Ankit Patel, who works in an IT firm, decided to take a rented house in 2014 from Bangalore to Mumbai. However, a few months later, he started paying a fare of Rs 35,000 every month. He decided to buy a house and settled in Mumbai. He believed that the decision to buy his house could benefit in two ways. First, they will not have to live in a rented house. Second, the price of the house will increase significantly in a few years. He took a loan of 60 lakhs to buy the house, whose EMI was around Rs 60,000.
Take decisions on the basis of age, long term plan
Patel’s friend Gaurav Sawant’s thinking is different in this matter. He has been living in a rented house for almost a decade. They believe that instead of spending on paying a fixed amount EMI every month, it is easy to pay a fare of Rs 18,000 every month. The question is, whose thinking of Patel and Sawant is correct? Experts say that there can be no one answer to this question. The decision to buy a house and stay in a rented house depends on different situations. It has a big hand for the person’s age, long term plan and the ability to take a loan.
Home loan EMI lasts for many years
You have to be ready to repay the EMI for a long period of time to buy a house. Suppose the price of a house today is about 1 crore rupees. His fare is Rs 22,000 per month. If two months of security is added, it sits at Rs 44,000. If you want to buy this house, then you have to make at least 25 percent of the money down payment. It will be 25 lakh rupees. You have to take a loan of 75 lakh rupees. The bank can give you a 20-year loan at 8.5-10 percent interest. This means that you will have to pay an EMI of Rs 65,000-70,000 every month. In this way you will repay a total of Rs 1.60 crore to the bank in 20 years.
Stay on rent or buy house cost
If you rent this house, then you will have to pay a total rent of Rs 1.61 crore in 20 years. It has taken care of 8-10 percent increase in rent every year. In the beginning, the rent of the house is quite low. But, it gradually increases. In this way, the cost that comes on buying or renting a house in a long period is the same.
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After buying a house, it will become your liability
Yes, it is true that you have to raise big funds for down payment. However, this causes the property to become yours in the long term. This is the biggest advantage of buying a house. However, taking home on rent keeps flexibility for you. If you do not need to live in that house then you can leave that house. But, if you rented the house, then you will have to pay his EMI or not.