Rent or Buy: What Is More Logical for Families in Tier-2 & Tier-3 Cities?

For most families residing in Tier-2 and Tier-3 cities of India, one of the most significant financial choices is whether to rent a house or purchase one. India's rent or buy question is not new, but with the changing lifestyle, increasing aspirations, and readily available online home loans, the choice has never been more pertinent.

At Aavas Financiers, we know how much of a difference this decision can make to a family's future, and through this blog, we will make it easy for you to understand the advantages and disadvantages.

Renting a Home in Tier-2 & Tier-3 Cities 

Renting has been a preferred choice for most families, particularly those just beginning their careers or not willing to settle down in one city for the long term. The following are some benefits of renting:

Advantages of Renting:

1. Lower Initial Cost: Renting involves paying a security deposit and monthly rent. No large down payment is required. 

2. Flexibility: If you need transfers for your work or you're still in the process of deciding where you need to settle, renting is an easy option for you. 

3. No Maintenance Burden: The majority of major repairs or structural problems will fall on the landlord.

Challenges of Renting:

1. No Asset Creation: Renting monthly does not accumulate ownership. After years, you don't own a property in your name. 

2. Rent Hikes: Rent can rise annually, affecting your monthly budget.

3. Limited Flexibility: You are not able to renovate or alter the house according to your family's long-term requirements.

Buying a Home in Tier-2 & Tier-3 Cities -

Conversely, homeownership in Bharat is now achievable for most families due to low-cost home loans and encouraging government programs. Tier-2 & Tier-3 cities are experiencing burst growth, improved infrastructure, and increased property prices, making home buying a compelling choice.

Benefits of Buying:

1. Asset Creation: Paying every EMI helps create your own house and future security.

2. Stability & Emotional Security: Homeownership provides families with the feeling of belongingness and stability, particularly for the upbringing of children. 

3. Value Appreciation: Property prices in Tier-2 and Tier-3 cities are going up steadily, providing good returns in the long term. 

4. Freedom to Customize: You can re-design, re-model, and construct your dream house according to your requirements.

Challenges of Buying:

1. Upfront Cost: There is a down payment, which may be a barrier to some households. 

2. Loan Dedication: Getting a home loan involves long-term financial commitment.

Rent vs Buy: A Simple Real-Life Example

Let’s break this with an easy-to-understand example:

·   If You Rent: Suppose your monthly rent is ₹12,000. In 10 years, you’ll end up paying:

o   ₹12,000 x 12 months x 10 years = ₹14.4 lakh

o   But even after this, you don’t own the house.

o   Also, rent usually increases by around 8% every year, so your actual outflow will be much higher.

·       If You Buy: Now imagine buying a home worth ₹25 lakh with a home loan. You pay ₹5 lakh upfront and take a loan for the rest.

o   Your EMI may come to about ₹18,000 per month.

o   In 10 years, you would have built ownership in your house.

o   Plus, if the property value goes up by 5% yearly, in 10 years the home could be worth ₹40 lakh or more.

The Learning: Rent feels lighter every month, but buying creates wealth and a strong future for your family.

Quick Comparison: Rent vs Buy (10-Year View)

(These numbers are for illustration. Actual EMIs and property values may differ based on interest rates, agreements, and location.)

How Home Loans Make Buying Easier

Before, the purchase of a house was a dream only for the rich. But now, with the advent of home loans online, the dream has come within the reach of middle-class families residing in Tier-2 and Tier-3 towns. At Aavas Financiers, we keep it simple, quick, and convenient:

●      Check Home Loan Eligibility: With our free-of-cost eligibility checker, you can easily find out how much loan you can get.

●      Credit Score Checker: You can avail a free credit score check, which will help you know your chances of getting a loan.

●      Free EMI Calculator: Our EMI calculator ensures that your monthly payments are calculated in advance, so you are not left with surprises.

●      Affordable Interest Rates: Our home loans are made affordable for families in Bharat.

Rent vs Buy: Which is Better in Tier-2 & Tier-3 Cities?

Let's break it down simply

●      If you are not very sure about settling in a particular city, or if your income is not yet stable, it is wiser to rent at the moment.

●      If you desire stability, long-term savings, and an asset for your family, purchasing with a home loan is a wiser choice.

●      In Tier-2 and Tier-3 cities, property rates are comparatively lower than in metros, hence home ownership in Bharat here is more affordable than ever before.

A Balanced Approach 

For most families, the choice between renting and purchasing is a matter of financial planning. Renting might seem less heavy on the wallet today, yet purchasing creates wealth and security for the future. As rising aspirations in smaller towns pick up speed, more and more families are opting to purchase instead of rent. 

At Aavas Financiers, we're dedicated to easing this shift with our home loans online, easy eligibility process, and services such as our EMI calculator and complimentary credit score checker.

Final Thoughts 

The choice between renting or buying in India is individual, but in Tier-2 and Tier-3 towns, purchasing is becoming more practical with low-cost property rates and simple financing solutions. Home ownership in Bharat is more than just a roof over your head—it's about creating security, stability, and a heritage for your family.

Comments: