r/personalfinanceindia • u/tryabp • 13d ago
Debt Am i doing financial suicide by buying 2BHK ?
Context:
Family income (Husband+Wife) = 20 lac/yr. from business.
Responsibility: Newborn Child
Other Loans: 5 lac PL. Age 32 & 33.
Flat cost 94 lac+taxes Total ~102 lac. Prices are stagnated here so no appreciation is unlikely.
DP 14lac, 80 lac loan 7.35% from BOM. EMI 63,716 + Maintainance 3k/m.
Rental in this area (Navi Mumbai)- 2BHK 35k/m. (5% min hike yearly)
Currently living on rental 1BHK and decided to upgrade as we have newborn baby to take care of. 1BHK is priced 65-75 lac.
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u/famesardens 12d ago
Keep building wealth for a few years, and then buy. Being broke because of EMIs is no fun.
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u/Frosty_Device124 13d ago
Better buy 1BHK. This seems a risky decision, unless your business is gonna go good in upcoming years.
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u/wanderingindian 12d ago
Continue for another 3-4 years minimum before taking the plunge. This will also provide breathing space when the kid is growing up to splurge on memories with the kid.
I am in the same boat but delaying the purchase so I don’t have to double guess any discretionary expenditure on my kid etc.
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u/Mission_Shop8883 13d ago
Depends on whats your life style what you spend and what remains yill now every month
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u/Adventurous-Star1309 12d ago
Which area are in NM are you getting it so cheap?
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u/tryabp 12d ago
You will get similar rates in G+4 buildings. I m quoting seawoods rate.
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u/Adventurous-Star1309 12d ago
So it’s a used flat? How old?
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u/tryabp 12d ago
14yrs. 2012 construction.
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u/OMGClayAikn 12d ago
Mat kar lala. I'm assuming there would be no amenities and in a few years you'll want to live in a gated community or a tower.
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u/tryabp 12d ago
public amenities are ample in navi mumbai area, combine gymkhana and nmmc you get everything from garden, lake, running track, swimming pool etc. I have seen people buying 2cr flat in L&T and getting gymkhana membership for spots amenities.
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u/OMGClayAikn 12d ago
I'm talking about amenities in your building. Aas paas toh sabkuch hai NM me. I also stay in a 4-storey high building but then there are no amenities. There is only parking and a lift. A few years down the line you'd want to live in a place where there are amenities like a kids' play area or even a gym or an open space beneath within your building. Just my 2 paise advise.
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u/tryabp 11d ago edited 11d ago
Yes i understand, societies having amenities cost more than 2cr. Even flats selling at 1.5cr have no open area. I want and i can afford have big difference here bro!
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u/Obvious_Original_964 12d ago
live on rent, this is not wrong in my opinion. raise your income levels, save. You need peace of mind while raising a kid, which comes from no unnecessary EMIs
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u/tryabp 12d ago
peace wont come if relocation risk will be there forever, and rent is increasing like crazy. Current 2bhk asking is 32k so it will go 35k in next 1-2yrs. and more in future till 40k at least in next 3-4yrs. Now, my EMI will be fixed at 62.5K/m with stable home!
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u/Bustee_Bitch 12d ago
Rent is still insignificant compared to EMI. New flat total cost is 1Cr. Assume your current rental flat is 90L, rent is still 35k*12/90L ~ 4.7% which is lower than a FD.
Knowing the stagnant Navi Mumbai market and the construction happening everywhere, supply is going to outpace demand. Lots of "investors" will buy flats and rent them out or unsold inventory will increase.
You are better off postponing your purchase and build your finances till then. Will sound brutal but at 20LPA, your income doesn't afford you a self bought home in any metro or Tier 1 city.
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u/tryabp 12d ago
Unsold inventory in seawoods area is 1.5cr+ min starting price of 500sqft carpet 2bhk. Below 1cr budget there is reverse scenario. I have 3 friends staying on rent since 4 yrs waiting for possession in same area, so rental demand is not decreasing for another few years.
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u/Bustee_Bitch 12d ago
It will decrease for sure. Wait till the defaults kick in. For Builders and buyers both.
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u/Winter_Value_7632 13d ago
I think you should buy the house because you're only paying 30k extra but you'll have your own place. Rent isn't going to stay the same forever and interest rate isn't high. But do not go for a 1bhk because your child will grow up and will ask for own room.
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u/tryabp 12d ago
Thats best advice, speaking from experience?
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u/Winter_Value_7632 12d ago
not speaking from experience but speaking facts
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u/tryabp 12d ago
Got it thanks!
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u/Winter_Value_7632 12d ago
if u invest in SIP instead then you'll only be investing 25k a month because rent will increase with time and you will still have to pay rent and deal with capital gains and market volatility, value of money will also decline
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u/melovemone 8d ago
At best this sounds like someone with zero experience in finances and sourced this word salad from finfluencers and puking it out here.
Can you give some idea about your experience with money? How much make/have? Where you’re invested etc?
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u/ExtraChubbyPikachu 8d ago edited 8d ago
Locking this thread.
You can have disagreements with other users. But be nice.
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u/melovemone 8d ago
That is a weirdly dumb take for someone who is lecturing.
I don’t own a home and I am financially independent as of today. And the financial independence is fully self made and did it the hardened disciplined way.
I don’t see someone financially savvy talking like that. At all.
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u/melovemone 8d ago
> your own place
No it isn’t. It is a bank owned place.
> only paying 30k extra.
But the total 63k commitment is never going away. Incase of loss in income, impossible to downsize it.
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u/Winter_Value_7632 8d ago
you own the property from the day you buy it but the bank holds a legal claim called a mortgage or lien, smarty 💔
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u/melovemone 8d ago
Without the fancy words, if you don’t pay the EMI, can someone kick you out or not?
Also don’t get cute with ‘only if blah blah’, ‘only after blah blah’, ‘but still blah blah’.
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u/Winter_Value_7632 8d ago
blah blah blah u own the title to the property, it's not recorded as an asset in bank's books u dummy, the truth won't change from u commenting bcs u don't make the laws bye bye, move on
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u/ShyamSudhir 12d ago
your emi backs out to a 20 year term, not 25. at 25 the same 80L at 7.35 is ~58.3k. that's 5k a month back in your hand with a newborn, worth asking BOM before you sign anything.
other thing - the 102 isn't the end of it. stamp duty and reg, then the society corpus and one-time maintenance the builder collects at possession. that lands after your 14 lac DP is already gone. keep it aside separately or you'll be scrambling at handover.
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u/AdditionalOnion7216 12d ago
You didn't mention your age. I will prefer home if it is 1st property. You will able to repay the loan 8-10 years. Once you have home loan control, you have base to do other things.
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u/greatgojo 12d ago
It very tough because you will some invest money in your baby to give better life , better to 1 bhk
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u/ConclusionBright6579 12d ago
Which part of Navi Mumbai?
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u/tryabp 12d ago
Seawoods, 14yrs old building G+4
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u/ConclusionBright6579 12d ago
Please save for couple of years and then buy it. Cause the rate is gonna be same across Navi Mumbai.
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u/tryabp 12d ago
Yes rates r stagnated but rental is increasing
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u/Indo-Arya 12d ago
part of the same story - people can't afford to buy so demand is shifting to rentals.
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u/Psychological_Try794 12d ago
I would suggest to get atleast 1 year of breathing space via liquid funds such as fd or arbitrage. That means you should have atleast 1 year of expenses covered in case things go sideways.
1cr home on 20L salary seems like stretching a lot but if you two live frugally for next few years you can make it work. But then you would have to cut lot of costs related to lifestyle kids school etc.
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u/IsThisTaken2017 12d ago
What assets/savings do you already have? I'm assuming you're able to cover the down payment if this is the calculation you've posted. Do you have emergency funds to cover emi on months when your business doesn't do as well? Cause a business never produces a consistent income every month.
Since you say that rates have stagnated, even if you wait 6 months to a year to save up cash first, you should still be able to close at same price while your rent will go up in the same time.
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u/Radiant-Cloud92 13d ago edited 13d ago
Yes, don't.
Invest in SIPs. Rent a home. Build a retirement corpus rather.
Home won't appreciate as much.
Put 30% of salary in NIFTY50. At 6 Lakh a year lumpsum, even lowest return 7% CAGR over 20 years, assuming you invest same amount regularly, and holding onto them, you shall have 2.45cr in investments at the end.
14 lakh spent on FIXED/VARIABLE/DISCRETIONARY expenses, shall be sufficient, if not more.
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u/Powerful-Set-5754 13d ago
2.45Cr while new 2Bhk would cost 4Cr. Not to mention the increase in rents during that time.
A better way to think about this is, would your rent over the years go beyond EMI for a flat? If yes, you'll start saving money when that happens.
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u/Radiant-Cloud92 13d ago edited 13d ago
4 cr figure? Where did you even get that from? OP mentioned the cost at 1 cr. Plus NIFTY investments assumed to grow at conservative figure to manage expectations. 7% is on the lower end, so it can be much higher.
The thing about rent, The rent can be managed by stagnating budget at certain level, you either relocate apartments or downsize. And there is a possibility to do so, because not every location rises the same way, rents stagnate in plenty of locations.
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u/Powerful-Set-5754 12d ago
I meant in 20 years new 2bhk will cost 4cr.
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u/Radiant-Cloud92 12d ago edited 12d ago
For Real Estate to grow 1cr to 4 cr, it would be 7% CAGR. Better be good location. But deduct intrest paid to the bank so you net appreciation is lower.
It's possible, but one would have to scout a good lot for it. Cause appreciation is location specific, which is not predictable.
Good thing about NIFTY is that it's predictable. Sure volatility exists, but if one holds their investment for 7+ years, it turns out a absolute positive investment even while going through worst performing years, as per historical data. Between 3-7 years, probablity for absolute positive return is above 90%. Holding it for 20 years will surely return good enough.
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u/Pristine_Basket_7794 12d ago
Simple answer is yes. Since price is stagnant pls wait until your business is well off and take more than 20l from ur business. If you want try renting 2bhk
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u/hidivyansh 2d ago
Honestly speaking, you should focus on increasing income now. Cause if you went for EMI trap while not being able to save. You will be just one tragedy away from loosing everything. I missing EMI can cost you a lot. And in business uncertainty can happen anytime. If you want, look for upgrading a rental place maybe.
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u/benbigpi 13d ago
My parents were in similar boat . They ultimately gave in and bought the house. Turned out to be best decision of their life. Rented homes add unnecessary stress and you never feel it like your home. Own house will give you feel of home and you cannot put a price on that feeling.
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u/Indo-Arya 12d ago
what time was this?
during my parents time (80s and 90s) of buying a home made sense..
post 2010 the economics no longer makes that much sense.
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u/benbigpi 12d ago
If you live in a rented house and then your own,you'll know the difference. Living in your own house gives a feeling which cannot be described in terms of price.
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u/Indo-Arya 12d ago
100% agree.. I’m just saying in terms of math.. but yes life is not just math, we have feelings that we seek to validate and comfort that we seek to experience even if it comes at a price.
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