Hello folks, I am here for advise on whether to buy a apartment in Bangalore (India) for 80 lakhs or just staying in rent and saving for the future. Me and my better half both earn around 1 L each per month, combined which equals 2 lakhs per month (we do have car loan of 14k every month) Considering we don't have much savings, we are taking 80% loan from the bank, considering the apartment is in a prime location of Bangalore there would be price appreciate in couple of years. However, I am still confused whether to go for such huge investment. Can anyone advise
do not think of them as investment and buy.
Yeah, it is our very first home, so we would be staying in there, but it just scares me to think of the financial pressure the EMI's would create. Even though we can afford by taking a bank loan, the repayment is the toughest part.
generally what happens is you grow, your salary grow, and you will be able to pay it early.
If you won't inheret any property, then you have no choice but to buy. In that case, just look for something you are willing to live in for long term.
Has this area of Bangalore started to have an upturn? India’s real estate has a huge overhang. Many developers are defaulting and preparing for jail time. Is this a new construction? Are you getting the possession immediately? Also - how confident are you that appreciation will be greater than interest rate?
Yes this area in Bangalore is having upturn and there is a metro station coming up 200 metres from the project within a year. The builder is reputed(sumadhura groups) who has built more than 80 high rise apartments in Bangalore successfully delivered within stipulated time!! Since we have a metro line coming near the project, the appreciation is quite high in next one year. The possession for this apartment is in December 2021
I would be very very wary of under construction flats! Even Unitech was reputed at one point in time.
Before you Jump in do a simple maths your Mortgage / EMI should not go beyond 30-35%of total income. Secondly if you are planning family in a year or two your spouse will take a break. Lastly 80 lakh for two bedroom is on a higher side. Though Bangalore has high paying jobs but 80 for 2 bedroom is too much How much is the rent in that society ?
I agree. 80L for 1250 sqft. However the area is in prime location near to metro, the rental yields around 30-35k per month.
So people are willing to pay 35-40k (including maintainance)? Don't buy for rental, you will pay much more interest anyway. Resell is hard in bangalore
Don't buy. It's not worth it. Housing in India is a big bubble powered by politicians-real estate developer nexus. Don't waste your hard earned money for puny returns and huge interest. Enjoy the flexibility of renting
Ok. But since we both don't have a house of our own, not even our ancestral home, do you still suggest the same? I am trying to think from all angles, before jumping into the ocean.
Yes. You do not need own house at this point in your life. Maybe you plan to have kids and suddenly 2 bhk is not enough. What if you have a great job offer in the other side of the city or a great school. I would highly recommend against buying a flat in loan - a plot maybe probably but never a flat
80% is too much of loan. Wait for some time. I see that price of my flat has been constant for last 4 years. Ofcourse there was a timer when property prices were booming but not anymore
Yes it is! Our strategy was one person pay EMI, the other person save the same amount as paid EMI, and keep repaying bulk amounts every year to reduce principal amount. (At the end of 5th year, we would have closed considerable amount) , however I don't know how far this strategy would work.
I have not read above comments but i was in similar situation two years back. I considered following things : Area of apartment. It has to be near tech parks or better connectivity to them. Even if you are not living in future, demand of rent should be there. A good measure of that will be greater than 4% rent yield. Our apartment gives that. Your apartment should not become a bottleneck in your or spouse career. If you want to relocate, house should be able to give easy enough returns. Monthly emi should not go more than 30% of your combined monthly salary. When we bought house, it was 30% for us, now it's 16% after our last two years hikes and my job switch. Target duration should not be more than 10 years. Since you guys are young and double earning, try to be more aggressive in repaying at early stage. Target 7 years, repay in 5 years. Plan your actual loan amount accordingly. Also you don't need to curb your desires of vacation and travel. Just need to manage well and reduce unnecessary expenses. Rent or buy : it's an endless debate. I had long debates on this during that time. Buying a house is a personal choice and not always a direct investment related decision. But in the end sooner or later, I see this as terminal stage for every one. You can always get a house in your budget even five years later, but whether at your desired location or not at same budget, may be may be not. Supply is huge hence take your time. Don't jump to conclusion. Target only premium builders even if you have to pay a bit more. Try going for a 3 bhk that will be better but all depends on your budget. I also had discussion around apartment or independent house : went ahead with apartment because multiple factors favoured apartment over independent house.
This is excellent advice by Oracle. One added tip is if you are buying with the intention of also selling/making a profit off of it, the money is always made at the buy. Not the sell. Also as he says, stick to a mortgage of 15 years or less on a fixed interest payment only. Also since it’s an apartment, anticipate repairs over time and factor your costs into that. Most problems are related to plumbing and water leaks and termites and mold. Consider power outages ( through generators work most of the time) you still want to be on a floor that you can climb to when elevators don’t work etc or when you are older.
What about bannerghatta road ? Don’t want to buy in shitty whitefiedl , north Bangalore even though there are lot of tech parks. South Bangalore I feel is much better
Buy. Don't think much. You will be able to pay it off in 3 years
What is your debt to household income ratio (after tax) (car+home+credit cards/loans if any) if you take this home?
14k car+ 60k home loan+ 10k credit card. 2.5 lakhs combined income of both me and spouse
The income is good, but debt to income ratio is a bit higher (33%). If one of you were to lose a job, it could skyrocket to 60% even. It’s unsafe especially as global economy is slowing down now. If I were you, I would work on aggressively clearing the car Loan and credit cards. Use credit cards only to pay off in full every month to increase your credit score. I’m assuming your other loans are like 15 lakh, you can do it easily in less than a year with that income, maybe even months. And then take a mortgage lower than 28% debt to income ratio, and make extra principal payments each month so that you own your home in let’s say 10 years instead of 20. This way, even if you lose a job you can continue the minimum payments without extra payments.
Don't! Doesn't make sense with rental yields at about 3%. Why would you even want to pay loan EMIs at 9%!
Yeah, since we both don't have a home/asset of our own, we thought we would invest. We even searched low budget apartments for 40-50 lakhs, however they are at remote places of Bangalore or just not from good builders. Since this was our first home, we decided to go a little overboard with the budget Our strategy was apart from EMI's , we can save 50k per month and try closing considerable loan amount within 8 years. However not sure how this will all end up, so came for looking some suggestions, as we both dont have much experience in housing sector before.
Some things to ponder : 1. Have you considered the financial burden on your/spouse's shoulder in case of loss of one income source - Even if its temporary(layoff or time off due to baby some time in future possibly) ? 2. Given the fact that you would possibly switch jobs, how would you handle traffic/distance if new work place is far away from your home? 3. Would have adequate surplus leftover to invest for other goals in case you over commit beyond your comfort zone? BTW, have you started investing? 4. How sure are you that you would be working in bangalore forever? Onsite /overseas job offers could take you elsewhere. What would you want to do with your 'invested' home in such a scenario ?