http://Whether you make an outright purchase or take a home loan, the economic logic does not support the buy option even today.

Do the math. Say you have just enough to buy a 3-BHK apartment. To the property price, add costs like stamp duty, registration and municipal taxes-an increase of about 8-10% to the total cost. Then, the cost of doing up interiors-it can be as little or as much as you like. In building complexes, there will be recurring monthly maintenance-more the amenities, higher the charges. If you opt to build your house, there are costs for the upkeep.

Now assess this against a rental property. Mumbai has a rental yield of 2.5-3%; your monthly rental comes to Rs 20,000-25,000 for a property worth Rs 1 crore. In Mumbai, the owner usually takes care of maintenance and structural repair costs. The lump sum you saved by not buying a house can be invested in equity mutual funds. Given an estimated annualised return of 12% (over periods of 10-20 years), at the end of 10 years even after deducting annual rentals (with an annual escalation of 7%) and, say, an initial deposit of Rs 5 lakh, you will have around Rs 2.6 crore. No taxes to pay, no interest repayment, no monthly maintenance. You get the drift.

Taking a loan? Consider this: for a 20-year housing loan for a Rs 1 crore principal at 8.5% per annum, you pay interest of around Rs 1.06 crore, more than the value of your loan. Plus, the costs and property taxes.

Many of you may be from different cities in India, Nevertheless Same calculation implies to almost all

To be true, We tend to hold real estate as if there is no tomorrow, We pile up several loans, stress our liquidity, Postpone our recreation, Lead mechanical life & teach children the rat race & leave this world with nothing in hand

Having worked several years into Life Insurance, Health Insurance, Mutual Funds & Closely with people into financial planning i am now putting my first step in investment advisory

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