Wanna buy a House?
I was trying to buy a house in Chennai and finally wound up the idea due to various financial factors. Here are few things I learned in last few months.
It’s everyone’s wish to buy and own a house. But, there are pros and cons as every decision has. One should think about various factors before deciding whether going for buying a house.
First, what is the need of own house? If your entire family don’t have a house to own, then it is worth to think and buy it, as you should definitely own a house, if not for you, at least for the next generation. If you have a house already as a family property and then we need to think about various factors.
Second, what is source of money to buy the house? Almost everyone is going to go for Home Loan. Banks also gives only 85%. The remaining amount, you have to put from your pocket. Of course, for that also, most of us go for another loan. Here’s where the problem starts. If you don’t have that 15% to fill in, then better you don’t go for taking a Home Loan at all. Because, you have to pay a huge sum as EMI already and another sum for personal loan. When you consider you take home salary, these two parts take almost 75% of your net salary, which gives very low money for livelihood. Considering skyrocketing expenditure and inflation, we may definitely need more money every year to cope up with Inflation.
Third, You need to decide, what is the budget for your house. This is very important, because we sometimes, get tempted to buy the house, if it is really good. The owner will fix a rate which is more than your budget. Now, you are trying to take another loan and take money from other sources, to fill the gap and buy the more expensive house. This is practically not a good idea as it will create more problems than any good. You have to stick to the budget and not to get carried away with the look of the house.
Fourth, Do you need a car park? This is considered to be the most important factor in today’s buyers. Everyone is asking for car park, because of known reason that everyone wants to own a car in near feature, if not today. Considering Tata’s 1 lakh car, every IT professional is expected to buy a car in one or two years. The owner or builder always tell you, you can easily park your car outside. But, you need to think for the long term. Today, you might have space in Road to park your car. But, tomorrow, the space might be occupied by the Corporation for something else. Or they might simply tell you not to park the car in that place. And another factor is, if you are going for out of town, how many days, your car will stand outside. When you comeback, what’s the guarantee the car will there still. So, now, what you will do? So, if you are going to buy a car in feature, don’t even think of going for a house without having space car park.
Fifth, let’s come back to the finance matter again. Today, we calculate, the interest rate according to the current market rate. Based on the interest rate, Bank fixes the EMI. Two years ago home loan interest rates were somewhere around 7.25 to 7.77. But, today it is between 10.50 and 11. So, if it increases further, obliviously EMI will also go further. Either EMI amount will increase or the number of years will increase. In either case, you are the looser. It is best recommended to get only minimum amount from the bank as loan, and put your own money for the rest. My recommendation is to have at least 30% of money in your pocket and go to the bank for the rest. Another advise is take the loan for minimum number of years. There are various EMI calculators available in the Bank’s websites. Use them and decide house much EMI, you have to pay for the loan amount you take. Just see the total amount you will pay after your tenure. It will be a huge sum. You will end up paying 3 times of you actual amount. You can bring down this cost, by taking minimum number of years for the loan period. Just the use the EMI calculator and see the difference between 15 years and 20 years. The EMI difference will be very low and but the total amount difference would be very high. In this way, you can save a lot of money. But the problem is, Bank will not give maximum money for 15 years. I mean they have slob for the period. If you are eligible for 20L for 20 years, you might be eligible only for 17L if you go or 15 years.
Sixth, the major reason why people go for own house is they get a new permanent address. You are the house owner so, there is no need of vacating the house. In rented house, you will be asked to leave every 2 years. Of course it completely depends on your relationship with the house owner.
Seventh, there are some advantages of living in rented houses also. You don’t need to worry about your house, for any natural calamities. If something happens to the house by any earthquake or something else, you can simply leave. If your company is moved to some other place which is too far from your current place, you can easily shift to the new place. Or even you might get an opportunity to go out of country or city, for which you need to vacate your house. In that case, being in rented house is extremely helpful.
After taking to many people, and taking their advise, finally I decide not to buy a house now. I can live happily for my monthly net salary, if there is no need of paying any EMIs. If most of the money goes for EMI, then what do you have for living. After starting paying EMI, you will always think about money and how to live the small money you have after paying EMIs.
You are the best person to decide what/when/how you want.
