by Admin

Why Buying a Home on EMI is Better than Renting: A Comprehensive Analysis

In today’s date, one of the most effective and biggest financial decisions taken by most people is of buying or renting a home. With the rate of property escalating day by day and the ongoing challenges of affording a house, renting has become the most common and easier alternative to making as well as saving money. However, buying homes with Equated Monthly Installments (EMI) has been offering long-term benefits that renting cannot match. In this blog, we will be exploring why buying a home on EMI is a smart choice than continuing to live in a renter house on today’s date. 

1. Building Equity Over Time

First and foremost, the primary advantage of purchasing a home is the opportunity to build equity. When a property is purchased by one, each EMI paid gradually increases the ownership of the house purchased. Over the passing year, the property value increases/ appreciates and the purchaser can continue to pay your home loans, he/she can accumulate more equity which can be a valuable asset for your future. 

Whereas, renting only provides you a place to live for a certain period til you are paying the owner your rent to the landlord without any contribution to your financial future. In other words, every single penny payment made on an EMI brings the individual closer to fully owning the property which is a form of saving, like you are living in essence and investing in your future while living in your property. 

2. Long-Term Financial Stability

Renting from afar may look like an easier option for living in the short term because it usually requires less upfront financial commitment. However, over time, the money that one has spent on renting a house can far exceed the cost of buying a home property. Renting tends to increase over time due to inflation, while EMIs remain relatively constant, except for the hike of interest rate but that too not so often. 

When an individual is buying a home on EMIs, he/she can fix a monthly payment, if opted for a fixed-rate mortgage; which relatively means that your house cost remains predictable. As property prices keep appreciating with passing years, the home purchased becomes more and more valuable, providing you with a sense of financial stability than renting could offer. One may also avoid the uncertainty of a potential rent hike, which can strain the financial condition and disrupt the long-term planning one has done 

3. Tax Benefits

In many parts of the world, people who buy homes are eligible for tax deductions for both the principal and interest paid on a home loan. These deductions can particularly provide substantial savings and make the home more affordable to own. If we take India, for example, Section 80C of the Income Tax Act allows a deduction of up to ₹1.5 lakh on principal repayment, while under Section 24(b), home loan interest payments are eligible for deduction of up to ₹2 lakh annually.

Renters, on the other hand, do not receive any benefits as when the rent paid can at times be deducted if one receives a House Rent Allowance (HRA) as part of the salary, such benefits are generally not as significant as the tax saving provided to homeowners. Thus, buying a home on EMI offers tangible financial incentives that miss out on. 

4. Appreciation in Property Value

If we talk about the appreciation of the property, property appreciation is the most significant advantage of owning a home. Over time real estate values gradually increase with the passing years, especially at the most desired location. When one plans to buy a property, one eventually stands the benefit from this appreciation, which can significantly increase your net worth. For example, in cities with a growing population growth of infrastructure is in high demand, and property values may increase two times or even three times off its original price that is today after a decade.  However, homeowners can take advantage of this opportunity by either selling the property for a profit or leveraging the equity to finance other investments, 

Renters, on the other hand, are unable to benefit from any increase in property value. For instance, while they are free from the risk associated with market fluctuations, they also miss out on the opportunity to grow their wealth through real estate. 

5. Freedom and Control

Freedom is when you own a house to mortify your living space according to your preferences. From renovating to remodeling the whole house, changing the paint of the house, adding new furniture, or shattering the walls down, homeowners can decide what they want to do with their homes with the liberty to recreate their ideal living space. Renting, on the other hand, has often come with restrictions on customization. Landlords do not allow such changes to their property, leaving renters with limited flexibility to personalize their homes. 

Additionally, homeowners do not need to worry about lease renewals or the possibility of being asked to vacate the property, as can happen with rental agreements. This stability allows you to settle into your home and create lasting memories without the fear of having to move every few years.

 

6. Legacy for Future Generations

Buying a home is not just about financial security for the present; it is also about creating a legacy for future generations. Once you’ve paid off the home loan, you own the property outright, and it becomes an asset that can be passed down to your children or heirs. This gives them a solid foundation for their own financial future, offering stability and security that renting can never provide.

Renting, on the other hand, provides no such benefit. At the end of your rental tenure, there is no tangible asset to hand down to your family. The money you’ve spent on rent goes to the landlord, and you are left with no ownership stake or inheritance.

7. Emotional Satisfaction

While financial considerations are crucial, emotional satisfaction also plays a role in the decision to buy versus rent. Owning a home brings a sense of pride and accomplishment. It gives you the feeling of permanence and security, knowing you have a place to call your own. Renting, in contrast, can sometimes feel temporary or uncertain, as you're always subject to the landlord's rules and potential rent hikes.

For many, buying a home is a life goal. It provides a sense of belonging and can offer peace of mind, knowing that you have a stable and secure place to live for years to come.

Conclusion

While renting may seem like a less burdensome option in the short run, buying a home on EMI is a far more advantageous decision in the long term. From building equity and enjoying tax benefits to having control over your living space and creating a legacy for future generations, homeownership provides financial and emotional rewards that renting cannot offer. If you’re in a position to afford an EMI, purchasing a home can prove to be one of the smartest investments you’ll ever make.