Rent V/S Buy Practical Tips
Posted: January 24th, 2013, 5:35 pm
The Million dollar question...
"Whether I should rent or buy a home", ??
The above question will always be in the mind of person who want to buy house and currently staying on rent....
Tips to Consider:
You can comfortably buy house only if following conditions satisfies for you...
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1. P/R ratio is less than 20
P= Price of house, R = Total one year rent for the same house that you want to buy
Lets take example:... You have identified a house/apartment to buy and its cost is 55 Lakhs... So P= 55 Lakhs
Rent for the same property is 15 thousand per month, so R = 15 thousand x 12 months = 1.8 Lakhs...
Now Calculate P/R = 55 Lakhs/1.8 Lakhs = 30.5
P/R ratio is 30.5 which is very high, so you will be wasting your money and put big financial burden on yourself if you go for this property....
P/R ratio shold be around less than 20 for you to buy a house.....
(Tax Savings that you get on your home loan vs HRA excemption claimed will be equated as no losss, no gain)....
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2. You can comfortably buy house if the cost of the house you are buying is 2.5 times your total annual income
Say if you get 12 Lakhs Salary per year.. you can comfortable buy a proerty of 12 lakhs x 2.5 = 30 Lakhs Property...
Anything above 30 lakhs will put you under financial burden.. and it will make to downgrade your lifestyle and keeps your mind bothering you for being in big debt/loan each day when you wake up....
========================================================================================================================
Those who follow above two guidelines will enjoy their life and will live comfortably with family....
Those who dont follow above guideline will certainly struggle to repay their loan and they loose intrest in life quickly ...
Hope the above stats can put thinking caps for the people who gets trapped in buying over priced apartments and properties to maintain their prestige among friends, relative and collegues...
and struggle each day internally in debt trappp... for 20 long years....
Those who have already fallen in high debt trap think they would have seen this blog...
"Whether I should rent or buy a home", ??
The above question will always be in the mind of person who want to buy house and currently staying on rent....
Tips to Consider:
You can comfortably buy house only if following conditions satisfies for you...
======================================================================================================================
1. P/R ratio is less than 20
P= Price of house, R = Total one year rent for the same house that you want to buy
Lets take example:... You have identified a house/apartment to buy and its cost is 55 Lakhs... So P= 55 Lakhs
Rent for the same property is 15 thousand per month, so R = 15 thousand x 12 months = 1.8 Lakhs...
Now Calculate P/R = 55 Lakhs/1.8 Lakhs = 30.5
P/R ratio is 30.5 which is very high, so you will be wasting your money and put big financial burden on yourself if you go for this property....
P/R ratio shold be around less than 20 for you to buy a house.....
(Tax Savings that you get on your home loan vs HRA excemption claimed will be equated as no losss, no gain)....
=========================================================================================================================
2. You can comfortably buy house if the cost of the house you are buying is 2.5 times your total annual income
Say if you get 12 Lakhs Salary per year.. you can comfortable buy a proerty of 12 lakhs x 2.5 = 30 Lakhs Property...
Anything above 30 lakhs will put you under financial burden.. and it will make to downgrade your lifestyle and keeps your mind bothering you for being in big debt/loan each day when you wake up....
========================================================================================================================
Those who follow above two guidelines will enjoy their life and will live comfortably with family....
Those who dont follow above guideline will certainly struggle to repay their loan and they loose intrest in life quickly ...
Hope the above stats can put thinking caps for the people who gets trapped in buying over priced apartments and properties to maintain their prestige among friends, relative and collegues...
and struggle each day internally in debt trappp... for 20 long years....
Those who have already fallen in high debt trap think they would have seen this blog...