It is the dream of every Indian to build his own house. The working person saves every single rupee leaving his small and big wishes and builds his dream house. Buying property in metro cities is becoming increasingly difficult. In today's hot real estate spots like Delhi-NCR, buying a 2 BHK home is no longer an easy task. For this, at least 50 lakh rupees will have to be spent. In such a situation, experts say that if you live on rent instead of buying a house in metro cities, then it can prove to be more beneficial.
Buying a home is always an emotional decision. Most of the people want to buy their own house so that their family can be secure to live under one roof. But emotions aside, renting may prove to be a better deal for you. You will not believe hearing this, but today we will tell you through a simple calculation that it is more beneficial to buy or rent a house in metro cities and make an investment strategy.
Understand the basics of first home buying
Suppose you want to buy a house in Delhi-NCR, you will have to spend an average of Rs 50 lakh for a 2BHK flat. A middle class working man can hardly afford 10 to 20 per cent down payment. If you make a down payment of 20% i.e. Rs 10 lakh, then you will have to take a loan of Rs 40 lakh for the house. Registry, stamp duty and brokerage charges are separate from the above. If you have bought a house then you have to set the furniture as well. You can easily spend up to Rs 5 lakh in all these works.
Thus, you spent up to Rs 15 lakh from your pocket and took a bank loan of Rs 40 lakh to live in a 2 BHK flat in Delhi-NCR. At present, the interest rates are very high and if you get this amount for 20 years even at 9% interest, then you will have to pay an EMI of Rs 35,989 per month. You will pay a total of Rs 46,37,369 as interest during the entire tenure. Not only this, you will be bound to repay the loan for the next 20 years.
Now see the math of investment
Now if you invest your monthly EMI amount of Rs 35,989 and lumpsum Rs 15 lakh in SIP then how much return you will get in 20 years. First of all let's talk about SIP. If you invest Rs 35,989 in SIP every month for 20 years, then your total investment will be Rs 86,37,360. If you add the 12% return on this, you will end up accumulating Rs 2,73,20,974 only as interest, while the total amount rises to Rs 3,59,58,334.
Now let's see the return of 15 lakhs on lump sum investment. Even on this, if you look at the average return of 12%, then in 20 years you will get only Rs 1.3 crore as interest, while your total amount will increase to Rs 1.45 crore. In this way, you can increase the amount of home purchase to Rs 5.04 crore while paying off the loan. That is, you have created a fund of 5 crores by investing only the EMI and down payment amount.
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How much will the price of the house increase?
The rate of property market is increasing at the rate of 10 percent every year. In such a situation, if the flat is worth 50 lakhs today, it will be worth 1 crore after 10 years and 2 crore after 20 years. If you have a fund of 5 crores then you can save 3 crores even by buying the same flat. Also, it's worth noting that a home bought today may not be worth as much as a new home 20 years from now. That's why experts say that it is better to stay on rent than to buy a house.
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