected to significant city areas.
Clear Title Deed
Select an attorney who will thoroughly investigate the property.
There will be no issues in the future if the property titles are trouble-free. Request that your attorney carefully review the builder-buyer agreement.
Fundamental Infrastructure
This is a crucial step to take before purchasing a home. It would help if you ascertained whether water is available continuously or not. Whether there are extended power outages in the area during the summer. These days, poor air quality is a severe problem. Discuss the quality of the air with the locals.
Security
Your family should feel safe and secure in the neighbourhood where you are purchasing a home. When it comes to safety, you must exercise extreme caution.
Social Infrastructure
Examine the neighbourhood before purchasing the property to see any hospitals, colleges, or schools in the area. To fulfil your daily needs, also check out the nearby shopping centres. Take note of the distance between the property and the closest playgrounds, parks, and police and fire stations.
Construction Quality
Before investing your hard-earned money in the property, you must consider this important matter. Consult a licensed structural engineer for assistance in evaluating the quality of the construction. Never judge a building by its appearance.
Keep in Mind the Resale Value
You may decide to sell your apartment and move somewhere else. Purchase easily resaleable properties with that in mind. If you purchase an apartment in a desirable neighborhood from a reputable builder, you won't have too much trouble selling it for a reasonable price.
Registered under RERA
Make sure the new property you are buying is RERA registered, as this will shield you from structural flaws for the following five years.
Mistakes to Avoid When Buying a House
Compared to seasoned homebuyers, first-time buyers typically make more mistakes. To ensure that there are no errors, the following checklist needs to be followed:
Check the Exact Price of the Property
If you choose to take out a home loan, the final rate of the property might increase because you will be paying for things like processing fees, documentation fees, legal fees, valuation fees, and other things. You must also pay the registration fees and stamp duty when you buy the property. Additionally, some realtors request annual maintenance in advance. Add up all the pennies to determine the total cost of the property. This will assist you in avoiding future financial difficulties.
Do not book property before checking loan eligibility.
Before you reserve your dream home, you must be extremely careful to confirm your loan eligibility. For example, you book a home and then apply for a mortgage from the lender. Once the lender has evaluated your income and ability to repay the loan, they may decide not to grant you the total amount. As a result, it is wise to always verify your loan eligibility after making your property reservation to avoid getting into debt.
Avoid overexpose
Depending on your financial situation, lenders may offer you a loan more significant than what you had anticipated. To ensure that you always have a safety net in an emergency, you should always abide by the fundamental guideline of buying a home that is less than your repayment capacity. Avoid overexposing yourself.
Shed the flab
These days, real estate agents sell homes with extra features like clubs, a gym, an auditorium, and a jogging track—things you might not use frequently. However, all of these amenities come at a higher cost when you buy a house, and you will also have to pay more for ongoing maintenance. Consider the amenities you'll need, then reserve the accommodation appropriately.
Keep your options open.
You might act quickly out of fear of missing out on a fantastic house deal. Before deciding on the property of your choice, you must visit a sizable number of projects in the neighbourhood of your choice. You can be confident that an option will always be available to you that meets your needs and fits your budget.
Ready units don’t always work.
Prospective homeowners often purchase pre-furnished apartments to avoid paying rent and interest on a loan simultaneously. A property still under construction frequently presents better value regarding amenities, location, and cost.
The window period is the only negative. Investigate projects that you anticipate finishing in a year or slightly longer. This might enable you to purchase a better home for less money.
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