Flat ownership is a better option

Flat ownership is a better option

There are several reasons why buying a house makes more sense than staying in leased accommodation

Buy or rent is a dilemma that faces most Mumbaikars and with good reason. On one hand, there is the concern that making a quick purchase decision may result in losing out on a better home down the line. At the same time, the high cost incurred in leasing an apartment can offset the advantages of waiting. In fact, there are several cases where people have deferred their purchase decision for years, waiting for that elusive 'dream' home and ended up shelling out lakhs of rupees in lease rentals. Now, they again face the quandary of buying a home in an under-construction project (ready possession flats being an extremely rare find these days) or waiting still further. While the increase in the number of double income families and people with disposable incomes has resulted in a rise in the number of nuclear families, the quest for a lavish residence or a prime location often compels the young couples to stay in leased accommodation for years on end. The large investment and the prospect of taking a home loan often deters them from buying a house, but what they fail to realise is that the cumulative amount they will end up paying for their leave and license fees could instead have been diverted towards repaying a home loan. That way, they could have invested their hard earned money and created a concrete asset rather than just pay up a hefty amount towards the rent every month and end up with nothing to show for it after a five or ten-year lease period. Moreover, with lease rentals in the Mumbai Metropolitan Region rising steadily during 2008, the cost of not buying a house is increasing with each passing day. Ask any finance consultant or even your chartered accountant for that matter. They will advise you that it makes a lot more sense to purchase a house rather than stay in one on rent. The tax benefits on repaying a home loan ensure that the effective rate of interest that you actually bear is considerably lower. It is also wiser than being a tenant, paying rent as well as higher taxes at the same time! Looking forward, experts advise prospective home loan seekers to opt for a floating rate home loan. For starters interest rates on home loans have taken southward turn recently and initiatives to further reduce rates are said to be in the pipeline. In medium to long term, the rates would definitely soften further. Fixed rates are being offered on premium as compared to floating rates and most of the banks have reset clause empowering the banks to reset the interest rates. Ideally flat buyers should opt for a floating rate home loan and go for the 15 to 20 year tenure. The long tenure will have lesser impact on repaying capacity of a person in case of upward revision in rate of interest. The increased burden will spread over the years. Another plus point is that most banks and financial institutions have a tie up arrangement with insurance companies for schemes like the mortgage reducing term insurance benefit. This helps the family members of the borrower to eliminate debt burden in case of an unfortunate event of death or permanent disability. Now just imagine what would happen in such cases if the family was staying in a leased accommodation? There are several practical benefits to buying a home as well. Flat purchasers are quick to point out the biggest benefit of owning a residence, namely stability. Rather than move from one location to the other like a nomad and be the brunt of jokes about 'settling down in life' from friends, relatives and colleague, a fixed location can be a godsend. Myriad problems are faced by those residing in temporary accommodation, from the children's schools to emotional upheavals at shifting residence again and again, making new friends, being treated as outsiders, and so on. It's tough for kids and their parents to get used to a new location every eleven months. When you buy a house, you can also ensure the décor of the apartment is to your liking and personalise it with pictures, posters and so on. This again is a facility that those residing in leased accommodation do not enjoy. How long your furniture lasts also directly depends on whether it is being carted off to a new house every 11 months or not. Above all, there is a sense of security and belonging when you buy a house. Coming back to a leased flat at the end of a hard day's work doesn't quite have the same attraction.