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Photo: Mint
Photo: Mint

Myth vs fact: Buying a house is better than renting out

Your wish of living independently in a dream house can be fulfilled without the burden of a home loan if you simply rent out the house you like

Living independently in one’s dream house is everyone’s wish. But sky high property prices have always been a deterrent in fulfilling this wish for many. Yet this wish can be fulfilled without the burden of a home loan if you simply rent out the house you like.

For example, you could rent a one-bedroom/hall/kitchen apartment worth 1 crore in a distant Mumbai suburb for a monthly rent of 20,000 to 25,000 which comes to just 2.5-3% per annum of the property value. The rent seems quite affordable in such a scenario. If the same apartment were to be bought, one needs to initially arrange the down payment of 20-25 lakh and pay an equated monthly instalment (EMI) of 75,000 for a home loan taken for 15 years at a rate of 8.5% per annum.

Think again and make the right decision. A change of mindset can help you fulfil your wish.

—Kalpesh Ashar, founder, Full Circle Financial Planners and Advisors

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