If you are at the stage when your career is beginning to pick up and more money is starting to come in, you might be asking the question: should I live in a rented property or invest in my own house? The decision to buy a house may be driven by several factors – more pride and prestige that is associated with owning your own property and stability in terms of your shelter and security needs, being the most important. However there are several roadblocks you will face along the way such as debt you will incur in the form of the home loan, recurring payment of property tax, or even shifting and settling down in your new home. In the same sense, renting a house comes with several advantages, like the freedom to be able to move with ease for work if it is required, and disadvantages, such as fluctuating prices within the same locality and the unpredictability of your land-lord’s actions. 

This question of whether you need to buy or rent a house can be an extremely difficult one to answer – especially if you haven’t gone over the necessary facts. So, to help you make this decision, here are some points to consider:

• Do you plan to continue staying at your current location for long?

In today’s fast paced world, many people are changing cities very often for  better job opportunities; some are even travelling overseas! Further if you are early in your career, this may be more likely. In that case, renting a house might be a better option as it allows you the freedom to move. Buying a house comes with its own set of costs like EMIs, property tax, repair and refurnishing, and the like. However, if you are planning on settling down or thinking about creating a stable foundation for your family, purchasing a house, to make your home, is the best anchor. 

• Is it more affordable to buy or rent a house in your city?

Depending on where you are located, you will have to check what may be the most feasible or affordable option. Some of the other factors that you will have to consider are: what are the current property rental rates in your city, and is there any trend the rates in how these rates change over time? This will help you decide which may be a more affordable and sustainable option. In cases where the cost of buying a house and the cost of renting a house are not very far apart, it would help to consult a certified financial planner to help you make an informed decision about the same. Then, depending on your assets and expected cash flows, you can decide if you should buy or rent a house.  

• What do your finances allow  ?

An extremely important factor to consider is what your income can support. If you choose to buy a house, you will have to ensure that you will be able to pay off the home loan – which can span for long periods. Keep in mind that you should have enough financial liquidity after making the down payment for the house and that the EMIs for the home loan should not strain your monthly cash flows. One more point of consideration is, how big of a house do you need?  Depending on your personal and familial needs, different people need houses of different sizes. Do not make a compromise on your requirements just because you want to buy a house. Understand that the implications of buying a house that doesn’t suit you are a lot steeper than renting one for a few months. Plus, if your finances don’t meet these criteria renting may be a better option. Subsequently, you should also ensure that purchasing a house does not affect your other financial goals. This can cause several disruptions in you life, including emotional turmoil. 

Consulting a certified financial planner or a wealth management/financial planning firm will also be beneficial for the decision making process. They will be able to help you assess the various factors involved and make the appropriate choice.