Purchasing own flat is one of the biggest decision for everyone. It's a decision which need to take after analyzing the financial situation, also better planning is necessary otherwise the purchase results in huge debt and loss of asset. The 5 points which given below helps to plan a good flat purchase:
1. Financial position : Financial strength is the guiding force which tends to buy a house. Please note that the monthly expenditure should be less than the amount which got by subtracting the home loan EMI from the monthly salary. It’s better to keep 6 month salary as predicament fund. Also its great to have some leftover after the monthly expenditure and monthly EMI. This leftover amount act as an investment option and this helps to manage if the interest rate rises abruptly.
2. Return on Investment Need to think about the return on investment, this will give an idea whether to deposit the money in bank or invest in flat purchase. First divide the cost of the house by annual rent. If the result is less that 15, flat purchase is better otherwise rent the house option works fine. Next need to do cost-benefit analysis, which includes various tax advantages, and other investment paths. Finally should do risk analysis since the prices of flats can be artificially made high over a long period in a highly populated country like India. Rental amounts only increase by 10% max per year but the flat price will double or triple within 3 to 5 years in city.
3. Job/Income security No one approve your loans without checking your employment records and your bank account transaction details. The housing loans are long term loans, commonly more than 20 years. It’s better to have confidence about the income stability before purchasing the flat. Also, should be aware about the salary hike within next 5 years so that it will be easy to manage the EMI if the interest rate increases abruptly.
4. Thrift Thrift cycle prediction is not easy. Purchase at the time of thrift turning around gives a cushion for at least 5 years. So, have a great look when stock markets turns rise since equities are one of the foremost measures of the economy. Better to avoid flat purchase if not sure about economy.
5. Disposability
Need to forecast the disposability option before flat purchase. It’s difficult to dispose a flat without good roads, transportation facilities, water availability etc also ensure the flat will not affect by any future regulations by the government. So make sure to purchase flats with good facilities and infrastructure.
Keep in mind these points before taking purchase decisions. It’s safe to purchase budget flats according to the yearly income. Last year different
budget flats in Chennai and other metro cities were great success .
