Case Study 1 : Ramesh has bought a 3-BHK home on rent @Rs.20,000. Let us consider the rental appreciation be 5% per annum.
FinancialsCalculationRented HomeAssumed rent (per month)Rs 20,000Rent appreciation (per annum)5%Expected rent after 20 years (per month)Rs 40,000Expected rent after 40 years (per month)Rs 80,000Amount paid in 40 yearsRs 2.9 crores
Case Study 2 : Ravi has bought a 3-BHK home for 40 lakhs on home loan for 20 years.
FinancialsCalculationOwn HomeAssumed home loan amountRs 40 lakhsTenure20 yearsInterest rate8.3%EMIRs 34,200Total amount paid in 20 yearsRs 82 lakhsRent amount saved by a home owner who lives for 40 years (i.e., excess amount paid by the tenant in the last 20 years)Rs 2.1 crores
From the above 2 tables, the cost of living on rental property for your whole life would be much higher than living in your own house. Moreover, the capital value of a home also increases over a period of time, whereas, there is no such benefit in a rental home.
Whichever way you look at it, there are pros and cons to both sides of the argument. That being said, your own preferences are likely to be influenced by factors like individual circumstances , personal opinions and experiences.
No matter which side of the bridge you’re on, there is never going to be a dull moment in the world of property!
If you feel the need for guidance or advice on property buying or just looking to have a casual talk on the real estate market, do get in touch with us at Viluva.
We’d be happy to clear all your doubts. Our team of property advisors and real estate consultants will be happy to help you search your dream house.