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Want to buy a 2 Crore home need suggestion ?

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Deal Lieutenant
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Want to buy a 2 Crore home need suggestion

So, one of my friend has 80 lakhs in hand and he is looking for a home. Now he has checked many properties but due to paper issues, locations or other negative reasons it took lots of time. Now finally he has end up searching for his perfect dream home as he got a nice option but the property he is willing to buy will cost him around 2 crore including registration, broker charges etc.

Should he take a big loan of 1.2 crore and go ahead with this property ? or he should go for other reasonable option?

His earning is Rs.1.3 lakhs monthly and his is completely debt free

please give your best advice, thanks.

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Assuming it's metero city looking at the valuation.

It all comes down to,

1. Cash left after Emi

2. Monthly expenses

3. Occasional travel/dinning etc

4. Marriage/child educational expenses

5. Potential salary hikes/income hikes

6. Dependent old age parents

1.2Cr is huge amount since emi has to be paid every month till 25-30 years, he should be very cautious. Selling and buying is very tough job, it becomes harder to sell high value properties as people who can afford reduces significantly. 

Also the property appreciation maybe equal to the interest paid on loan(my own estimates). 

If the property is earning some rentals along with stay, then it would be ok.

I suggestion: if he buys the home ask him to take a term insurance (of not already have one) covering the ~1.5Xloan amount, it will make sure the loved descendents will not be in trouble.


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from recent personal experience, i would not suggest someone to spend their entire savings and again taking huge loan for house and be in debt for significant time. i know it is everyone's dream to own a dream house but in today's market it is a trap.

ps: no offence to anyone.. but just an honest real life review

Deal Cadet Deal Cadet
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I would suggest to buy property ranging from 80 lakh to 1 cr. taking 1 cr loan will put huge pressure on a salaried person. I myself bought a flat for 2 cr.(had to buy high value property to reduce capital gain on property sales). Its present value is 4cr+ as it is 2kms from my office and is located in prime location. but for me my property value is zero as I live in it. It will be an asset to my future generation when they sell this.

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Generous Generous
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Will this be a primary residence and his first property, if not I don't see any reason to go into debt over it.

Deal Lieutenant Deal Lieutenant
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yeah first property 
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Cool Cool
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Assuming a ROI of 8.4% and loan amount of 1.2 Cr

If
Term is 15 year EMI will be 117466
Term is 25 year EMI will be 95819
Term is 35 year EMI will be 88739

It is advisable to keep EMI at 30-40% of salary, how he is going to do that

Pro Entertainer Pro Entertainer
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Same question.

Also if he spends his 80lk and takes this huge loan(wrt emi calc) what does he have for unfortunate circumstances for the 1st 5 years? 

This may be resolved if he is in a joint family with others who could support him .

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Assuming it's metero city looking at the valuation.

It all comes down to,

1. Cash left after Emi

2. Monthly expenses

3. Occasional travel/dinning etc

4. Marriage/child educational expenses

5. Potential salary hikes/income hikes

6. Dependent old age parents

1.2Cr is huge amount since emi has to be paid every month till 25-30 years, he should be very cautious. Selling and buying is very tough job, it becomes harder to sell high value properties as people who can afford reduces significantly. 

Also the property appreciation maybe equal to the interest paid on loan(my own estimates). 

If the property is earning some rentals along with stay, then it would be ok.

I suggestion: if he buys the home ask him to take a term insurance (of not already have one) covering the ~1.5Xloan amount, it will make sure the loved descendents will not be in trouble.


Generous Generous
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@whyred my initial hesitation exactly. Real estate has gotten way out control, normal people can't buy anything.

Cool Cool
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Yes very bad situation in tier 1 cities. On top of that we are getting more pollution
Helpful Helpful
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from recent personal experience, i would not suggest someone to spend their entire savings and again taking huge loan for house and be in debt for significant time. i know it is everyone's dream to own a dream house but in today's market it is a trap.

ps: no offence to anyone.. but just an honest real life review

Benevolent Benevolent
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bro totally agree with you. if u dont mind then can u share ur experience, it will definitely help others/
Deal Cadet Deal Cadet
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is this tier1 city .. ? tier 1 builder ? there is a property price boom in pan India .. and I don't think its going to stop .. 

Benevolent Benevolent
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population>land

demand>supply

Benevolent Benevolent
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I do not think any bank will give so much 1.2cr loan for 1.2lacs/month salary

We should consider even Income tax rise in near future because of freebies wave😌

He should look for another home,there are always better options available.

 one can not enjoy the home with so much tension

Finance Mentor Finance Mentor
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Calculated madness... budget should be 1 to 1.25cr max...

Deal Cadet Deal Cadet
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I would suggest to buy property ranging from 80 lakh to 1 cr. taking 1 cr loan will put huge pressure on a salaried person. I myself bought a flat for 2 cr.(had to buy high value property to reduce capital gain on property sales). Its present value is 4cr+ as it is 2kms from my office and is located in prime location. but for me my property value is zero as I live in it. It will be an asset to my future generation when they sell this.

Benevolent Benevolent
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bro what parameters to look for if one is looking for a flat? and with time as doesn't older construct flats become stagnant in price rise or the maintenance increase becomes higher and you purchased a ready to move in flat?
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Generous Generous
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Where is this place anyway, Your friend wants to buy?

Generous Generous
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Everything is done by Friend..

Purchases

Frauds

Worng Transfers

Fraud calls receiving

ITR Notices receiving grin grin grin smile smiley grinning stuck_out_tongue_winking_eye stuck_out_tongue_winking_eye

Benevolent Benevolent
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Yeah.. Desidime must be renamed to dosti dime. 

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Generous Generous
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He's going to pay his entire Salary in the EMI and 0 savings left.

Not at all the good idea. Better, negotiate with the seller. Sometimes if they are in hurry to sell, they do negotiate a lot.

Going beyond 1.25 - 1.5 Cr is not suggested based on this situation.



Specialist Specialist
Moderator
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suggested to go ahead if your friend

1.  can share the loan with a partner and the liability comes to 0.6c/person

2.  is having a steady job and assured of regular hikes and protected by term insurance.

3. have other properties which can be sold / has good family  financial support 

Deal Lieutenant Deal Lieutenant
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Yeah he has 1 properties from his family which he has right to sell in future worth 55 lakhs around. But currently he is no plan to sell that.

Is that possible to take regirsty of the property in 2 parts-
like 50% of the property bought in name of his mother by paying complete half and no liability 

other 50% in his name with bank loan and 20% down payment?

In that way at least 50% of the property ownership stays to them but the other part he has to hustle to pay loan and get ownership after paying the whole loan amount?

just a though is that possible ?
and a plan to rent the other part of the property?
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Helpful Helpful
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Do not mix investment with business.

Business: Take loan and invest and rent it out.
Invest/Asset: Take loan and live there and enjoy (Unfortunately, 1L/month salaried guy can enjoy the unit which is less than 50L).

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Little bit more info to the above.


FLAT : Land cost (Undivided share) increases over the period of 30 years. After that the building gets demolished (and rebuilt or land gets sold).

When you rent out the flat , the rent will be equal to EMI from 11th year onwards.

So, first 10 years, one has to pay  the difference (of EMI - rent) from pocket.


Individual building:  The land cost would be our initial payment from the pocket.

The rent would be equal to EMI from the first year onwards for the loan taken for the building cost (excluding the land cost ).


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Deal Cadet Deal Cadet
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at first He won't get loan of  1.2 crore on salary of 16 lakh/year ,  Maximum banks lend out 5-6 times of annual salary , with EMI + plus Income tax , your friend will be left with Zero rupees in hand 

Helpful Helpful
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Bookmarked the thread.. OP is the location Hyderabad?

Helpful Helpful
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Baki sab toh thik hai koi yeh Bata do woh kaunsi bank hai joh 1.2L salary walo ko 1.2cr loan de rahi joy

Jokes aside, banks give home loan upto 100% of your salary but they consider only 60% of your salary into acc rest are consider as living Expenses.

If he is married or there is another earning member in the house he can take the co-join loan & can harvest tax benefits.

Also, Factor in lifestyle Expenses, home expenses,  kids expenses before taking loan, coz it's going to be with you for longer time (for some more than there marriages smile)

Also, the decent 2bhk in tier 1 cities especially Mumbai starts around 1.5cr+ so it's not a really big amount as from comments

Deal Lieutenant Deal Lieutenant
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He is not alone buddy, definitely he will take his brother or wife together if he is thinking of a loan. so combined earning will be more.

2 tier city bdw

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Helpful Helpful
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try to keep ur emi at max 30% of salary...so decide ur budget accordingly

getting a good flat is big thing n delaying purchase is also not very advisable as property rates keep on increasing

Generous Generous
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neutral_face rolleyes

Deal Subedar Deal Subedar
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@Best_Deal_Hunter 

more details required.. like

age of ur friend

spouse or family members working? if so total income of the household.

My General suggestion is its best not to invest in a "dream home" till the age of 50 or atleast 45

By doing so u can invest the surplus in a some good equities which grow in a long term or index funds etc. this will result in a debt free dream home buying expreiance...! coz equity growth is significantly higher than the real estate growth...!

with time our priorities and likes will chagne bro.. who knows he might be interested in buying an indivual farm house in outskirts of city or suburb which will be very much cost effecient compared to a prime location real estate.

ur must ask himslef these below questions for himself  before taking this decision.

whats the likely hood of staying in the same city for the rest of his life... ?

any abroad oppurtunities he is interested in?

lastly..

buying a 2cr home supported by his own income is very bad idea bluntly put...!

plus u dont necessarily need to own the property (with huge debt)  to experience the same..! u can also rent a simliar property with some compromises at a very significant monthly outflow compared to the present arrangement. plus no huge commitements and freedom to shift anywhere without much cost involved.

30000 rental would seems a very good deal compared to 85k monthly EMI....!

peace of mind is a very valuable asset for growth and which is very muh underrated nowadays...!

Deal Cadet Deal Cadet
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I already gave my views. I will emphasize one point that property in which you are staying is not an asset but a liability. It is only a asset when you sale or an asset to your future generation.

I myself pay maintenance charges of 10k each month for my flat .  So it is a liability for me. My old  property which yields a monthly rent of approx. 20k which has now become an asset for me.

I will myself never sell the flat as I did interior which costed me a bomb (50 lakhs).I will live lifelong in it.

If OP's friend is investing all his funds in the property then he is investing in a liability not an asset.

After reaing all the posts I think he should not cross 50-60 lakh in buying a liability in tier 2 city.

Invest rest 20 lakhs in mutual fund and generate 12-15% returns in long run and live life debt free.

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Deal Cadet Deal Cadet
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Gone are the days when old people used to buy property in double digit thousands or single digits lacs but sell them in crores.

Dont expect that kind of return think if you buy in crores u will end up triple digit crores like past.

India's main natural resource = Cheap human labour which is why rental yields are the lowest in the world so that masses will not suffer.

Japan was what China is, India is what China was, Africa will be what Japan, China & India was.

Plus AI is challenging the cheap labour which India has as its main export.

India is reaching its peak and what goes up must come down as it pure economics.

Get a budget home & with 80 lacs cash in a tier 2 town, no need to leverage if you want a home for living unless u need a house for money making via rent etc.

Big EMI which catch up with you, your relationships, your life, lifestyle. There is more to life that HOUSE.

HEALTH IS WEALTH. 

Helpful Helpful
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Really shocked to see such pricing in 2nd tier city.

Having bought 3 flats and sold 2 in tier 1 city, I feel it just doesn't make any sense going for such Transaction.

If he is debt free and has 80L in hand , he can easily buy decent 2-3BHK flat.

Consider Pune tier 2 city for example.

Never Consider such high value real estate as investment and selling it becomes very very tough. (Based on personal example).

Blaze Blaze
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No point on buying a 2cr home, what if your wife put a false case on you and later get the house for free as a part of alimony. joy joy

Deal Newbie Deal Newbie
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Depends on which city you are targeting man. 2Cr is lot of money. But if you are looking for a flat in Mumbai then you can only get a 2BHK flat,  nothing close to the picture you have against your post.

Deal Newbie Deal Newbie
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What is  the rent of this property

Deal Newbie Deal Newbie
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I have purchased a property worth 1.8 in Gurgaon prime location as I was fed up paying huge rents, I will get the possession in an year and will be happy that my money will go to my own property instead of someone's account as rent.

I will be paying 90 L in installments and other 90 in loan, My household Salary is 2.2-2.5 L.

I do feel some financial constraints while planning vacations, but having own house is worth it.

Generous Generous
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Congrats BTW, the person in question has half your salary. His position will be untenable that's what everyone's been saying.

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Firestorm Firestorm
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He can take a loan for 15yrs .. easily...

And get a 2Bhk in mumbai (south) (average builder, or under development property)

Or buy a 3bhk in thane or upper mumbai ..

(If mumbai is a choice for him)

Deal Cadet Deal Cadet
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30 year law is fine but it will be very difficult to implement. builders wont like it as then the price of the flat will decrease significantly. constructing again will be significant amount for the residents.

government i think wont pass any strict law to enforce this as anyway finding housing is costly and difficult. lots of people buy old flats as they cant afford new flat. I can easily sell my 3bhk old flat for 75 lakh upwards which is more than 35 years old. a new flat will cost 90 lakh to 1 cr in my area.

Benevolent Benevolent
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but doesnt big builders get the buildings certified by an engineer companies after 5-10 years to get some certificate which certifies that the building is ok to live in?
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