With the current construction boom going on in the real estate industry, it becomes a little difficult to decide whether it’s the right time to invest in a new home or to simply go ahead and carry on with the hassle-free process of renting a home. The urge to invest in a new home becomes increasingly tempting and Keralites are more than ever opting for investing in apartments at a comparatively younger age these days; this could be because of greater economic freedom, more customer-friendly loan facilities and of course more lucratively employed people.
All this makes it very confusing when trying to make the very important decision on where to live. However, there are two important factors that you should concentrate on when trying to decide which way to head. The more obvious one would be the financial factor; the second one is a little more complicated and personal as it has to do with your emotional preparedness for this very big commitment. Jumping in with both feet into a major investment like buying a home without really being 100% sure could lead to serious repercussions. So you need to discuss with family and friends, get on the net and research, get your homework right before taking the plunge – whether it’s for or against is purely your own decision and suited to your situation.
Take a stress-free hour or two off with your partner and go through your finances to determine whether you can actually afford to purchase a home. The first determining factor is whether you have enough capital saved up to pay for the down payment on your home; this usually comes down to about 20% of the purchase price. Other miscellaneous expenses like closing costs as well as cost for additional fittings also have to be accounted for. So all in all, you are talking about a tidy sum here!
When you compare these expenses to the cost of paying a security deposit plus an initial rent payment on rented accommodation, the difference in investment becomes glaringly obvious. But don’t let this lead you into taking the easy way out as prices are only going up on all items, whether consumables or homes.
Financial experts suggest that your loan EMI shouldn’t exceed 30% of your gross monthly income as you could run into financial troubles otherwise. Do keep in mind your other monthly expenses, emergency nest egg, maintenance plus rising cost of things. Renting on the other hand is only likely to go up by a nominal value per annum which is easily adjustable to your income. Additionally when renting, you get to have your maintenance done free of cost by your landlord!
Also, buying a home gets you important tax breaks as well as an increase in the value of your investment as costs of homes only appreciate over the years. Buying a home is a great way of making savings as well as getting your own home at the end of the day where you are the boss of your home and don’t have to kowtow to any landlord’s whim!
And remember if you really do want to buy your own home and don’t have the capital, there are always government schemes available to help you have your own home.