Buying Or Renting, Which Is The Right Option?
- May 7, 2016
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Given that the properties in Mumbai are highly valued, more and more house hunters are going the renting route rather than buying flats. This has kind of tilted the balance in the rented apartments favour. Because of good prospects on both sides, it is becoming increasingly difficult to choose between renting a property and buying one. In case you are stuck in a similar situation, these pointers will definitely help you out.
1. Risk Analysis – Property prices often go up and down, but a city like Mumbai is a safe destination to invest in. Most rental prices rise steadily. The best thing to do is to calculate the kind of pay you earn along with the ongoing rentals at a given place. Carefully weigh your options to come up with the best solution possible.
2. Price to rent ratio – This tool is fast becoming the new love of prospective property buyers across the city. In case the value turns out to be less than 15% then it is advisable to buy the property than to rent it.
3. Financial strength – If you are thinking of buying an apartment, then your financial position should be planned properly. In case you decide to go ahead with the decision of buying a flat, you need to learn the art of balancing your budget, as a certain amount will go into paying EMIs. The fact that you also have to pay down payment upfront means you must have enough savings with you when taking the plunge. Since buying a flat is a costly affair, it is important that you set aside a stipulated amount as cover in case things go wrong. Ideally, you should also have extra income for home expenses and leisure activities. The surplus should be more than enough to cover the increasing interest on the loan. Once all these aspects are secured, you can think of buying an apartment.
4. Stability of earnings – Home loans are generally given to individuals on a long term basis (time period of about 20 or more years). Having a stable employment record is the key in securing one. If you are employed in the private sector, you must be sure that your job is secure.
Do keep in mind that prices are different at different places of the city. For example, property in Powai is priced higher than the property in Virar. So, be the smart investor and make the right choice before inking the deal.