With banks cutting home loan interest rates after a series of policy rate reductions, many people are once again considering buying their own home. Lower borrowing costs have made home loans more affordable on paper, but the decision to buy versus rent is far from simple. Financial planners say this choice depends heavily on an individual’s income stability, age, career path, and long-term financial goals. What works for one person may not be suitable for another.

Falling Interest Rates Boost Buyer Interest, But Prices Remain High

Over the past year, policy rates have been reduced by around 1.25%, prompting banks to lower home loan interest rates. As a result, monthly EMIs have become slightly lighter, increasing buyer sentiment in the real estate market. However, this positive development comes with a major caveat. Since the pandemic, property prices in most large cities have surged sharply. In many localities, home prices have moved beyond the reach of average middle-class buyers.

This has led to a common dilemma: should one lock into a long-term loan and buy a house now, or continue living in a rented home while keeping finances flexible?

Buying a Home Means Long-Term EMI Commitment

Purchasing a home with a loan typically involves a repayment period of 15 to 20 years. During this time, a significant portion of monthly income goes toward EMIs. Once the loan is fully repaid, the property becomes a personal asset. Over the years, property values generally appreciate, adding to an individual’s net worth.

Owning a home also offers intangible benefits. Homeowners enjoy greater freedom to renovate or modify their living space according to personal preferences. In addition, under the old income tax regime, eligible borrowers can claim tax benefits on both principal repayment and interest paid on home loans.

Experts point out that a self-owned home provides long-term security and emotional stability. It can be used for self-occupation, rented out for income, or even sold in times of financial need.

Renting Offers Flexibility and Financial Freedom

On the other hand, living in a rented home comes with its own advantages. The biggest benefit is the absence of a long-term EMI burden. Renters are not tied to decades of monthly loan repayments, allowing them to allocate money toward savings, investments, or lifestyle needs.

Renting also removes the responsibility of property maintenance and repair costs, which can be significant over time. For professionals with transferable jobs or uncertain career locations, renting is often the more practical option. Shifting cities becomes easier, without the stress of managing a vacant property or arranging tenants.

Rental Income May Not Cover EMI Costs

One important factor to consider is that rising property prices have not been matched by a similar increase in rental yields. In many cities, rental income is insufficient to fully cover home loan EMIs. This means homeowners often need to pay a substantial portion of the EMI from their own pockets.

If a person is transferred to another city, they may face a double financial burden—paying EMIs on their owned house while also paying rent in the new location. This situation can put pressure on monthly cash flow and force compromises on other financial priorities.

Your Financial Profile Should Drive the Decision

Financial advisors emphasize that there is no universal answer to the buy-versus-rent debate. The decision should be based on personal financial health and life stage. For example, younger individuals with stable jobs and no frequent transfers may consider buying a home early. A 30-year-old taking a 15-year loan can aim to be debt-free by 45, offering financial relief during peak earning years.

Extra Caution for Those Above 40

For individuals aged 40 and above, buying a home requires careful thought. At this stage of life, responsibilities tend to increase. Expenses related to children’s higher education, elderly parents’ healthcare, and retirement planning become more pressing.

Taking a home loan at 45 or 50 may mean repaying EMIs well into retirement years. This can limit retirement savings and increase financial stress. In such cases, renting may offer greater flexibility and peace of mind.

Bottom Line

Lower home loan interest rates are encouraging, but they should not be the sole reason to buy a house. A well-informed decision should balance affordability, long-term commitments, lifestyle needs, and future financial security. Whether buying or renting, the smarter choice is the one that aligns best with your personal circumstances and long-term goals.