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EMI vs. Rent A Case Study

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EMI vs. Rent is always a complicated matter that comes to the mind of everyone at least once. The individuals dependent on their salary are quite a challenge whether to pay home loan EM or Rent. That is why it is better to have thorough and well-researched knowledge before deciding upon the fact.

Real Estate in India is one of the most widespread sectors. This sector consists of 4 sub-sectors-Housing, Hospitality, Retail, and Commercial. The development of this sector is well attached with the development in corporate society, Demand or Requirement for space of the office, and urban or semi-urban quarters or accommodations. The Ranking of the Construction Industry is 3rd among 14 particular sectors in an expression of direct, induced, or indirect effects in all economic sectors.

Real Estate in India has developed in recent times with an increase in the demand for Residential and Office spaces. Real Estate in India fascinated U$ 5 Billion investments in Institutions in 2020, alternative to 93% of operations recorded in last year. According to researchers, by 2040, Real estate in India will develop to Rs 65000 crore compared to Rs 12000 crore in 2019.

Home loan is mainly taken for purchasing Home/ Flat, Renovation or Construction of house. The eligibility of Home loans most probably depends upon the capacity of repayment as per the property's price. Also, home loans can be sanctioned for an extended period of 30 years. When you apply or take the Home loan, you devote almost up to 60-65% of your monthly income for a period that can be 30 years long. Before taking a Home loan, the essential thing is to get a better guide or take the right decision that benefits you in the Future. Moreover, a Home loan whose EMI does not exceed 60-65% of Post-tax paid is considered best or comfortable.

House Rent is a necessary component across the income scale, as House Rent allows greater labor mobility. Ownership of a house needs fixed monthly remittance. Also, it is not a liquid asset that leads to Risk in the market or hampers mobility for those who can afford least to be not employed. For Low-class income that mainly works in the informal sector, House Rent suits their Volatility of Income or profile Risk.

According to Classes Size, Small, medium, or large cities have 28%, 36%, and 40% of House Rent. It is hard for an ordinary person to afford Rent as rent rates are too high in the Modern Era, but purchasing a house is more complicated. Moreover, Landlords provide their house for a limited period at the Rent, and getting an authorized or better locality is also an uphill task.

In India, All persons have a dream to own a comfortable house. Before you go for Home buy, plan a proper budget to know how much money each month will be left to handle your expenses. Besides this, the following are some vital information a buyer should know before going for a Home Buy:

  • If you are purchasing a home for Rental income, firstly get better knowledge about the Rental prices in the area that supports you to select the right property and locality.
  • Additionally, the Home's Resale Value is also a necessary component that is to keep in mind going for a Home Buy.
  • Also, get enough knowledge about additional costs like tax or expense or income tax to pay on the property.

Purchasing a property is an important decision or step in everyone's life. Buying ready to move in apartment firstly reduces the probability of getting cheated. Still, it is more expensive as compared to an under-construction apartment. Moreover, financially you should be suitable as you should be handed over the key after full payment of the property. There are unique features in buying a ready-to-move-in apartment as follows:

  • Risk Involvement is Low
  • Authority on Apartment Purchased is Immediate
  • Relief from Rent paying is Instant
  • Purchase within Budget along with Instant Tax Benefits

The bottom line

It depends upon the situation and the family's income level to decide which is better between Rent and EMI. At times, people have to shift between cities for work. In that case, house rent is better than paying EMI. However, if the family can have to settle down at one place, paying EMI is better as after a specific time, they can own the home.