Buying a house may be
an emotional issue, but given the high prices & steep interest rates,
staying on rent house may be a wiser option, says Mr. Madhu T.
The stories are dark.
The narrators are
starkly different from each other, cutting across the class & income. The
only common thread that runs through these poignant stories is the ‘obsession’
to own a house and finances that are stretched beyond repair.
After listening to the
stories – told by the victims as well as financial advisors – you ask yourself:
is the desire to own
a house at any cost causing irreparable damage to individual lives &
finances?
Consider these two
stories.
The first couple,
barely making . Rs. 35,000 a month, bought a house in a far-off place in Navi
Mumbai area. They bought the house only for sentimental reasons, knowing very
well that they can not stay there.
“When I met them for
the first time, the wife started crying & said that they can barely afford
even a meal at a restaurant because they were paying EMI (equated monthly instalment) plus rent & the EMI has shot up because of higher interest
rates” says a financial planner, who does not want to be named.
Another young couple
in their thirties also bought a home in a posh locality in a happening suburb
in Mumbai. They almost overshot their budget by 75 per cent, and paid around
Rs. 1.5 crore for it.
Then came the
interest rate shock and the extra EMI, plus living in a posh flat also meant shelling
out more for services, and opting for bigger cars & brands.
“The husband took a
foreign assignment to earn some extra bucks. The wife has some health issues,
but can not quit because of bad finances. It is a real sad case,” says another
financial planner at Mumbai.
Mr. Suresh Sadagopan,
Principal Financial Planner, Ladder7 Financial Advisories said, “These days, it is not uncommon to come
across people who have exhausted their housing loan eligibility & taken
personal loans and used all their savings to own a home. Naturally, there is
tremendous pressure on their finances because of EMIs. Since most of them have
a floating interest rate loan, they also have to bear the brunt of higher
interest rates.".
 |
| Mr. Suresh Sadagopan, |
Mr. D. Sundararajan,
Investment Consultant, Trendy Investments said, “ Several people are struggling
with their housing loan EMIs because of the higher real estate prices &
interest rates. They also have to face uncertainties on the job front, and also
their incomes are not keeping pace with the inflation & expenses. Some of
them resort to distress sale as the last option.But some still go on carrying
the burden”
 |
| Mr. D. Sundararajan |
.
Mr. D Sundararajan also said, ''Just
does not make sense to be aggressive when it comes to buying a home now because
of the higher real estate prices & interest rates.You can pay very little,
about 2 to 3 per cent of the capital value - as rent & stay in the same
place”
Mr. Sadagopan also
advocates rental accommodation.
Mr. Mukund Seshadri,
Proprietor, MS Ventures Financial Planners, said, ''People should realise that
they have multiple goals to take care of in life & home is just one of
them. If you pay a huge EMI for next 20 years and left with just 5 years for
retirement, you would be in real trouble"
 |
| Mr. Mukund Seshadri |
Emotional Decision..!
However, for many
people buying a home is an emotional decision & it is not easy to reason
with them.
Mr. Sadagopan
added, “Buy a home if you can really
afford it, but do not become obsessive & give up all financial
prudence”
Mr. Sundararjan also
added,'' Individuals to limit all their EMIs to 50 per cent of their income. If
you exceed this limit, you could be in trouble”
Many financial
experts say most of the arguments in favour of buying a home such as
inconvenience of staying on rent, the wastage of money, ‘you would not be able
to buy a home if you do not buy one now’, and so on, just do not hold water.
Mr. Sadagopan finally
said, “Sure, the property prices have gone up phenomenally in the last 5 to 6
years & the prices have once again gone up after a small correction. But
prices can not go up by 30 per cent every year. It has to be in single digit,
may be on the higher side, in the long term. If you stay on rent, then you will
be paying only a fraction of the amount & you will also save a lot.”
Src: ET
Contact:
Ladder7
Financial Advisories
Office No. 9,
Neel Empire, IDBI Bank Lane, Sector - 25,
Nerul ( E), Near
Jhama Sweets Navi Mumbai - 400 706. India
Mobile : +91 98200 25941
Telephone : +91-
22 - 2772 2069
+91-
22 - 3209 3554
+91-
22 - 6534 4219
Email :
info@ladder7.co.in
Web Site:
http://www.ladder7.co.in/
Dr.
D. Sundararajan
Owner, Trendy
Investments
Address: 17 Gr Floor, Rawji Sojpal Building, Gokhale Road North,
Dadar West, Near Portuguese Church, Dadar West, Mumbai, MH 400028
Phone: 022 24362650
MS
Ventures Financial Planners
Mumbai Address:
7/2, Chandrodaya
C.H.S. Ltd,
Swastik Park,
Chembur, Mumbai - 400 071.
Tel: +91 22 25299013, Fax: +91 22 25299014
Email:
response@msvfp.com
Web Site:
http://www.msvfp.com/
Pune Address:
A-2 Gruhlaxmi
Apartments, 415/1, Somwar Peth,
Near Rasta Peth
MSEB Office, Pune - 411 011.
Contact Person :
Mr. Shroff
Mobile No.
9763744557
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