1. Continuing to live on rent is a better option if:-
a) You are at the beginning of your career,
b) You do not plan to stay in one location for more than 10 years,
c) You are unsure of the city you want to settle in,
d) Your existing rent is less than 25% of your take-home salary,
e) The house which you can afford to buy would be too small or far from your workplace making it unsuitable to live,
f) The difference between rental yield (rent as % of price you would pay for the house) and home loan interest rate is more than 5-6%,
g) The purchase price of the house is over 25 times the annual rent that you would pay,
h) More than 80% of the EMI goes into servicing the interest component of your home loan.
2. Ideally, a house should be bought for actually spending the entire retirement in it, which would help decide its location too.
3. Buying a house is a big, long-term, illiquid investment, giving minimal annual returns at a specific place, with no scope of any partial redemption for meeting any emergency needs.
4. It can also limit your scope of other long-term growth-oriented investments, if bought at a young earning age, and even if it is let out on rent, its rental yield below 4% is an insufficient income as a regular investment product.
5. Even when a house is bought with a home loan, missing any EMIs entails a double penalty – from your lender as well as your bank - besides impacting your credit score for other future loans.
a) You are at the beginning of your career,
b) You do not plan to stay in one location for more than 10 years,
c) You are unsure of the city you want to settle in,
d) Your existing rent is less than 25% of your take-home salary,
e) The house which you can afford to buy would be too small or far from your workplace making it unsuitable to live,
f) The difference between rental yield (rent as % of price you would pay for the house) and home loan interest rate is more than 5-6%,
g) The purchase price of the house is over 25 times the annual rent that you would pay,
h) More than 80% of the EMI goes into servicing the interest component of your home loan.
2. Ideally, a house should be bought for actually spending the entire retirement in it, which would help decide its location too.
3. Buying a house is a big, long-term, illiquid investment, giving minimal annual returns at a specific place, with no scope of any partial redemption for meeting any emergency needs.
4. It can also limit your scope of other long-term growth-oriented investments, if bought at a young earning age, and even if it is let out on rent, its rental yield below 4% is an insufficient income as a regular investment product.
5. Even when a house is bought with a home loan, missing any EMIs entails a double penalty – from your lender as well as your bank - besides impacting your credit score for other future loans.