The constant debate between benefits of buying and renting never ceases. While renting may be a wise decision for short durations, EMIs are the choice for those focused on future benefits. This Independence Day, free yourself from the burden of rent and enjoy a sense of ownership.
A number of people, who come to the city to make a living, often spend a major chunk of their salary on monthly rent. And it doesn”t end there; the hassle of moving homes often adds to the expense – not to mention the yearly deposit. And after all that trouble, they neither have a house to call home nor land as asset.
The early worm gets better EMIs
Millennials who have learnt to strike a balance between the traditional and modern way of living, those who live independently and yet have a certain sense of belonging and responsibility now understand why buying rather than renting is the smart way to go.
A home starts appreciating as soon as you buy it; better returns and a place to call your own are among the many perks of buying a home. The decision to buy or rent is influenced by factors such as property prices and potential appreciation, annual income, job stability, prevailing rental yields, tax benefits and other investment opportunities and lifestyle.
Rajan Pental, Group President and Head – Branch and Retail Banking at Yes Bank, says, “Buying a house is beneficial if an individual plans on living in a particular city for a longer duration, whereas renting is a better option for a short-term stay. It is recommended that you buy a house at an early stage in life rather than postpone it. This will help the owner manage expenses effectively since the EMIs become manageable as income increases.”
Harshil Mehta, JMD & CEO, DHFL, points out the benefits of EMI:
Home loans make one eligible for certain tax benefits by claiming deductions against the principal and interest amount repaid;
EMIs provide the borrower flexibility to decide the amount and duration based on one’s financial situation and income;
EMIs facilitate a life-long investment that translates into an asset in the future.
Golden rules of EMIs:
Never let your EMI amount exceed 40-45 percent of your monthly income;
Schedule your EMIs closer to your salary date so that there is no delay in repayment;
In case of surplus funds, opt for a higher EMI or prepayment of your home loan to reduce the principal outstanding, thus saving on the interest amount and reducing the EMI amount and loan tenure;
Plan your expenses with the remaining funds after your EMI payment.