This is not as straight forward choice as it seems. Many young upwardly mobile, financially sound professionals often decide upon a house that is close to their work place. Now this may not always be the most prudent option, as jobs are not permanent, well at least not in these times. Your father may have stuck around in a single job for 35 years; you may find it difficult to stay put for 35 months. You may move on to another place, another job. You should buy a house where you want to live, in your home town or your favored city. Ask yourself ‘Which city do I prefer to live in? Is this the place where I can spend the better part of say 20 years? Do not buy a home until you want to live in it. After all why spend so much – and not just money but also your energy and time – if you decide to move to another place because of your job. Renting out can be a hassle. And if you are just looking to make an investment, surely there are more better options, why not opt for your hometown, who knows you may decide to settle there after all.
So, the decision to buy has been made. Great, now let’s sit down and find out exactly how much can you spend or realistically how deep the pockets can stretch. For a young professional who is just starting out maybe that dream bungalow is a bit out of reach? Pitch your dreams to match reality.
Work out your finances – income v/s outflow. Projected expenses as well as projected income raise in future and after all this have been done what can be saved aside for a rainy day. Ideally look at a property in the range of Rs 11-15 lakh with a loan component of about Rs 10 lakh. For those in their mid-career phase obviously the options are wider. You have had more time to save and plan your finances. Also the monthly income is a tad on the higher side as well. These are what are termed as the upwardly mobile professionals with the capacity to spend anywhere between 45 lakh -1.5 crore plus on homes.
Well that will depend on your priorities. Some of you may be alright with a slightly smaller home which is closer to the workplace, anything to avoid that dastardly daily commute. Also the close proximity to schools, airports, entertainment avenues, shopping malls can also play a big role in your decision. But don’t make a hasty decision, after all a home is a long term purchase and it should fulfill your requirement for the next 10-15 years at least. Take into account your family requirements and weigh them against your budget. Maybe in the long run that bigger house might start to look more feasible. And being young means you can stretch a bit, can travel that extra distance, can put in more effort. Go for that larger home.
This is like comparing apples and oranges. Both have their own advantages and faults. Renting gives you the freedom to move when you want; no expenses on furniture and stamp duty. On the other hand you pay rent which is a bit of a waste. Why not pay EMIs instead? At least the expense will be towards creating an asset for your future. Of course, once you decide to buy a property you choose a specific location which may not be as easy to change as renting a place affords you. And putting down or even acquiring a loan for a large amount for a house purchase may be difficult. Still, property purchase may well work out as the more wiser option if you have made long term plans. Make you choice carefully after fully weighing the pros and cons of both.