Owning a home is a dream goal for many. Most people intend to buy and own a home for a long time, and the investment is substantial. So, the first question to ask oneself is to understand why they are buying a home. This financially strategic decision has to be taken after understanding different factors. Getting a permanent dwelling for yourself is one of the prime reasons for getting a home. This decision can be affected by lots of advantages and disadvantages. Here in this blog, we are going to discuss further the different pros and cons affected by your decision to own a home.
Advantages of owning a home
Owning a home offers several advantages over renting one. For most of us, a house is more than four walls and a roof. It induces a range of feelings in us. When you own a home, you get a sense of safety, comfort, accomplishment, and emotional security for everyone. Now, take a look at the key advantages of owning a home.
Helps control your monthly rent payment
The basic expense that a family has to take care of every month will be primarily the rent payment for the space they are staying in. This money could be better spent managing the loan payments for a house. It will also help you avoid the monthly reminders of rent payments from your landlords. The principal payment does not change, and you can bring down the interest rates by opting for options like refinancing. You also have the option of reducing the number of years of interest payments by making cumulative payments at definite intervals, or you can pay higher amounts towards your loan payment if you are comfortable with such payments.
A long-term investment
Owning a home is a good long-term investment. The chances of homes losing their value are very rare. The equity that you invest in is the home that you own. The chances of the home’s value increasing eventually reflect the increase in your equity. You may be able to redraw or refinance your loan if you’ve made additional payments to it. The money can then be used for remodelling, purchasing a new vehicle, or even as a down payment for a different property.
You can use your home equity as cash by:
- Spend money on home improvements that increase its value.
- combining debt from credit cards with a high-interest rate
- Invest in new ventures or pay for college expenses
- Invest in a rental vacation home.
When you provide yourself and your family with a home, the amount of emotional security that you provide them is pretty high. Having a space to call your own after a hard day at work is something that a rented home can’t achieve. The security and comfort of your own home are definitely better than those of a rented or leased space. You need not worry about moving or the various excuses landlords can make for not performing basic maintenance.
Create your dream
When you own your own space, you have the liberty to make changes and construct it the way you want. This may not necessarily be possible when it comes to a rented home. You have complete creative freedom and control over the appearance of your space. If you intend to sell your home, you can get a good price simply by keeping the property in good condition. The scalability and flexibility of the home you build are definitely better than the space you are renting out.
When you have your own home, there are seldom any chances of being afraid of an untimely termination of a contract or other reasons that will prompt you to leave your home unplanned. The hassles of renewing the rental agreement can also be avoided.
Rent is considered a more regular expense, and families choose homes that are far from their location in order to minimize their expenses as much as possible. But when you make a financial investment in a home, you consider all the factors that will make it a wise decision.
A Permanent Investment
People usually think of buying their own home once they feel comfortable in a place. Buying at an earlier stage will allow you to secure a good investment option. This will also have the benefit of increasing your appreciation.
Building of Credit
You get a better credit score once you have invested in a home. Higher credit scores are an easy way to build the trust of banks and other such financial institutions. So, when interest rates drop, homeowners get a sufficient reduction in their payments. This scenario never occurs if you live in a rented home where the rent is constantly increasing year after year.
You get a good tax break when you take out a mortgage. Under Sections 80C and 24, you can claim a tax deduction for up to Rs. 1.5 lakhs on your principal amount and up to Rs. 2 lakhs on the interest payment.
Building your own asset
Taking a home on EMI is also a gradual way of earning an asset in your own name. The sense of accomplishment one can receive through buying a home is commendable, both by one’s own standards and by societal ones.
A rented house has a lot of landlord interference. Furthermore, the termination and revision of the lease agreement is a headache. When you own a home, you will be free from all these kinds of tensions and get maximum privacy.
Option to Customize
A rented home will not give you the flexibility to customize the property according to your taste and preferences. One of the main advantages of owning a home is the option to remodel your space as per your desires and needs.
Disadvantages of buying own home
Considering the downsides is as crucial when deciding to buy a home. So, after reading about the advantages of owning a home, it would be good to learn some disadvantages as well. No matter, whether you are planning to buy an apartment or villa, you must have a clear picture of the cons associated with owning a home rather than renting one.
A lot of upfront costs
Buying a home comes with a lot of additional costs, which you may have been ignorant of while staying in a rented home. There are numerous fees, property taxes, filing of documents, necessary connections, etc. when it comes to buying your own home. You will have to wait some years before you can recover these payments.
The major advantage a person can achieve by buying a home is stability. But, if your job profile and requirements don’t allow you to be in one place for a long time, then by buying your own home, you will be restricting your mobility.
In a rented property, all the maintenance costs and requirements have to be borne by the landlord. But, when it comes to your own home, you have to start spending money as soon as you are on the first line of repair. You will be in charge of a lot more things than just living inside your home. You may fall short of money and may not be able to invest your money properly due to the regular repair and maintenance costs.
Depreciation of property value
There are chances for a fall in property prices at times when there is an economic crisis in your country. And if you don’t properly maintain the building, the chances of a fall in prices are high.
The sense of security that one attains through buying a home definitely outweighs the disadvantages of owning a home. To ensure that your home retains its full value over time, ensure that it is built by reputable contractors and is situated in a prominent location. Buying a home is a big financial decision, so make sure you don’t rush and make a bad investment choice.