Gaurav and Rishabh are two friends in their early thirties having conversation over tea.
G: Did you see the New flats in green house society. I loved them. I am planning to buy a house there.
R: Yes, I saw, the flats there are indeed very nice, even I was thinking to rent a house there.
G: Rent? why don’t you buy it? you’ll easily get a home loan. Even I don’t have all that money. I’ll make the down payment of 20 Lakhs and take loan for the remaining 90.
R: I don’t think, taking such a huge amount on loan is a wise decision.
G: sooner or Later we’ll have to buy our own house, then why wait and waste money on Rent, isn’t it better to take loan?
R: Let me explain you. For the 90 lakhs you are planning to take a loan, if the Roi is 7 % you will have to pay a monthly EMI of 69 thousand for 20 Years. And the total amount you will have to pay including the principal and interest will be around 1.6-1.7 crores.
G: which means 1.8-1.9 crores for a house that is worth 1.1 crores?
R: exactly my friend! I have done all the calculations for myself and thus decided on Renting the house. Instead of paying the EMI, I can pay rent for as long as I want to.
and even change the house if it doesn’t match my needs.
But if you still think, you want to pay 70-80 lakhs for your emotional satisfaction, then it is up to you.