--- title: Day 18- Rent or Buy description: Day 18 task is to explore the possibility of buying a house and see how well the numbers fit in. image: https://www.financialplanningindubai.com/hubfs/Rent%20or%20Buy.png --- [![Financial_Planning_in_Dubai_logo](https://www.financialplanningindubai.com/hs-fs/hubfs/Financial%20Planning%20in%20Dubai%20Logo_9090-2.png?width=90&height=90&name=Financial%20Planning%20in%20Dubai%20Logo_9090-2.png "Financial_Planning_in_Dubai_logo")](https://www.financialplanningindubai.com/?hsLang=en-gb) - [Home](https://financialplanningindubai.com/) - [Blog](https://www.financialplanningindubai.com/blog) - [Services](https://www.financialplanningindubai.com/services) - [Islamic Investments & Takaful Plans](https://www.financialplanningindubai.com/blog/salama-hyat-plus-takaful-plan) - [Medical Insurance](https://www.financialplanningindubai.com/blog/topic/medical-insurance) - [Free Resources](https://www.financialplanningindubai.com/free-finanical-tools) - Tools - Calculators - [S&P 500 Investment Calculator](https://financialplanningindubai.com/sp-500-investment-calculator/) - [Life Insurance Calculator](https://www.financialplanningindubai.com/life-insurance-calculator) - [SIP Calculator](https://financialplanningindubai.com/sip-calculator/) - [Lumpsum investment calculator](https://www.financialplanningindubai.com/lump-sum-investment-calculator) - [Inflation Calculator](https://www.financialplanningindubai.com/inflation-calculator-uae) - [Net-Worth Calculator](https://www.financialplanningindubai.com/blog/free-personal-balance-sheet-template-networth-statement) - [The Best Budget Planner for Expats](https://www.financialplanningindubai.com/expat-budget-planner) [Book A Discovery Call](https://www.financialplanningindubai.com/meetings/damodhar?hsLang=en-gb) # Day 18- Rent or Buy ![Damodhar Mata](https://app.hubspot.com/settings/avatar/e63bc971ec29ebe6c012fd042c1a8215) [Damodhar Mata](https://www.financialplanningindubai.com/blog/author/money-mata-aka-damodhar-mata) 27 Jan 2023, 08:52:21 ###### [30 Days Challenge](https://www.financialplanningindubai.com/blog/topic/30-days-challenge) Last week, I got a call from a young expat couple wanting to know if they should buy or continue to rent. Like many expats, they were tired of renting and wanted to buy a house. A place where their children would play and grow. A place where they could grow old, creating nostalgic moments to be relived in the future. They also liked the idea of building equity into a property instead of just paying rent. However, they were also going through a range of emotions like excitement, nervousness, stress, and confusion. So the couple reached out to me for an emotion-free opinion that made financial sense. ![Rent or Buy](https://www.financialplanningindubai.com/hs-fs/hubfs/Rent%20or%20Buy.png?width=740&height=400&name=Rent%20or%20Buy.png) ## The Idea To begin with, it was an excellent idea. The couple had lived in Dubai for over a decade and spent over a million dirhams in rent. They were expecting to live here for at least 15-20 years, and buying a home could help them save a lot of money over time.  We sat down to discuss the idea and the numbers.  The house they wanted to buy was around 4 million dirhams.  The couple had money saved for different purposes and could pool it together to pay down 30% of the property.  They had no other loans and saved almost 40% of their income. The mortgage was pre-approved, and everything looked well set up for buying the house. I asked them how much rent they were currently paying. They said about AED11000 per month. The proposed mortgage payment was around AED21,000. Everything looked good as an idea until we put the numbers on an excel sheet. ### Number Crunching  ![Screen Shot 2023-01-27 at 5.57.37 AM](https://www.financialplanningindubai.com/hs-fs/hubfs/Screen%20Shot%202023-01-27%20at%205.57.37%20AM.png?width=500&height=248&name=Screen%20Shot%202023-01-27%20at%205.57.37%20AM.png) At the end of the exercise, we decided that they would not buy the 4.00 Million dirhams house but would look for a property in the range of 2.00 Million.  ![Screen Shot 2023-01-27 at 5.57.50 AM](https://www.financialplanningindubai.com/hs-fs/hubfs/Screen%20Shot%202023-01-27%20at%205.57.50%20AM.png?width=500&height=245&name=Screen%20Shot%202023-01-27%20at%205.57.50%20AM.png) By buying a house within their budget, they are not only saving on interest. They are also not putting stress on their cash flow while being able to focus on other important goals like; Retirement and Children's higher education. By spending only a portion of their savings on the downpayment, they also have enough for emergencies.  And most important of all, they would be able to pay the EMI even if one of them is unemployed.  Day 18 task is to explore the possibility of buying a house and see how well the numbers fit in. You can use the following Thumb Rule from [Day 12](https://www.financialplanningindubai.com/blog/thumb-rules-of-money?hsLang=en-gb) to decide how much house you can afford; #### Rule of Thumb for buying a home using a mortgage:  Property Value = 3 - 5 times your annual household income.  If the numbers make sense and you want to buy one, go ahead and buy your dream home. If not, continue to rent until you have saved enough. But I wonder what ChatGPT's response to this question would be! Will it take into consideration emotions, or will it only go with facts? Hope you this is of value to you. Feel free to share your thoughts on the above.  See you tomorrow  ![Damodhar Mata](https://app.hubspot.com/settings/avatar/e63bc971ec29ebe6c012fd042c1a8215) [Damodhar Mata](https://www.financialplanningindubai.com/blog/author/money-mata-aka-damodhar-mata) Author, Blogger & Independent Financial Advisor. My goal is to give you actionable tools for creating passive income and building wealth. More than 10,000 expats have already used my ideas to jumpstart their journey towards financial independence. Connect with me to start yours... Share this article on [mailto:?subject=Check%20out%20Day%2018-%20Rent%20or%20Buy%20&body=Check%20out%20https://www.financialplanningindubai.com/blog/day-18-rent-or-buy](mailto:?subject=Check%20out%20Day%2018-%20Rent%20or%20Buy%20&body=Check%20out%20https://www.financialplanningindubai.com/blog/day-18-rent-or-buy) ##### Read more - [The Real C-Suite – The Only Title That Matters 🏆](https://www.financialplanningindubai.com/blog/breadwinner?hsLang=en-gb) - [The Wealth Secret 99% of Investors Ignore – Will You?](https://www.financialplanningindubai.com/blog/the-iceberg-of-investing?hsLang=en-gb) - [From Risk to Reward? The Shifting Case for China Investing](https://www.financialplanningindubai.com/blog/from-risk-to-reward-the-shifting-case-for-china-investing?hsLang=en-gb) ## Further Reading [![Expat’s Finances - Too Much Month at the End of Money?](https://www.financialplanningindubai.com/hs-fs/hubfs/Stock%20images/Young%20couple%20calculating%20their%20domestic%20bills%20at%20home-1.jpeg?width=300&name=Young%20couple%20calculating%20their%20domestic%20bills%20at%20home-1.jpeg)](https://www.financialplanningindubai.com/blog/2012/07/29/an-expats-finances-more-month-at-the-end-of-money?hsLang=en-gb) ###### [Personal Protection and Savings](https://www.financialplanningindubai.com/blog/topic/personal-protection-and-savings) ##### [Expat’s Finances - Too Much Month at the End of Money?](https://www.financialplanningindubai.com/blog/2012/07/29/an-expats-finances-more-month-at-the-end-of-money?hsLang=en-gb) UAE and in particular, Dubai is a great place to live and work in. [Read More](https://www.financialplanningindubai.com/blog/2012/07/29/an-expats-finances-more-month-at-the-end-of-money?hsLang=en-gb) [![Beneficiary Trusts: The Smarter Way to Build and Pass On Your Wealth](https://www.financialplanningindubai.com/hs-fs/hubfs/What%20is%20a%20Beneficiary%20Trust%20%26%20Why%20you%20need%20one%20now%20(350%20%C3%97%20250%20px)-2.png?width=300&name=What%20is%20a%20Beneficiary%20Trust%20&%20Why%20you%20need%20one%20now%20(350%20%C3%97%20250%20px)-2.png)](https://www.financialplanningindubai.com/blog/what-is-a-beneficiary-trust?hsLang=en-gb) ##### [Beneficiary Trusts: The Smarter Way to Build and Pass On Your Wealth](https://www.financialplanningindubai.com/blog/what-is-a-beneficiary-trust?hsLang=en-gb) Most people focus on growing their wealth. But very few plan for how that wealth will be passed on. [Read More](https://www.financialplanningindubai.com/blog/what-is-a-beneficiary-trust?hsLang=en-gb) [![Top 10 retirement quotes that inspire to save & invest for your future](https://www.financialplanningindubai.com/hs-fs/hubfs/Top%2010%20retirement%20quotes%20%28800%20x%20400%20px%29.png?width=300&name=Top%2010%20retirement%20quotes%20%28800%20x%20400%20px%29.png)](https://www.financialplanningindubai.com/blog/top-10-retirement-quotes-that-inspire-to-save-invest-for-your-future?hsLang=en-gb) ###### [Retirement Planning,](https://www.financialplanningindubai.com/blog/topic/retirement-planning)[Retirement Quotes](https://www.financialplanningindubai.com/blog/topic/retirement-quotes) ##### [Top 10 retirement quotes that inspire to save & invest for your future](https://www.financialplanningindubai.com/blog/top-10-retirement-quotes-that-inspire-to-save-invest-for-your-future?hsLang=en-gb) Words have power. When delivered with the right intent and energy, they incite, empower and... [Read More](https://www.financialplanningindubai.com/blog/top-10-retirement-quotes-that-inspire-to-save-invest-for-your-future?hsLang=en-gb) *Damodhar Mata | Your Trusted Financial Advisor in Dubai* ![Damodhar Mata-7-2](https://www.financialplanningindubai.com/hs-fs/hubfs/Damodhar%20Mata-7-2.png?width=119&height=119&name=Damodhar%20Mata-7-2.png) *I can help you grow wealth, gain passive income, and achieve your goals faster and with ease. * **Top Pages** - [Home page](https://www.financialplanningindubai.com) - [Best Life Insurance](https://www.financialplanningindubai.com/best-life-insurance-dubai) - [Best Investment Plan](https://www.financialplanningindubai.com/blog/how-to-invest-in-uae) - [Retirement Planning in the UAE](https://www.financialplanningindubai.com/retirement-planning-in-uae) - [FIRE Early Retirement Guide](https://www.financialplanningindubai.com/blog/early-retirement-in-uae-fire-guide) - [Best Child Education Plan](https://www.financialplanningindubai.com/childrens-education-planning) **Top Blog Posts** - [Financial Planner or Financial Advisor?](https://www.financialplanningindubai.com/blog/financial-planner-or-financial-advisor) - [How to find the Best Financial Advisor](https://www.financialplanningindubai.com/blog/best-financial-advisor-uae) - [Win With Money Challenge](https://www.financialplanningindubai.com/blog/30-days-win-with-money-challenge) - [FIRE guide for expats](https://www.financialplanningindubai.com/blog/early-retirement-in-uae-fire-guide) - [Pay Yourself First](https://www.financialplanningindubai.com/blog/how-expats-in-uae-can-grow-wealth-using-pay-yourself-first-strategy) - [Google Reviews](https://www.financialplanningindubai.com/testimonials-financial-advisor-in-dubai) **Other pages** - [About us](https://www.financialplanningindubai.com/about-us) - [Testimonials](https://www.financialplanningindubai.com/testimonials-financial-advisor-in-dubai) - [Services](https://www.financialplanningindubai.com/services) - [Contact us](https://www.financialplanningindubai.com/contact-us) --- © 2024 Financial Planning in Dubai. 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