Should You Buy or Rent a House Now? Key Factors to Consider

Posted on Monday, February 17th, 2025 | By IndusInd Bank

Summary – While market dynamics heavily influence the choice between renting and buying a house, several other factors come into play. These include your financial situation, market trends, long-term plans, and associated costs. For those considering buying a home, IndusInd Bank offers home loans with attractive interest rates, quick processing, and flexible repayment options to facilitate homeownership.

For many, the dream of homeownership represents a significant milestone in life. However, high property prices often stand in the way of this dream. Naturally, a portion of consumers decide to rent a house instead of owning one, a decision that can often prove to be costlier in the long run.

With property prices and rental costs in flux, aspiring homeowners are faced with a critical decision: should they buy a house or continue renting? While market dynamics heavily influence this decision, your financial situation and long-term plans are equally important. This article discusses key factors to consider when deciding between renting or buying a house.

Key Factors to Consider When Deciding to Buy or Rent

1. Financial Health

First, assess your financial situation. Buying a house requires a considerable down payment, closing costs, and ongoing maintenance expenses. Renting, however, involves a security deposit and monthly rent, expenses that may be more manageable if you have limited savings. Therefore, evaluate your budget and financial readiness before making a decision.

2. Market Trends

The real estate market is highly fluctuating, so consider the prevailing rental or property costs when deciding. For instance, a recent report indicates that the average rent for a two-bedroom house has increased by nearly 65% over the past five years. On the other hand, property prices fluctuate based on several macroeconomic factors. It’s also important to remember that rental and property prices differ from region to region.

3. Long-Term Plans

If you plan to stay in a city for an extended period, buying a home can be beneficial as it allows you to build equity and potentially benefit from property value appreciation. However, if your career or personal life necessitates frequent relocation, renting provides the flexibility to move without the hassle of selling a property.

4. Rental Costs and EMIs

Rentals typically rise by 5-10% annually but, recently, there has been a clear upward trend. Landlords may also increase rent at their discretion, making it difficult to ascertain the rental amount two or three years down the line. In contrast, if you buy a home using a home loan, you pay a fixed EMI each month, allowing for better financial planning.

Even when considering an EMI, only opt for it if you have surplus funds for other goals. If EMIs leave you with no surplus for essential goals like children’s education or retirement, renting may be the more prudent choice.

5. Taxation

In some cases, employers provide House Rent Allowance (HRA) to cover part of their employees’ rental expenses. This allowance is taxable, but you can claim an exemption under Section 10(13A) of the Income Tax Act. The exemption is the least of:

– HRA received.

– Actual rent paid minus 10% of your salary.

– 50% of basic salary for metro cities or 40% for non-metro cities.

For home loans, however, there are multiple tax advantages. You can claim a deduction of up to INR 1.5 lakh on principal repayments under Section 80C. Additionally, Section 24(b) allows a deduction of up to INR 2 lakh per annum on the interest portion of your home loan EMIs. As a first-time home buyer, you can also receive an extra deduction of up to INR 50,000 under Section 80EE after using up the limit for interest under Section 24(b).

Embrace Your Dream Home with IndusInd Bank’s Home Loan

Deciding between buying and renting a house depends on your financial situation, market conditions, long-term goals, tax benefits, and associated costs. If a home loan is the better option for you, IndusInd Bank is a great choice.

With an  IndusInd Bank Home Loan, you can enjoy:

1. Competitive home loan interest rates

2. Quick Turnaround Time

3. Longer repayment tenure up to 30 years

4. A Gamut of Home Loan Products

Additionally, the bank offers quick processing to help you achieve your dream of homeownership. Visit the website to apply for a home loan online.

Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.