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The Dream of Every Middle-Class Family
Almost every middle-class family has this dream: that one day we won't have to live in a rented home. As a child, we didn't have much money, so we always lived in rented homes, constantly moving from place to place. Decorating a new home and making it feel like home again, even if only temporarily, was always my mother's responsibility.
Therefore, buying one's own home becomes an emotional goal for many. When income stabilizes, the question arises: should we buy a home or continue renting?
Emotional vs. Objective Thinking.
Buying a home brings a deep sense of love, security, and stability, especially when you do it for your partner or family. But before making such a decision, you should ask yourself some objective questions.
Let’s break it down between the cost of buying and the cost of renting.
Cost of Buying a Home.
Opportunity Cost of Money – If you invest a large sum in a home, that money could have been invested elsewhere to generate returns.
Home Loan EMI – Most of us can’t afford to buy a home outright, so we take out a loan. Initially, a large portion of your EMI goes toward interest alone.
Maintenance and Repairs – Unlike a rental home, once you own a home, all repairs and maintenance are your responsibility.
Cost of Renting a Home.
Monthly Rent – This is the largest cost. Sometimes you even have to pay 2-3 months’ advance.
Rental Yield Concept – This shows how much rental income a property generates compared to its value.
For example, if a house costs ₹1 crore and its annual rent is ₹2-3 lakh, the rental yield will be only 2-3%.
In India, rental income is typically only 1-3%.
Example: Gurgaon House.
A friend of mine lives in a house worth ₹5 crore in Gurgaon. He pays ₹55,000 per month (₹6.6 lakh per year) as rent.
Rental Income = (₹6.6 lakh ÷ ₹5 crore) × 100 ≈ 1.2%
This means that the landlord earns only 1.2% annually on his ₹5 crore property.
From my friend’s perspective, he is enjoying a house worth ₹5 crore by paying only ~1% of its value as rent each year.
If both home prices and rents increase at the same rate, it would take 100 years to repay the purchase price through rent! Even if rents were 3%, it would still take about 35 years.
Advantages and Disadvantages of Buying a Home.
Advantages:
Emotional satisfaction and a sense of security.
Long-term stability for your family.
Property ownership and potential appreciation.
Disadvantages:
Heavy financial burden from loans.
EMIs confine you to your job/location.
High opportunity cost (money locked up in a single property).
Less flexibility if you need to change cities or upgrade.
Advantages and Disadvantages of Renting a Home.
Advantages:
High flexibility – you can move anytime.
Lower monthly expenses compared to EMIs.
You can invest your savings elsewhere for higher returns.
Disadvantages:
No property ownership.
Rent may increase over time.
The emotional dissatisfaction of not having “your own home.”
Final Recommendation.
Suppose you buy a house worth ₹50 lakh:
Down payment: ₹10 lakh
Loan: ₹40 lakh
EMI (20 years): ~₹35,000 per month
In the initial years, ~₹30,000 of this goes into interest.
Now compare with renting the same house:
Rent may be only ₹8,500 per month (at 2% rental yield).
So you are paying much more as EMI than as rent.
When Should You Buy a House?
If you have a stable job/income.
If you are sure you want to stay in one city for the long term.
If you have enough savings for down payment without draining your emergency funds.
But if you are in your early career stage, it’s better not to rush.
You may need to change jobs, cities, or lifestyles – and an EMI can trap you financially.
Conclusion:
Before buying, always calculate rental yield vs EMI.
If rental yield is very low (1–2%), renting may make more financial sense.
Remember:
Renting = short-term comfort & flexibility.
Buying = long-term stability & ownership.
✅ Conclusion: Don’t buy a house too early in your career just for emotional reasons. First build financial strength, then buy when you are ready for stability.
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