Some suggest that buying a house isn’t necessary and that renting is advantageous. While some believe that owning a house is essential, staying on rent comes with various financial losses and multiple issues. However, neither argument reveals the complete truth. Today, we’ll explain the whole truth about whether, when, and why one should buy a home or continue renting in detail.
In reality, everyone dreams of having their own home; it’s an emotional connection with a place called home. Consequently, some people, especially in metropolitan cities, buy houses or flats as soon as they secure a job. This becomes feasible due to the easy availability of home loans, with savings thrown into the down payment.
Before purchasing a home, everyone should consider at least four aspects and then make a decision. When you deliberate on these aspects, you won’t necessarily need a specialist; you can make your own decision whether buying a home is essential for you or if it might be a wrong step.
Home Loan EMI Formula 2023: First Criterion – Salary: Individuals should consider buying a house only if the EMI amount for a home loan is 20-25% of their salary. For instance, if your monthly salary is Rs. 100,000, you can comfortably afford a home loan EMI of Rs. 25,000. However, for salaries between Rs. 50,000 to 70,000, purchasing a home resulting in an EMI of Rs. 25,000 per month will be financially burdensome because repaying a home loan takes a minimum of 20 years. The notion or advice that you shouldn’t buy a house is entirely wrong. Renting does have its advantages. If your salary can accommodate an EMI that’s only 25% of the amount, then go ahead and buy a house. For individuals earning between Rs. 50,000 to 70,000, it’s advisable to save while renting and wait until your salary reaches around Rs. 100,000 to make a larger down payment and buy a house. The higher the down payment, the lower the EMI will be.
Financially speaking, if someone earns Rs. 100,000, they can decide to purchase a home worth Rs. 30-35 lakhs. Similarly, for those earning Rs. 1.5 lakhs per month, a budget of up to Rs. 50 lakhs for a home would be appropriate. In any case, the maximum amount for the home loan’s EMI should be derived from the salary.
Home Loan EMI Formula 2023: Second Criterion – Decision as per Need: Decisions should be made based on necessity. What kind of work do you do? What’s your job profile? Decisions should be made based on these factors. If you buy a house immediately with your first job, you might get stuck in that city in a way. Due to career growth, most people tend to shift from one city to another in the initial stages. However, when buying a house with the first job, individuals are not inclined to change jobs. This is because they don’t consider it appropriate to live on rent in a new city and then rent out their own house. Additionally, if job security is uncertain, refrain from hastily buying a house.
Home Loan EMI Formula 2023: Third Criterion – Property Selection: If you’ve decided to buy a house, choose the property carefully. If you want to buy a flat, choose a location where you can get a good rental amount. Additionally, the flat’s price should witness an annual increment of at least 8% so that with inflation, the flat’s price increases and after repaying the home loan, i.e., after 20 years, the current price should be at least three times the buying price.
Home Loan EMI Formula 2023: Fourth Criterion – Real Estate Investment: If you’re considering investment in real estate, it’s better to buy a house connected to land in tier-2 or tier-3 cities. If a house linked to land isn’t available, buying just land could be an option. Land has historically provided better returns compared to flats. Not only that, but in many cities, there has been a decrease in flat prices last year, making buying a flat a potentially losing deal. When buying land, you can build your house according to your wishes.
It’s worth noting that some people burden themselves with EMIs by buying a house and a car with their first job. This often proves to be a completely wrong decision in the future. Therefore, decisions should be made based on necessity. If you start saving from your first job, you’ll feel secure about your retirement at the age of 40.”
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Information Source : Internet
