buy a house or rent: Better to buy or rent a house on a home loan Know simple understanding.
Nowadays everyone knows that many people live on rent. And their only desire in life is to build their own house and get rid of rent. Everyone’s only wish in life is to own a good house, to have a good car.. But nowadays many people cannot afford a flat or tenement, and have to live on cheap rent due to inflation. Besides, many people also think that by taking a loan of lakhs of rupees and building a house, paying monthly installments for a long period and paying a very large amount in interest. Everyone then thinks and calculates whether it will be more profitable to buy a home loan or cheaper to rent? Let’s understand whether buying a house will be beneficial or renting will be beneficial?
Buying or renting a house on loan
Everyone dreams of owning their own house but nowadays many people say that renting is more beneficial than taking a loan. That’s why there is now a confusion and calculation among people that whether it is better to take a loan to own a house or to rent it. In that case, if you also think of buying a house So someone must have told you that you will be better off if you rent instead of paying loan installments and interest for 20 years and paying more interest than the principal amount of the loan. But do you know that this saying is really true? Let us understand whether it is better to rent or to realize the dream of building a house on loan.
Understand by example.
Now think that you have to pay 50 lakhs to buy a house, when we buy a house on loan, the down payment is 20 to 25 percent of the original cost of the house, and the bank gives a loan of 70 to 75%. In that case, if we are thinking of buying a house worth 50 lakhs, then a loan of 30 to 35 lakhs will be available which will be available at an interest rate of 8.5 to 9.5%. On the other hand, if you consider living on rent in the same house, you will get a house worth 50 lakhs with a monthly rent of 15,000 per month. And looking at this direct calculation, it seems that hiring is better, but this is half truth, let’s know the detailed calculation here.
Suppose you live on rent and there is a possibility that the rent will increase by 10 percent every year from 08:00, against which the EMI that you have at the time of taking the loan will never increase. So, if you calculate the long term, your rent may double in 10 years. But the EMI amount remains the same for 20 years as you decided while taking the loan. And in the 21st year that house will be your own. But if you are living on rent then even at the age of 50 or 60 you have to pay the rent.
On another count, many people also think that renting a house worth 15,000 is better than paying monthly installments of 35,000. The remaining ₹20,000 can be invested in a place like SIP and the amount invested in such a place will grow in 20 years and then the house can be bought with cash. But if we think about it, there is not much power in this because the market value of the house you bought also increases.
Home Loan Interest Rate
Home loans are offered by different banks at different interest rates depending on your Shibil score. SBI Bank is running an interest rate of 8.6% to 9.5% based on CBILL score. Bank of Baroda has an interest rate of 8.40 to 10.60 percent based on CIBIL score.