Should i buy a home on loan, pay monthly EMI OR rent a house, and reinvest the rest? Whats the best option?
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Should i buy a home on loan, pay monthly EMI OR rent a house, and reinvest the rest? Whats the best option?
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staying at cheap rent will be better option if u young & expect undecided about where to stay.
if u old & plan to retire at same place then buy as money has lost its meaning along with your youth.
explore this life vs exploit
regadless advise going for low budget and focus on people & relationships as u are going die in a home vs house
Buy. Pay EMI and stay. If in the future you relocate, you can always sell the property and use the capital gains to buy a new one at another location, possibly a bigger one as by then your EMI paying capacity would be higher.
Even if you continue at the same location, as your salary and disposable income goes up, you can prepay the loan.
Buying a property at young age (say 25) gives the advantage that by the time you are 36-37, your loan is paid off and you have a place to stay, without any loan in hand. By that time, the value of the property would also have got increased significantly.
Basic difference between rent and EMI is, rent will keep increasing, whereas EMI will remain same and can also be reduced by prepayment.
Asking random people on internet and not your financial planner with respect to life long decisions can be detrimental.
decsion will be your but here are few numbers to do the math ?
mortgage rate excluding fees, charges etc = 8+ %
emi > 30% of take home income = poverty
annual inflation = 10%
annual property appreciation excluding tax, maintenance etc = 6 vs 10% ( city centre vs rural)
annual rental yield before taxes = 2 - 3 %
things to take into account :
society monthly charges ( unless u buy land & build own house)
capital gains taxes when selling (unless again buying proprty or govt bonds to offset tax)
income tax on rental income
FINALLY
1. do not expect the exponential real estate returns of the past as now growth of future india will be on low interest rates and credit = oversupply
2. As labour rates go up foreign investors will move out : so economy will come down just like it went up.
CRUNCH THE NUMBERS BOTH WAYS TO SEE THE TRUTH & DECIDE
If u r living in Mumbai then don't buy home
If not then buy home
staying at cheap rent will be better option if u young & expect undecided about where to stay.
if u old & plan to retire at same place then buy as money has lost its meaning along with your youth.
explore this life vs exploit
regadless advise going for low budget and focus on people & relationships as u are going die in a home vs house
Also, you will get more functions invitation cards ( Marriage, anniversary, birthday ) from neighbors. Because they know you will be going to live here forever, so they will love to have good relations with you. 😜😜
However, this decision also depends on your age. marital status and the society you live in / upbrought.
If you already have ancestral property/home then I think investment will be a great option. But if you don't have that then having my own roof will be my first choice.
Buy. Pay EMI and stay. If in the future you relocate, you can always sell the property and use the capital gains to buy a new one at another location, possibly a bigger one as by then your EMI paying capacity would be higher.
Even if you continue at the same location, as your salary and disposable income goes up, you can prepay the loan.
Buying a property at young age (say 25) gives the advantage that by the time you are 36-37, your loan is paid off and you have a place to stay, without any loan in hand. By that time, the value of the property would also have got increased significantly.
Basic difference between rent and EMI is, rent will keep increasing, whereas EMI will remain same and can also be reduced by prepayment.