0 hidden charges. 0 forex

The Rent Vs. Buy Debate: When is the Right Time to Buy a House?

Reviewed by
Created on
July 8, 2022


What’s Inside

Many people in India dream of owning a home, but is it really a better financial decision than renting one? Well, the answer depends on various factors and what you personally prefer. This article explores the pros and cons of buying versus renting a house. If you're unsure about which option is right for you, keep reading to help you make the best decision.

Before you dive in, try out this rent vs. buy calculator that should help you arrive at a decision faster.

Firstly, research the market outlook

When deciding between rent vs buy, it's important to research the market outlook. Despite the pandemic affecting many sectors, the real estate industry presents growth opportunities. According to the regulatory authority, the housing loan market has grown by 15% year on year, indicating that the dream of owning a house is still attainable.

However, most people take out a home loan when buying a house, and home loan interest rates may differ among lenders. Consider key points such as your credit score, current MCLR rates, location and value, and tenure of the loan, as these can impact your home loan rate.

1. Your credit score

Your credit score is your creditworthiness or your ability to pay back loans. A poor score will lessen your chances of getting a loan, while a good credit score gives you leverage to negotiate the interest rate.

2. Current MCLR Rates

This is the benchmark rate at which lenders give loans, and these rates keep resetting every 6 or 12 months.

3. Location and value

Location matters! There’s an obvious difference between the cost of an apartment in a high-end locality and a flat around the corner of a street. If you’re buying the one on the street, then the value will be lesser for the lender since it will be difficult to sell your home. Hence there will be a high-interest rate. Read more here.

4. Tenure of the loan

Usually, loans taken for a shorter period have a lower interest rate even though the EMI may be high, and loans taken for a longer duration have higher interest rates even though the EMI value may be lesser. Read more here.

So, when is the right time to buy a house?

Ask yourself these questions before you decide.

  • Are you prepared to put down roots?
  • Do you have job security?
  • Are you financially prepared?

If you’ve answered yes to all of these questions, here’s a checklist to consider when purchasing a home.

1. Property price

Thoroughly research the prevailing market rates of similar properties you’re eyeing to understand if the seller is providing a reasonable price or if it requires negotiation. Property rates also give clarity on the per square feet rates and the investment prospects of the house in case you decide to rent it out or sell it.

2. Your paying capability

Know your loan-taking capacity and how much EMI you can pay. Use online tools like Fi EMI calculator to help.

3. Documentation

Ensure you check these crucial documents before deciding:

  • No Objection Certificate (NOC): A certificate given out by various government establishments like water, gas, and other civic authorities. Any property being sold without an NOC is considered illegal.
  • NOC from the bank: A certificate that shows all dues have been paid by the borrower if a home loan is taken on the house.
  • No-encumbrance certificate: A document that tells you if there is any legal issue with the land or if it is partially sold to someone else. Given out for a maximum of 30 years.
  • Title Deed: A certificate that verifies the authenticity of the ownership of property. It contains the name of the seller and loan details among other things.
  • Possession certificate: Handed over after the sale deed has been done and the buyer has obtained physical possession of the property.
  • Society-related documents: If you’re buying a house in a community, then there will be specific documents from the community like their own occupancy certificate and property card.

4. Expert knowledge

Numerous smaller details and conditions need to be met as well, which are more technical and require expert knowledge, so it’s always advisable to take the help of a legal advisor who’s done this before.


The Rent Vs. Buy debate is a complex one, influenced by personal circumstances, financial stability, and market conditions. The right time to buy a house is often when you can afford it, have a good credit score, and the market conditions are favourable. While some studies suggest that renting can outperform buying in certain scenarios, others indicate that owning becomes a better deal if you plan to stay for more than five years. Ultimately, the decision to rent or buy should align with your financial goals and lifestyle needs. It's always recommended to consult with a real estate professional when planning to buy a home.

Manage All Your Personal Finances Through Fi

To effectively manage your personal finances, you should seek assistance from Fi. Whether you're considering purchasing or renting, Fi can help you with your money management. Make sense of your personal finances instantly with Fi Money. You can open a zero-balance Savings Account in a matter of minutes. Next, get all your money questions answered by Ask Fi, an intuitive personal finance assistant. Regularly use the app, as it encourages you to build better monetary habits, meet all your money goals & reward you for making significant financial choices. Fi and its licensed banking partner help categorise your daily, weekly & monthly expenses to manage your money online easily, so you spend smarter, not less. If you upgrade to other account plans within Fi, you get access to premium features like Jump, US Stocks, Mutual Funds, etc. & up to 4x rewards!

Frequently Asked Questions

1. What is the best age to buy a house?

People tend to buy houses in their late 20s to 30s when they have more financial stability, start a family, or get married.

2. Which month is best to buy a house?

There is no universally best month to buy a house, but it is worthwhile to consider periods when market trends are lower. In India, the festive season (typically October-November) sees increased purchasing of gold and property.

3. Is it better to buy or rent?

Choose to buy or rent a house based on your financial planning, needs, and goals. In general, renting has advantages such as lower upfront costs, greater flexibility, and fewer responsibilities. However, buying a house has its own benefits and can provide long-term revenue. Consider your priorities before making a decision.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
Share this article
Copied Link!
Personal Finance
The Rent Vs. Buy Debate: When is the Right Time to Buy a House?


View similar articles in
Personal Finance
Get the Fi app