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Home Loan vs Renting: Which is the Better Financial Advice

by Sonal Shukla

From building a portfolio to considering compound annual growth rate (CAGR), when you ask, “Should I buy a house or rent one instead?”, the question of whether to purchase a house or opt for renting requires careful consideration. The decision extends beyond the immediate cost considerations. It involves assessing the future and what will yield better returns a decade down the line.

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Are you looking to secure a prosperous future for yourself? If yes, then this blog is a detailed guide to understanding the best option to use a home loan for financial stability. 

The Fundamentals of Home Loan vs Renting

In the following sections, we will take a closer look at each option. We will break down the complexities and inspect the pros and cons associated with both choices.

1. Home Loan

Let’s look at the various aspects of home loans: 

Understanding EMIs

Equated Monthly Instalments (EMIs) are a systematic repayment plan for home loans- covering both principal and interest components. EMIs are calculated based on the loan amount, interest rate, and tenure. Over time, a larger portion of the EMI is allocated to principal repayment, accelerating the process of building equity in the property.

EMIs provide financial predictability, allowing homeowners to budget effectively.

Tax Perks

Tax breaks associated with a home loan are the financial advantages provided by the government to the people who have taken housing loans. It is an incentive designed to encourage investing in real estate. Under section 80C and section 24b, borrowers can claim up to Rs. 1.5 lakhs and Rs. 2 lakhs, respectively. Furthermore, under section 24b, there is no limit for claiming tax benefits on the interest component of the loan if the property is let out.

2. Renting 

Renting offers housing flexibility. It is a wise option if you need a temporary place, want financial flexibility, or haven’t yet decided on a specific location.

Understanding the Perks

Renting provides flexibility in terms of mobility. You can easily relocate to other places for work or personal reasons. It requires a smaller upfront cost compared to buying a property. You don’t need to save for substantial down payment or maintenance expenses.

Tax Benefits

As a renter, you don’t need to pay loan interest as your homeowner has this responsibility. Renters may be eligible to claim certain deductions, like those related to home office expenses, depending on their occupation and circumstances.

Home Loan vs Renting – A Direct Comparison

Now that we have seen each option individually, let us compare costs and benefits side by side.


Home Loan


Financial Investment

Home loans contribute to lasting wealth, with each EMI building equity in a tangible asset.

Renting offers immediate flexibility but lacks long-term investment potential.

Long-Term Gains

Homeownership presents opportunities for appreciation, providing potential long-term financial gains.

Renting provides short-term reliefbut misses out on potential returns over time.

Tax Benefits

Home loans come with tax benefits – they offer a financial advantage in the form of deductions.

Renting doesn’t provide tax benefits – meaning fewer financial advantages.


While home loans may have some restrictions, the property is yours to personalise and modify.

Renting offers immediate adaptability but with limitations on customisation.

Monthly Costs

EMIs represent a steady monthly cost, which, over time, contributes to ownership and potential equity.

Rental payments contribute to housing but do not build equity or offer ownership.

Before you make any decision, it is important to remember one thing: your decision isn’t just about right now, but it shapes your story in the future. If you are thinking that the choice to rent is easier, less expensive, and quicker, it would be advisable to take a second look.

Can’t afford to fund the whole purchase? A home loan will come to your rescue – making you a proud homeowner and investor within no time.

Be Smart, Choose Better Today

Every person’s situation is different, but there are certain benefits of buying a home and adding it to your portfolio that renting will not offer. If you choose to buy a home, the one thing you won’t have to stress over is the finances. Why? Because a home loan provides the necessary financial support at the right time. 

Picking a trustworthy, reliable lender to get a loan is always a smarter idea. Established names like Tata Capital come with strong financial backing from reputed fund houses. Benefits like rapid disbursement, easy payment terms, and lender-friendly processes make getting a home loan hassle-free. Which new homeowner wouldn’t be delighted to have their financials taken care of? With their help, new homeowners can fulfil all their dreams without worrying about their finances. 

So, apply for a loan today! 

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