Why You Should Not Buy A House?

Why You Should Not Buy a House in India?

The stigma around not owning a house in India has been age-old. But, Gen Z is here to break old shackles and make way for new ways. Even though now our society has become more receptive to owning debt which has made buying a house even easier. Have you ever considered renting a house instead of owning one? Sounds illogical?

Well, this will all make sense to you once you go through the list of reasons stated below on why you should not buy a house in India. 

Reasons Why You Should Not Buy a House In India

1) Liability > Asset

You are buying a house in a good location by taking a debt against two people i.e. you and your spouse. Now the good part is, you have got a larger amount approved but did you try to see the flip side? This also means continuous employment for both you and your partner no matter what may come. Why? Because you took a loan against combined income and one person’s income may not be sufficient enough to pay the monthly installments. 

So, don’t you think it is better to rent a house in this case and be free from all the stress and tensions? Well, it is better to own an asset instead of a liability. 

2) Renting is Cheaper

If the main objective is just to have a roof over your head, does it even matter whether you’re owning a house or simply renting one? Have you ever given it a thought that homeownership comes with its own set of obligations? While renting is comparatively way cheaper, and also leaves you obligation-free. You are not liable for the maintenance, repairs, house tax and so much more. 

3) Poor Return on Capital

Residential property has a very poor return on your investment. Best case, if you choose to rent out your house then the value would be at around 3% on average whereas interest on your home loan itself would be 6%.  

4) Everyone Else Is Doing It

Just because all your friends around you are buying a house and settling down, does not mean you have to do it too. Buying a house is a huge responsibility that is going to bound you for the next 15-20 years straight unless you have the entire money to pay in one go. 

You’d be much better and secure if you invest in commodities or mutual funds or even start your business venture. You don’t always have to be a part of the crowd to go in the right direction.  

5) Little or No Job Security

It is not a wise decision even if you have a faint idea about your job being in trouble. Buying a house is a long-term commitment that also requires you to have a stable job. This is where most people go wrong. They end up taking home loans only to lose their jobs in the end and getting deeper into the debt trap. 

Again, renting a house would be much easier because of the lesser amount of money involved without any additional expenses. 

6) Duration of Stay

Unless you’re planning to stay in the city for the next 8-10 years, there is no point in buying a house according to most financial experts. If you keep getting frequent transfers, renting is a much better option for you, unless you’re planning to buy a house for investment purposes.

But even in that case if you’re eyeing yielding higher returns in a short period, think again. Because, for any property to fetch you returns, it takes somewhere around 7-10 years easily. Therefore unless you’re prepared to hold onto your investment for this long, it is pointless investing your money in buying a house.

7) Alternate Investment Opportunities

If you invest the same amount you plan to pay as down-payment of EMI on a house, it is better to invest in the Stock Market or Debt/Equity Investments. You will earn a much higher return on your capital. 

So, the bottom line is both renting and owning a house has their pros and cons. Undoubtedly, owning a house means you can modify, redesign and restructure it as many times as you want as per your needs and also the unmatched feeling of pride and security. But, on the flip side, you always have to be ready to bear any uncalled expenses and the ever-increasing maintenance costs over time. On the contrary, if you rent a house you can live more flexibly and also be in a position to manage your finances better because of a fixed monthly rental amount. The only disadvantage of renting is that the house owner calls the shots on both small and big matters. 

Whether buying or renting, we understand this decision is not an easy one to make. So, before you take the plunge, make sure to think through all these aspects and evaluate your finances beforehand.