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IREF® - Indian Real Estate Forum > Real Estate in India > Real Estate Pune > How do people afford 50 lakhs house
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Old July 31 2012, 05:43 PM   #21
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people used to have budget of 35 lakhs for 2 bhk, 40-45 lakhs for 3 bhk , now it is 50+ lakhs for 2 bhk and 60+ lakhs for 3 bhk. more than affording, i feel surprised to have people's budget risen suddenly.
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Old July 31 2012, 07:51 PM   #22
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Puser,

Please, also think of the choices people has got...if one is looking for a residence then he has got two options:

1) Go for it, as per bulls, there is not bubble and prices wont come down.
2) Wait for a while, as per bears, the burst is just around the corner.

But in fact, both are just theories and outcome of it, speculative... one has to take a call...a tough call indeed!!!
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Old July 31 2012, 08:14 PM   #23
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Quote:
Originally Posted by Gsagarcoep View Post
I am 23 years old and I am looking to buy a flat now. I think that when in future my salary will increase, I can save some money and reduce my principle amount, which in turn, will reduce my loan tenure. I plan to make it null by 10 years maybe.

It's all about planning your money wisely. There are a lot options for that. Start early !!
I wish I were like you. If I had bought some RE when I was 23, I would have been very rich by now.
Or probably not. WIth overactive libido I couldn't think beyond women when I was 23. Not that I was successful at that either.

A flat/RE is a huge anchor. Why would anybody want to anchor their ship of life at that early age? RE doesn't come cheap and although the past expericne (or rather very recent past), tells us that inflation and salary hikes makes EMI look very small after a few years, it may not be so forever.

I am sure you will pay off your loan within 10 years, provided the economy sustains and your skillset remains useful.

IMO, over long periods of time, RE growth will match to that of inflation. So getting into RE fearing that they will be outpriced forever is not right. Last decade was different...but prior to that I have seen sellers begging to prospective buyers. RE is highly illiquid. Calling it an investment is a folly even though it can yield amazing returns if you happen to be at the right place at right time.
However, like with any investment, people buy whatever is already going higher and shun whatever is going down.
Remember days of Harshad Mehta and euphoria that it caused in stock market??? Even 20 year olds were thinking about buying stocks then.
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Old July 31 2012, 09:00 PM   #24
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Originally Posted by herohiralal View Post
If a families' gross salary is 10 lakhs then they should not be looking at buying a house with 30 lakhs of loan. Stay in a rented place and when the EMI is 30% of take home salary then only go for a house. Another option is to buy a place which costs 30-35 lakhs. If the area in which such houses are available is not preferred by the buyer then go back to renting a place in a good location.
my financial situation is perfectly in the bracket ...

Families' Gross income just over 10L
home loan just under 30L
EMI just over 30% of take home salary
bought a home which costs just over 35L in area which wasn't preferred by buyers however developing rapidly to good location.

Quote:
Originally Posted by herohiralal View Post
Financial harakiri is to buy that car on loan. A person should buy a house before buying a car on loan. House is an asset and car a liability. Buy a 2nd hand car instead.
bought home before car, always against buying car on loan and planned for a 2nd hand car

@Herohiralal - how two minds can think same way but this thinking ends here..i am no where matching ur thinking on indian, world economy and bank run in UK :P.
 
Old July 31 2012, 09:08 PM   #25
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Originally Posted by herohiralal View Post
Financial harakiri is to buy that car on loan. A person should buy a house before buying a car on loan. House is an asset and car a liability. Buy a 2nd hand car instead.

If a families' gross salary is 10 lakhs then they should not be looking at buying a house with 30 lakhs of loan. Stay in a rented place and when the EMI is 30% of take home salary then only go for a house. Another option is to buy a place which costs 30-35 lakhs. If the area in which such houses are available is not preferred by the buyer then go back to renting a place in a good location.
House where you live is a liability not an asset - mortgage , taxes , maintenance - plus you dont sell it .
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Old July 31 2012, 09:14 PM   #26
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Quote:
Originally Posted by Gsagarcoep View Post
I am 23 years old and I am looking to buy a flat now. I think that when in future my salary will increase, I can save some money and reduce my principle amount, which in turn, will reduce my loan tenure. I plan to make it null by 10 years maybe.

It's all about planning your money wisely. There are a lot options for that. Start early !!
Good thinking - but what is your budget and how can you afford the downpayment as of now ?
Secondly 23 most youth think of a overseas Master's degree - wont that be a better investment than getting stuck with EMI so early and for so long period ?
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Old July 31 2012, 10:50 PM   #27
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Originally Posted by NG2012 View Post
I wish I were like you. If I had bought some RE when I was 23, I would have been very rich by now.
Or probably not. WIth overactive libido I couldn't think beyond women when I was 23. Not that I was successful at that either.
LoL . Can't stop laughing man.

suryawork,

+1. Thinking about building the career is better than house.
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Old July 31 2012, 11:15 PM   #28
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Icon2 Some facts & tips

Here are the ways what people do -

> Put in all the savings done till date as down-payment for house. This in most cases also includes savings of wife, if any;

> As income is not sufficient for EMI, increase the duration of EMI to 20 or if possible 25 yrs;

> Once this is done, forget car, use only bike;

> Emergency funds are also put in to pay for down-payment,

> Forget good quality holidays. Yes, I know some person who haven't gone out of Pune in past 2.5 yrs as they think about home loan EMI 24x7. His wife wanted to buy a car for herself earlier but now drives on activa scooter so as to make things bit easy for home loan EMI. Couple of cases recently have increased their tenure by 5 yrs !!

> One of my friend was at Croma recently. This chap is also searching for house. And he told me incident which happened at the store -

My friend was looking for dock speakers while a young married couple was looking for nano. They liked it & then saw Ericsson mp3 player near it which was far cheaper. The husband said, lets buy this than , will help in saving money & will buy if I get opportunity to go on-site.

Don't know whether they have EMIs or not but now, if one has to compromise even on these small things like music players, whats the use of owning hyped up flats ??

> I am of firm opinion that car should be brought on 100% down-payment. As said somewhere before, that with loan, I could have bought D segment car, but settled for C+ segment. Infact, doing these things become an eye-opener for you as it shows you true picture of your finances.

> And many people who over-leverage, lead BPL quality life later. There have been cases like these which took place with some people & they just gambled on the fact that they will keep getting 30% increment YoY.

Remember the story given by fellow member where a person bought a flat worth 30L & travel with 4 on scooter to lonavala.

Simplest thing to see before you take the jump :-


* You should have 1 yr of your total income in savings, mostly parked in FDs,

* The total price of the house should not be more than 3 times your yearly net income,

* The home loan EMI should not exceed 30% of your take home income,

* The loan duration should be max to max 10 yrs.


Doing this will ensure that you have comparatively better life with lesser stress atleast related to finances in days to come. Better stay few yrs on rent, save & then buy with min loan than to buy early & remain slave to banks & builder for rest of your working life.
 
Old August 1 2012, 02:00 AM   #29
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Originally Posted by suryawork View Post
House where you live is a liability not an asset - mortgage , taxes , maintenance - plus you dont sell it .
When RE is a proper functioning market what u says is 100% right but in India where RE is a twisted market RE is an asset.
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Old August 1 2012, 02:06 AM   #30
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Originally Posted by braveheart200 View Post

bought home before car, always against buying car on loan and planned for a 2nd hand car
There is a chapter in the book rich dad, poor dad on how people should buy luxuries - the income from investments should fund luxuries. Some parts of that book are pure gold (or silver or RE or FD or cash - whatever one thinks is of value is this crazy world )
 
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