What are the reasons to buy a home and What are the obstacles to it?

Today we do not buy a house. Rather we buy a home. Statistically speaking a whopping 73% of the world’s population desires to buy a home or a property. Yet we are witnessing a consistent drop in this rate, especially with the young generation. There are certain factors that prove highly detrimental while buying a home. These are real issues and are becoming a roadblock to purchasing a property.

High Prices

The truth is that buying a home can be an exhaustive affair in terms of finance. A buyer will exhaust most of his financial liquidity and security only trying to afford a home for himself. Most people will be able to purchase only one property in their entire lifetime. The uncanny market trend makes a buyer wary to buy a home. Inflation which makes the rupee weak also makes taking a loan less sustainable.

Not Enough Surplus

You may have planned a home buying corpus early in life but the fact is your corpus won’t be sufficient due to escalating inflation rate, global recession, and the ever upward real estate market. A housing loan is almost a must while buying a home. You may want to move into a particular neighborhood where you will have to match its lifestyle. When buying a home you will also have to calculate all the allied costs that come along with it. It is important to ask yourself if your salary will be able to support all the expenses.

Availing a home loan

While buying a home you can’t rely on your savings alone as you will mostly be tempted to overstretch your budget looking at it as a long-term investment. A loan is a must.

While banks make it easy to avail one in terms of processing of documents one should not forget that the tenure of the loan is generally high and that ensures that your interest ends up being more than the principal amount. By the time you become free from the home loan your property would have become at least 30% more expensive because of the interest.

So the reasons to dissuade one from buying a home are in its place. Yet owning a house has been a matter of priority for most. Buying a home can be a stressful affair with long term implications if not planned well. But this should not discourage you from investing in real estate as the pros are stronger than the cons.

It’s your Own Space

Having your own house is a matter of pride. It brings a sense of wellbeing. It provides you with socio-economic status. Affording your own home gives you financial stability and security. Having a property also means having the power to tide over distressing times. You are more in control of your life and do not have to deal with ever-increasing rental or worry about moving out of a premise you called your home. When you buy a home you secure your future with an asset that stands the test of time.

Better Tax Benefits

The government of India is working endlessly in bringing affordability to buying a home, for its citizens. It is offering a wide spectrum of tax deductibility on property as well as home loans. There are deductions on the rate of interest on home loans. There is a deduction in the repayment of principal amount. There is a deduction in stamp duty and registration charges too. There are multiple facilities for joint property holders where the partners are individually eligible for tax exemptions. The tax benefits on buying houses are given under Section 24, 80C and 80EE of the IT Act. Homebuyers should study these in detail to understand the benefits. There are major concessions for first-time buyers too.

More Savings

Today most properties are moving towards sustainability, which means it has all the modern facilities as well as the basic amenities. E.g. most residential complexes come with their personal gymnasium, swimming pools, clubhouses, community halls, cafeterias, amphitheaters, jogging tracks and much more. They even have ATM services, small hospitals, schools, grocery stores, etc. So basically the health, recreation, and essentials are taken care of. These save many lifestyle expenses in the short term and many recurring expenses in the long term. Buying a home may require some financial discipline in the initial stages, but it eventually reaps more benefits. The cost of living is considerably lower as compared to living in a rented house.

Price Appreciation

Statistically, a house will almost always double up in value from its original price. Real estate like any other investment has its cyclical movement when the prices are sometimes supremely high and sometimes stubbornly low. All in all, you will definitely see your investment multiply. When purchasing a property do consider some points that will help with better yields in the future like the location.

Buying a home is eventually more of a personal choice. Some people are most comfortable living in rented houses as compared to losing their financial freedom.

But if you do intend to invest in a property your research has to be strong, planning impeccable and your patience endless.

We’d love to help you manage your down payment with a program that we have curated especially for first time home buyers. Click To Check It Out!

residential real estate

5 Myths of Purchasing Residential Real Estate

It was the year 2016 that can be called the ice breaker for Indian real estate, but especially for Residential Real Estate. The RERA Act (Regulation and Development Act) in 2016 and the introduction of GST (Goods and Service Tax) in 2017 proved to be a boon after a very disheartening lull. India is finally seeing a happy phase in the housing sector.

The government responsible for some path-breaking work has developed policies that are very encouraging for the serious buyer as well as the seller. For e.g. The GST brought in some much-needed transparency in accounts. The GST council also eliminated the Input Tax Credit leading to a positive sentiment.

But what looks so green may not be, just yet. The buyer is vary of the unstable market and has doubts regarding investing in a home. Let’s take a quick look at what seems, and what may be.

1.   Buying a house in a tier 2 city is not the correct decision.

Well, it is actually the other way around. From an investor’s point of view, it makes sense to invest in Residential Real Estate in a tier 2 city as the market is cheaper than the metros hence the rental yields are better. The government is making a paramount effort to bring these cities at par with the metros to prevent migration. The mall culture, overall better infrastructure and many more job opportunities ensure a better lifestyle compared to the competitive and stressful lives of the metros.

2.  Buying a property in India is a cumbersome process.

The RERA has chalked out specific rules and regulations especially for the Residential Real Estate buyer, to secure him and help him understand his rights better. It has stringent and clearly explained mandates for the builders. Registration of project completion and occupational certificate are also covered under RERA. It has even created the Real Estate Authority where a buyer can go and complain about his grievance. Overall RERA has looked into cushioning the buyer well and ensuring buying property is a better experience for him. 

Also, the government, as well as the private sector, has facilitated easy housing loans and EMI schemes so as to promote Residential Real Estate Investment.

3.   One should not buy a house in the current market situation.

According to common sense yes one should not invest in Residential Real Estate during a slowdown. But if you think about it, it is most lucrative to invest in a property during a slump for obvious reasons. Prices of houses and the rate of interest are significantly down. 

Real estate over the years has always shown capital growth, besides it doubles in value as compared to other investment plans. It is one of the most tangible assets to own. Investing in Residential Real Estate also has an added advantage to it which most other investment schemes don’t offer and that is you can lease out your investment and earn good rent. 

The most important aspect is that your property can also be leveraged or hypothecated in stressful times or you can even have a tenant and not lose your property.

4.  Renting a property is better than purchasing.

Yes, buying a house can be a massive expense where you end up putting all you have earned and saved over a long time. But there are innumerable benefits of buying a house vis-à-vis living in a rented one.

  • Investment in Residential Real Estate means lifelong security.
  • In distressing times, it is one of the most bankable assets. 
  • The returns are higher than the investment always. 
  • You will never have to surrender a premise you made your home out of. 
  • You will not have to deal with the ever-inflating rentals. 
  • A property can become your second source of income and can be your retirement plan. 
  • When you live in your own home you are more in control of your life. Rented premises always come with interference frill. 
  • Buying a home can be very expensive but in the long term, it turns out to be cheaper than renting one.

5.  You will have to spend from your contingency funds even after you avail of a home loan from your bank.

If you are planning to buy a house and are looking for a home loan then you are obviously calculating the high rate of interest you will be paying to the banks, which sometimes ends up being more than the principal amount. 

Well not anymore. The government is offering excellent down payment and EMI schemes for Residential Real Estate investments especially with the middle segment in mind. The interest rates are incredibly low and real estate is tax-deductible which will help you save a lot eventually.

You can also consider going to Non-Banking Housing Finance Companies which have far more relaxed interest rates and also offer a higher quantum of loan. There are many nonprofit making organizations and house finance companies that help you secure a housing loan at almost zero percent interest. Do your research well and you are good to buy your very own home… stress-free.

We Take Care Of Your Down Payment Needs And Would Love To Help You Fulfill Your Dream Of Buying Your First House! 

Rent vs buy

Rent vs Buy: Here are 6 Factors To Help Your Evaluate Your Decision

Buying a house versus renting is an age-old debate, especially with the way the real estate industry has been functioning for the past year. It is important to determine the income of the family before you take the first steps towards buying a home. Here are a few points that will make you evaluate your decisions and help you work towards buying a home. Rent vs Buy: here are a few reasons why the latter is a better option.

Buying Is Cheaper Than Renting

Buying a house may be more expensive at first. However, in the long run, it actually helps you save more than when you rent a home in the long run. But you must also play your cards right. We all agree that property prices have spiked by 11.59% in the past year, but we also need to take into consideration the fact that even rent rates have increased by 9.79%. Although you may start at a lower rent rate with time in India, the applicable rate of rent increase every two years is around 10 % for residential properties.

Though rent adds up to more in the long run, buying a home is not cheap. First, you will still have to put in a 5-20% down payment when you buy a home. You will have to look into home loans and work with EMIs on a monthly basis. Eventually, that will eat into your savings but once you’re done with your home loans you need not worry about it anymore. Paying more upfront is better than constantly having to pay. So we see the balance tilt a bit in favor of buying a home here.

Time For Saving Up

You know that 5- 20% down payment you need to look into. Have you looked at options for paying it? We can most definitely help you with that. But eventually, everything that is borrowed from lenders needs to be repaid, so that it does not harm your CIBIL scores or credit scores in any way.

In order to do so, you will be forced to be disciplined about where you spend your money so you can reach your goals. Experts say that being a homeowner makes you more responsible, both financially and on the personal front. It will help young adults and millennials get their act together as dates to pay off your EMIs draw closer.

Personalizing Your Home

Honestly, as a person who rents, you are living in somebody’s home. You need to respect and understand their home. You are subject to petty rules and there are times the ambience doesn’t fit your personality but more of your budget.

When you buy your own real estate property, you have control over things like redecorating, remodeling and making the place your own. If you are one of those dreamers fantasize about customizing your own dream home, being a homeowner is the only way that can happen.

Your Home And You Will Appreciate In Value

The real estate industry may seem to be a bit on the tough side of investments when it comes to appreciation in value. But it is also one you can bet on to increase over time. With good research, you could purchase a home whose value will increase each year that you own it. Though urban cities like Mumbai, Delhi, Bangalore have seen a slow rise in property prices, many other developing ones like Pune, Indore, Lucknow, Hyderabad are also great places to buy your new home with the rise in employment and development of the areas.

Buying a home also increases your net worth. Though you may already invest in SIPs, mutual funds or the stock market, this will add to your credibility financially.

Adds Stability To Your Life

When you buy a home you have taken a huge step towards settling down. You are building a relationship with the people in the community where you’ve bought your home.

Homeowners have a greater sense of stability especially when they settle into their first home. They also add to the stability of the neighborhood. In many areas with high rental properties, it gets hard to know neighbors or trust someone with your mail or pets. If you are looking for stability and a good neighborhood, homeownership is something you should look into.

Adds Security To Your Life

Homeowners do not have to go through an eviction notice from landlords. Your home is yours until you decide what to do with it. If you have an extra room you can even put that up for rent. Being a homeowner means you have a permanent address and will never have to move because of factors not in your control.

In a developing country, it is important to look at affordable cities to live in. However, if you have already set up shop in a city, here is how your city ranks in the rent vs buy debacle.

Affordable cities to buy a house

  • Indore
  • Jaipur
  • Ahmedabad
  • Lucknow
  • Kochi
  • Hyderabad
  • Kolkata
  • Bengaluru
  • Pune
  • Chennai

Affordable cities to rent a house

  • Indore
  • Lucknow
  • Jaipur
  • Kochi
  • Ahmedabad
  • Hyderabad
  • Kolkata
  • Chennai
  • Pune
  • Bengaluru

So if you do decide to buy a new home, let us help you with getting your down payment on track.