Here is the one thing which was drilling my heart and soul for quite sometime. Which I realised off late that I should share my thoughts on this. I may not be right but I am definitely nowhere near to any wrong information.
All of us whether it is of any class of the society. looking for a easy money for a property and the first stop is at any lending banks. I am not targetting any bank here. This includes both Nationanlised and Privatised banks.
it is true, nobody has the huge amount or reserve to buy in one go. whether it is flat or independant house.so it is quite obvious for a bank loan. But 95% of people realise and repent later for this act.
I will directly come to the calculation part.
This details are applicable for Urban and Sub Urban areas which has the rapid growth in the recent past and the years to come.
current market rate for a 1000 sq ft in a good locality costs you 35 lacs
When you go for a home loan you get 80 to 90% means, 30 lacs approx
lets assume the average interest(floating) in market 10%
so our monthly emi we need to pay is 30, 000
we need to arrange for 5 lacs to buy that flat thro loan
Extra registration charges 9% of the property value
so on the whole, you need to spend atleast 8 lacs from your pocket to get a loan(30 lacs) and property worth 35 lacs
So Now come the interesting factor. tenure 20 years
1 month= 30000, so for one 1 year 3.6 lacs, for 20 years it is 3.6 lacs* 20= 72 lacs
So this is the bare minimum amount which we need to pay for the loan. until unless the interest rate doesnt change.
but recent market study shows that floating rate is increasing half yearly irrespective of banks.
so for the 30 lacs @ 10% for 20 years we pay 72 lacs.
it is 100% sure that u will be paying more that 72 lacs. not less than that for sure.
this is applicable for both flat and ind house.
so my question is do we really need a house of our own in a fast growing real estate market.?
Ofcourse we get tax exemption, to which we can save upto the 20% of the final amount. which would be negligible when your pay back amount touches crore mark.
Ok now I coming for the defence of my point going for a rental house .
No tension of locating area.
on an average even with the posh locality. we need to pay 15000 as rent.
15k for 1 month, 180000 for a year, 360000 for 20 years. in this 30% savings thro HRA so final comes to 25 lacs for 20 years.
4.and most important, most of the todays jobs are dynamic and often changing places, so most of the time we need to rely on rent house even if we have a own house.
if the amenities are good, rent is so adviceable, with the amount we need to pay 25 lacs for 20 years. so with the amount of 75 lacs paying as home loan we can stay upto 60 years in rent alone. I agree, rent will not be the same for next 60 years. but the inflation and money value will not make a huge impact as our CTC will grow naturally.
above all, u r enjoying for what u r paying. whereas in housing loan . whether u enjoy or not.u need to pay 2.5 times more than the property value.
Recommendation.
I would recommend for those who have already a own house, dont go for a new house that too with loans. on otherside buy some land or house in the rural and slowly growing places. where u get 3000 sqft for 2 lacs or so.or even cheaper. but just imagine the same tenure of 20 years. that particular place would have claimed atleast sub urban status. so after 20 years. u will be multi millionaire . this is a kind of smart investment.
Pls dont get carried away with the gimmicks shown by banks and builders. in this world nothing comes for free. and if the world is so MEAN to you, then why cant u then do the same to the world.
Hope you got what I meant.so far. I am open for criticism.pls share ur comments and experiences so that other readers can get more educated than what they are. why I mentioning this point is, all the mistakes are done by all people like us, so called engineers, doctors.so called learned people. being ignorant about the future and getting carried away with the current storm in real estate.