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View Poll Results: Home Loans in today's times: Are they worth it?
Do Not take a Home Loan, invest in retirement savings plans, etc. 10 19.61%
Take a Home Loan for a well developed area, it makes financial sense in the long run. 16 31.37%
Take a Home Loan, but not for a well developed, inflated area. 21 41.18%
None of the above, there are other ways of safe guarding your future. 4 7.84%
Voters: 51. You may not vote on this poll

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Old 24th September 2010, 00:52   #31
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Quote:
Originally Posted by download2live View Post
All this is w.r.t Bangalore Real estate.
Recently my friend bought a 2BHK house worth 30 lacs. I asked him like what is the total money he will pay out including the intrest. He said as a rule of thumb the person ends up paying around twice the actual value of the property. So I assume that he will be paying around say 55 lacs at the end of say 15 years. Now the question which is bugging me is that how much the 15 year old flat will be worth at that time?
Also, I would like to know what the expected life of these 30L mid tier apartments are? I see 15 year old apartments have cracks and faults. Will these apartments stand still in a safe way for our lifetime. With advances in medical field, I would suspect that to be another 50+ years. Do the documents say what happens after that? Or, if it has to be taken down in 20 years, what then? Who pays to build it back up?
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Old 24th September 2010, 09:13   #32
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Originally Posted by quadra View Post
I would suggest you pick a 30L house from a small builder. EMI should be around 25K per month. Pay 15% of 30L = 4.50L as downpayment and get started.
No need to go for hotshot builders unless you have dual source of income with anyone of you earning a 6digit monthly salary.
You mean dual source of income with one member earning more than a lac as in hand salary??
If yes then I am out.

Quote:
Originally Posted by prasadee View Post
Also, I would like to know what the expected life of these 30L mid tier apartments are? I see 15 year old apartments have cracks and faults. Will these apartments stand still in a safe way for our lifetime. With advances in medical field, I would suspect that to be another 50+ years. Do the documents say what happens after that? Or, if it has to be taken down in 20 years, what then? Who pays to build it back up?
Thats a big concern for me. The ones by reputed builders like Shobha and company are supposed to hold on to their values well over years. And a good location also helps.

Thats why I wanted to go for a small'ish kind of flat from some reputed builders in a good location rather than a big one in some far off location.
But if the prices quotes by quadra are for a 2 bhk flat e.g. @50 lacs a piece in Shobha and company then well.......Its bye bye shobha and company for me.

Man I feel so poor.
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Old 24th September 2010, 09:21   #33
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Someone alluded that if you live in a rented house, you need to relocate at your landlords whim.
But there is a different side to this coin as well.

You buy this perfect flat, living a great life, till one fine day your neighbor sells his flat. In moves a obnoxious group of low lives. If you were in a rented house, no problem at all you move on. If you own the flat, what will you do.

There are a couple of such instances as well. What if a big hospital or mall opens up in your immediate neighborhood. Everyone parks their cars on the road leading to your apartment complex. What will you do now.

There are 2 sides to a coin.
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Old 24th September 2010, 10:12   #34
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Originally Posted by download2live View Post
I am 30 now. Is it too late?
No age is late!!!

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Originally Posted by download2live View Post
But though the idea looks great but I cant see myself going for a 40 lac flat this way. Unless a loooong onsite happens. And frankly I am not interested in that.
See its a question on risk. Let me tell you from what I see, probably someone else can point out the flaws in my thoughts & show the light in the other side

50% downpayment means, I'm mentally owning 50% of the house. This also means, the EMI is low. If I'm unable to pay the loan money back due to job losses, then I can let it out to rent & the house can pay the EMI itself (probably with your friend's case 10K EMI). I would've also be paying less interest (not rate of interest). This means, I can have some more money, not that the house is eating away all my salary. I can use it constructively for saving/investment as well as set aside for family entertainment/outing/drive.

Overall, my risk is reduced by 50%, rather I would say, 50 is not a thumb rule, more the better. But again, there're people who're willing to take risk & grow up in life too. Like I said, its all in the thoughts.

Quote:
Originally Posted by download2live View Post
Infact going by the views expressed it seems it will be a better bet to take a small flat from a hotshot builder than go for a huge one from a local builder in some far off location. Views??
If one can afford & the builder is reputed (no matter the distance), go for it.

Quote:
Originally Posted by download2live View Post
I do have house in my native place but there is no IT there. What I will do there?
If you don't see a use & have no sentiments for it - sell it for a good money & bingo!!! you get to purchase your dream flat/construct home.

Quote:
Originally Posted by download2live View Post
And a good location also helps.
Remember, a good location does not fall from sky, its evolved. So what's outskirts today might become within city limits tomorrow.

Quote:
Originally Posted by download2live View Post
Thats why I wanted to go for a small'ish kind of flat from some reputed builders in a good location rather than a big one in some far off location.
Depends on what one needs; like close proximity to office means more money (atleast now) farther the distance lesser the price.
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Old 24th September 2010, 10:14   #35
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Quote:
Originally Posted by quadra View Post
If you are not a local, you should buy an apartment. True - a big / small, doesn't matter
I disagree with the size of the apartment doesnt matter part. When we were looking out to buy an apartment, we had almost signed the cheque for the downpayment to a so-called budget apartment. When we gave it another thought we felt we were making a mistake since it was so tiny, that we would feel suffocated ourselves, forget the kid!

The sales guy who happened to be a Keralite himself took us into confidence and asked us not to go for it, as in th long run, we would not like what we are buying. Come to think of it, he was true.

Quote:
Originally Posted by quadra View Post
I would suggest you pick a 30L house from a small builder. EMI should be around 25K per month. Pay 15% of 30L = 4.50L as downpayment and get started.
No need to go for hotshot builders unless you have dual source of income with anyone of you earning a 6digit monthly salary.
Agree with the first part, disagree with the second about the 6 figure income. Look out for a mid-level builder, and do check their track record as well.

Quote:
Originally Posted by bblost View Post
Someone alluded that if you live in a rented house, you need to relocate at your landlords whim.
But there is a different side to this coin as well.

You buy this perfect flat, living a great life, till one fine day your neighbor sells his flat. In moves a obnoxious group of low lives. If you were in a rented house, no problem at all you move on. If you own the flat, what will you do.

There are a couple of such instances as well. What if a big hospital or mall opens up in your immediate neighborhood. Everyone parks their cars on the road leading to your apartment complex. What will you do now.

There are 2 sides to a coin.
Imran, this is where associations are getting more strict these days. I had been to a Concorde apartment off Hosur road and there was a board there which clearly mentioned that buyers as well as tenants will need to be approved by the association. Not sure of how much that happens, but it just goes to show how assocaitions are dong their bit to control such happenings.

A friend of mine who used to have late night parties quite often in their rented apartment were gradually ousted by the association in their apartment for being a nuisance.
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Old 24th September 2010, 10:23   #36
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I disagree with the size of the apartment doesnt matter part.
Absolutely true. Its same as the concept of buying a car. In the current scenario I would be able to afford for M800, but it will not serve its purpose life long & has to be changed in between. Unfortunately a house cannot be changed like changing a two-wheeler or a car.

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Originally Posted by benbsb29 View Post
Imran, this is where associations are getting more strict these days.
Association fee - Rs XX
Water - Rs YY
Maintainenence Charges - Rs ZZ
Errr...aaah!!! this is one thing I hate about association.

I kinda tend to agree with BBlost here for the flats.
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Old 24th September 2010, 10:26   #37
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Originally Posted by BheemBoy View Post
Very interesting thread. Coming to buying a flat, what has age got to do with that. I have seen many people say that the earlier the better.

Is it true?
If you read my post on page 1, you will understand. My EMI is much more per month becuase my years of remaining service are lower.

It would be ideal to take a loan when you have more than 20 years of service left, so that the EMI's will not hurt you. AFAIK, banks have a maximum loan tenure of 20 years.
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Old 24th September 2010, 10:59   #38
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My two bits having just bought a flat 2 days ago.


Rent vs Buy:
People buy two reasons 1. as an investment which will give appreciate and give returns 2. a place to stay. If you plan to stay in the place that you buy you look at different things distance to workplace, amenities, transport (bus, taxi, metro, etc).
The buy vs rent decision also depend on your age and marital status. I was looking around for a place to buy for the past 2 years my wife had given me a deadline that we need to be in our own house by the time my 15 month old daughter goes to school. This was in a way putting our roots down. What good would it do to me if my property value increases 10 times in 10 years if I don't want to sell it till I am alive. The house/flat becomes your home. I would have liked to have lived in the same place all my childhood and have friends from them. I want to give this to my child a sense of permanency and security. From where they can go ahead and take risk.

Secondly will you be able to meet those savings targets? I havent been able to in 2 years.

About old flats, I actually bought a 15 year old flat in Jayanagar, Bangalore for a price I have trouble speaking out aloud leave alone posting. It may not appreciate sharply but it still will appreciate over a period of time if it is maintained well. The thumb rule is that the price of an apartment should be equal to 2/3rds of the price of land in the area (the price is final price not counting stamp duty) also keep in mind that the UDF (Undivided Share of Land) of flat should be atleast 1/3rd of the superbuilt area. If you use this calculation then the present value of the UDF should come to about 55% of the cost of the flat.

What is a developed area? This is a small check list.
Access - Should be more than one approach to the property preferably all four directions
Roads - Width, surface, side walks
Drainage- Is there sufficient storm water drains is the area prone to flooding
Common Amenities - Playgrounds, parks
Power - Is there power supply in the area, what is the quality of supply
Water - Is there municipal water supply? how good is the ground water
Sewage - Does the area have sewage connection?
Legal - Is the development approved by a planning authority
Conveyance - Are there bus, metro stations nearby. Can you get a taxi/auto to the place a 8 in the night?

Please contribute to this list maybe it will help prospective home buyers.
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Old 24th September 2010, 11:30   #39
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Hi... The rent vs purchase agrument has been going on for a looooong time now...

A few points which I would like to add:

1) The assumption that RE prices go only 1 way up is a WRONG one...

2) Calculation / Maths for buying vs renting will show exactly opposite results if you assume that RE can only rise or RE will go down...

My take on buying RE is as under:

1. Rental yields fluctuate between 3-6% of the Current Market Value of the property... however, the headache of changing flats every 11-33 months leads people to buy property than rent it...

2. One should ideally have 2 properties - 1st for self occupation, 2nd for inflation linked rental income for post retirement income...

Believe anyone who have more than 2 is as much a speculator as a Equity market investor...
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Old 24th September 2010, 12:10   #40
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@ssdingri: Excellent Post. I agree with you.

I have a couple of points to share.

If you are an IT professional or some other professional and living in a big city like Blr, Chennai, Delhi, Mumbai, commute time and ease of access to places should be the big factors to go for an apartment. Security in an apartment is better than in a house if you are staying with your wife and kid only.

My suggestion would be to have an Apartment+ A piece of land in outskirts say 5 to 6 lakhs for a 1200Sqft plot.

1) Plan for a decent 2 BHK apartment in the city which would have all facilities and help you in your commute times. You can stay here till you end your work career. Ensure that basic facilities that @ssdingri mentioned are fine in that place.
2) The plot that you buy now would appreciate in years to come and you can take a call later what you want then. Buy in a place where things have been planned properly ( roads, parks, sanitation, water etc)

I agree with other people who felt that the feeling of having a house of your own cant be compared to that of a rented house as I have first hand experience when I married and moved out of our own house leaving behind my parents. I still can move back to my own place but I chose not to .

Last edited by muni : 24th September 2010 at 12:12.
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Old 24th September 2010, 12:15   #41
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Great thread.

Hey how about a new thread indicating where people are buying new flats in each city. This will help a lot to know about where are the projects running and where people are heading.

I am looking to buy a flat and I felt this would help people like me.

Please share your thoughts on opening that new thread,
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Old 24th September 2010, 12:16   #42
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I kinda tend to agree with BBlost here for the flats.
Cant limit this to the flats alone.
Read this : Link (Neighbour Nuisance : Any suggestions ?)

There was another one i remember about some garment factory in the vicinity, working late into the night, and causing disturbance. Again, this was an independent house.

So, we just cannot generalize.
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Old 24th September 2010, 12:41   #43
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But I there's limited private space with flat. But again, this list will keep going & the thread will change to flat or independent house.

In general, a colleague of mine adviced a logic, which I'm trying to break it, but found it impossible.

Buy a flat/land little far off from city at cheaper price. By the time the loan closes or 5-6 years later the value of the flat appreciates several folds compared to the ones that are nearer to the city. What he meant was, if the rate of outskirts increased by 50%, the places nearer to city would increase only by 10-20%. However there would be a stage when there would be a marginal difference between the outskirts & moving little forward towards the city.

So in course of time, one can sell the flat & keep moving towards the city by paying the marginal difference in form of new loan or add on loan provided the fact that the income also increases.
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Old 24th September 2010, 13:11   #44
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Let me give my case as an example.

I knew my parental home (where I lived with my parents - I still do) will one day come down to me and my only brother, so there was no urge to own property. The two floors of the house could always be modified to accommodate two families.

But my employer was giving housing loan at extremely attractive terms - 8% interest calculated on monthly diminishing balance, repayment period of 240 months - principal repayment for 160 months and the accrued interest to be repaid in the last 80 months. Icing on the cake was, no interest to be calculated on this accrued interest for those 80 months!

Just to make use of this oppurtunity and create another asset, I availed a loan of Rs 2.00 lacs in 1992 and booked a small 2 bhk flat @ Rs 285.00 per sqft. The total cost for me with extra fittings was about Rs 225000/-, which will at the most buy a tata nano today! I was not prepared to pump in any extra money and go for a bigger property, a decision I rue now! But nobody expected such a boom in real estate prices then.

I have never lived in that apartment. After the initial couple of years, the rent it fetched always exceeded my monthly repayment. Now, at about 18 years old, it will fetch me at least Rs 20 lacs if I decide to sell it, assuming even a rate of Rs 1000 less per sqft as compared to a new one in the same area.

I am not implying any lesson to anybody. I leave everyone to draw their own conclusions. But just remember that we Indians set a great value to ownership of a house. It is a need felt deep down, not explainable. If one decides to live in a rented home, he will have to keep moving even if he remains within the same city. I personally would not like to move from my neighborhood every now and then.

Last edited by Gansan : 24th September 2010 at 13:14.
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Old 24th September 2010, 13:16   #45
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I have a simpler question dear D2L - if your wife and parents are adamant on a flat, then no numbers will convince their need for security. You cannot argue numbers.

Of course, if you/your wife earn then staying on rent is best - you can save the maximum.
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