How to get into your own flat and save on rentals?
There’s nothing like a place called home. But when you are living in a rented apartment, there’s this little voice at the back of the head saying “Wish we had our own house.”
And even though rentals might be working for you now, there are a plethora of benefits you can get by investing in a house.
If you do the math, investing in a home has more pros — especially in terms of financial gains. So, let’s understand how you being a home-owner could work out as a better option for you:
Rentals burn a deeper hole in the pocket
Right now your rentals may seem cheap as compared to the EMI. However, in the long run, it turns out to be far higher than the cost of the house.
For example, you are paying Rs. 10,000 as the rental for a 2BHK house. Depending on your contract, you may have an increment every year — or a couple of years.
So your rentals are only increasing!
On the contrary, your EMIs offer stability or fixed amount being cut every month. As per the loan you have taken, this amount usually remains fixed for a set number of years!
Loss of rental cost
Another issue is that you don’t recover your rental costs. Basically, the money you are paying as rentals is not generating any returns!
However, when you are paying EMIs — you are actually investing the money in an asset. With price appreciation, your home value is like to increase too.
Your EMIs are only adding to your financial portfolio.
Generate additional income
If you own a house, you can always rent it out or consider having paying guests. This is especially a sensible option for retired people or senior citizens.
It assures them of a steady income without having to work for it — and enjoy their retirement in peace.
A homeowner has collateral
One of the biggest plus points of owning a home is you have the option to mortgage or use it as collateral.
Mortgage and collateral are similar — but there’s a slight difference. Collateral offers security to the lender who is offering you a loan
A mortgage is used only for immovable assets — which here refers to your home. On the other hand, collateral could be used for both tangible and non-tangible assets.
During difficult financial times, you can consider mortgaging your house or using it as collateral to get loans.
When it comes to a rental property, you cannot mortgage it or use it as collateral — in spite of having lived there for decades.
Risk of non-renewal of rental
For any tenant, there’s always the fear at the back of their mind that they may have to shift out anytime.
Yes, there are contracts but sometimes landlords do back out on their words or make conditions unliveable.
And you don’t want to get involved in legal hassles for a rented home!
With your own apartment, you don’t have to worry about contracts expiring — and house-hunting!
Sense of security
The sense of security and pride one feels in their own home is a great feeling. You are assured of having financial security & stability thanks to an asset called home.
Plus having something that you can call yours is always great. You have the option to personalize the space.
This sense of belonging is just what gives an extra kick.
A more predictable future
Financial planning for the future is not easy. One of the biggest ‘BUTs’ here is the risk of unpredictable expenses.
For example, your landlord may suddenly ask you to evacuate. The new landlord is asking for a hefty deposit — this takes your entire financial planning for a roll!
You could have been thinking of a holiday or buying a car — and now this!
Thankfully when buying a home, you are aware of the home loan terms and conditions. You know the EMI required to be paid over the long term. So your future costs are predictable and more stable.
Having your own home gives a range of psychological and financial benefits. You are free from interference from your nosy landlord.
You can decorate it as you please and not worry about a mark on the wall!
Yes, it may seem like a bit of strain right now — but think of this — instead of paying rentals — you pay EMIs and take possession of your home!