With rents in Bangalore escalating faster than annual pay rises, buying a house of your own could be a smart choice. However, unlike what some people say, in certain cases renting a house can be more economical than buying a house on EMI. Here are some important factors that you might want to consider before deciding whether to buy or rent a house in Bangalore.

Indicators For Deciding To Whether To Buy Or Rent A House

The Rule of 15

Multiply your annual house rent with 15. If buying a house in your locality costs less than this amount, you’ll definitely save more by buying a house. For example, say you pay a monthly rent of about Rs. 20,000 (or Rs. 2,40,000 yearly). So, the basic rent-buy cutoff price would be Rs. 36,00,000.

Do I buy or rent?

If you pay high rent, and you cross the threshold of the rule of 15, consider buying a house.

How long do I plan to stay in Bangalore?

Buying and selling a house within a couple of years will result in the loss of about 6 % to 7 % of the cost price in terms of transfer taxes, and real estate commissions.

Do I buy or rent?

If you plan on staying in Bangalore for fewer than 3 to 5 years, it is advisable to rent a house.

How much do I initially have to invest?

Renting a house or an apartment in Bangalore requires paying ten months’ rent as security deposit. This amount can be recouped at the end, provided you do not damage the house. Buying a house involves a down payment of at least 20% of the cost of the property, plus the processing fee for the loan and the legal counsel fee for getting the property documentation verified.

Do I buy or rent?

If you can’t afford to set aside 20 % of the property value, rent instead.

Who pays for the repairs?

Owning your own house means paying higher insurance, and shelling out more towards maintenance costs. Maintenance is no longer as simple as calling your landlord to get the repairman to fix the leak in your shower.

Do I buy or rent?

If you do not have the time to get things done personally, or aren’t willing to bear the higher maintenance costs, rent a house.

The Final Verdict

Buying a house in Bangalore is increasingly becoming profitable, particularly with the real estate market yet to recover from the recent low. Whether you decide to buy or rent a house depends on your finances, and a few other factors as discussed above.

The bottom line is, if you plan on staying in Bangalore for a considerable period and are financially stable, consider buying if not, continue renting for the time being.

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