Thanks for the replies guys.
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Originally Posted by MX6 Some points here.
If you go for a fixed interest rate, then your EMI amount remains the same for the period of 15 years.
Your rent goes up north. So today you are paying 15K rent doesn't mean that you'd pay 15K rent 10 years down the line, especially with current inflation levels.
Flat is a long term investment. You don't think of selling that off after 15 years or 20 years unless you want to move out of that place in to a new one within city, or back to your village in a farm house. And real estate always appreciates. The rate of returns might not be good enough like other high risk investment plans. But then it's your own home.
I'd say go for a flat within your means. |
Does SIP come under high risk investment plan?
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Originally Posted by Ardy So, if the apartment is in a good locality and is subtantially well developed township, there are always a chance that a prospective builder might come in with plans of redevelopment and offer substantial money or a newer flat in the society.
Secondly, when you do calculation of comparision of rent vs EMI, please do also consider the savings on the tax. If you are married, you can both get the tax benefit. You may find that the interest that you are paying in the EMIs, can be equivalent to the tax savings depending on your earnings, tax liabilities, joint loans etc.
Also, most of the experts would suggest that you should close your HL within 40% of your tenure to get the maximum benefit. |
The key point you put forward is that it should be in good locality. 2BHK flats in upcoming apartments are almost all in kanakpura, jalanahalli and other outer fringes of city. Does this means that if small time builder makes these flats the rise in value of the flats won't be that much say in 20 years? To go for shobha or mantri means to have a budget of at least 50 lacs for 2BHK. But will one see a good increase in the price over a period of 20 years if he goes for these bigshots?
Also my wife name popped up in CIBIL while we were looking for car loan. Does that mean that we two together cannot take the loan together and share the Tax benifits? An what about the HRA which we will lose out on?
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Originally Posted by SPARKled Rental rates give a true pricture of the overall affordibility of the general public. The builders are increasing rates almost everyday citing various stupid reason but rental rates have more or less remained stagnant and in some cases even reduced from the last 2-3 years. What does this tell you? One 1 thing that there Indian RE is overhyped and there is a huge bubble which will burst sooner or later. |
To add to my confusion I refused to pay the so called 5% annual hike in rent during recession saying that my salary hike is zero. How he expected me to give more rent. I said I will vacate. And then landlord said its fine. I paid same rent for two years.
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Originally Posted by m8002? I dont know the basis for this 250. I vaguely remember it was based on some interest, inflation, tax calculations, etc. I am not sure of its validity now. Also, this is applicable only for own use and not as an investment. |
Will have to google for more on this.
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Originally Posted by v.anand To cover the risk of apartment complex not holding onto its value in the future, you may consider buying from a reputed builder now. |
Again I feel that the message is to go for a flat in a prime location and by a good builder. But that will cost around 50 lacs for 2bhk. Will have to calculate more on this.
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Originally Posted by tsk1979 I think it may vary city to city.
For example, noida.
A good flat 3 bedroom not far away from city will cost 60 lakhs(1500sqft)
The rent for the same flat is 16000 today.
Now lets compute
You take a 60 lakh loan at 7%. your outgo will be 46000 for 20 years every month.
Lets say you stay on rent with 10% increase every year
First year you pay 16000*12
Second year it goes to 16000*12*1.1 and so on
So after 12 years your outgo will be same as loan.
After that your outgo will be more than loan.
Moreover, if you sell your flat after 20 years, there is a good chance you will get the money back as you will be able to sell the flat for 1.2 crores atleast(inflation).
So what does this tell you.
Are you a wiz at stock markets, and can make money grow like anything? Then stay on rent, and the extra 25K you save can be invested and made into 2 lakhs.
If you are just like the rest of us, its a no win and no lose situation! |
Are you talking about investing in person or via MF using SIP route?
If I am going to be in market it will be via SIP only. No trading for me.
But SIP has consistently given returns of around 20%.
If I take house example quoted by you I find this (Please correct me if I am wrong. I am not good in maths):
A=p(1+r/100)^n
200=60(1+r/100)^20
r=6.20
Assuming an inflation of 10%,
A=100(1+10/100)^20
A=672
So an amount of Rs 100 is equivalent to Rs 672 twenty years from now.
But 100 rupees I will put in a flat will worth 106 rupees only.
Trusty MF's typically return more than 10% over a period of 20 years.
Now we need to take into account the rent which went as it is. So 25K*12*20*1.1= 6600 or 66 lacs in hand . That is if I stay on rent.
120 lacs If I buy apartment.
Ok I have lost it now. I said I was poor in maths.
But one thing. Will I be able to find a buyer of 1.2 crore flat?
A person like that wont he go for a new one?
I do not mean to prove a point here. I just want to clarify things. And I want to know how much I lose either ways, e.g. rent or buy option.
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Originally Posted by benbsb29 As for staying on rent, you never can predict when the house owner asks you to move out, or the rent may be hiked drastically. |
Thats precisely why I am looking out for my own flat now.
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Originally Posted by mobike008 I have been very lucky on this situation. |
Oye Lucky...Lucky Oye