Kolkata: Owning a home is a dream for many. It is also an emotional decision for most of us. But should you buy a home or live in one taken on rent? It is as much a matter of old arithmetic as an emotional call. Or, is it? Pakshal Sanghvi, MD of Sanghvi Realty tells the readers of News9 when the scales tilt in favour of which decision and why.
One of the first things buyers should think about is how much they can afford besides the EMI, says Sanghvi. “When inflation is high, household costs including food, school, health care and transportation tend to go up faster than incomes in the short term. If a home loan EMI takes up too much of your monthly income, it can make you less financially stable and less able to handle unexpected costs,” he says. The Sanghvi Realty chief says that housing expenses ought to allow sufficient capacity for savings, insurance and discretionary expenditures and this is all the more true when there is persistent inflation.
Crucial role of interest rates
Interest rates play a crucial role in the home buying decision. “Higher borrowing costs make the overall interest payments throughout the life of a loan much higher, especially in the first few years when interest makes up most of the EMI payments. Buyers should stress-test their finances to see how they would handle changes in interest rates, and they shouldn’t anticipate that rates would go down right away. Renters, on the other hand, don’t have to worry about this risk and can be flexible during times of economic uncertainty,” he remarked.
Yet the decision to buy a dwelling unit can still make financial sense under the right conditions. “For people with steady salaries, long-term job security and a clear plan to stay in one place for a few years, owning a home protects them against rising rental prices. Rents in cities like Mumbai have been steadily rising over time, frequently faster than average inflation in well-connected micro-markets. For these families fixed EMIs may seem easier to handle in the long run than rising rents, even though they start out higher,” says Sanghvi.
The opportunity cost factor
Opportunity cost is another important decider. “You may use the money for a down payment to buy stocks or start a business instead. When the financial markets offer good post-tax, inflation-adjusted returns, renting while investing extra money may be a superior way to build wealth overall. Buyers should compare the predicted rise in property value with the returns on other investments taking into account how long they will have to retain the property and how easy it will be to sell it,” advises the realty expert.
Tax implications constitute another significant factor. “While home loans offer tax benefits on interest and principal repayment, these incentives have limits and should not be the sole reason for purchasing a home. Tax efficiency must be weighed alongside long-term cash flow sustainability rather than short-term savings,” points out Sanghvi.
Mobile professionals should keep options open
In the economy, the number of mobile professionals is rising and Sanghvi has a clear advice for them. “Renting can help professionals who move around a lot, change careers often, or have multiple sources of income as an entrepreneur. It can also help them keep their options open and lower their long-term financial stress,” he points out.
In today’s environment, the buy-versus-rent decision is less about timing the market and more about aligning housing choices with life stage, income stability, and long-term goals. Inflation alone should not push buyers into ownership prematurely, he adds.