Thread: Are you plannig for a New home.

Unaffordable property prices, high mortgage rates, and uncertainty in employment conditions due to global economic meltdown has affected the demand of houses in a big way. The buying and selling of properties have gone down by over 80 per cent. Thus putting pressure on the prices for the houses to come down And, that's why the rates are falling.

The good news is that the correction has started and it will take 10 to 12 months to get the right level.

if you got hurry now, then you would pay more money as loan then the value of your home.

If you plan to occupy the house, I would suggest focusing on rental premises for a year, and then look out for a good deal for outright purchase.

Comments plz

In the current situation, renting is a better option at least for 6 months. Rents too have come down.

In Pune, for example, am unfurnished 2 bedroom flat will rent from Rs. 8000 ~ Rs. 20,000, depending upon the locality. The 8K rental flat will be costing at least Rs. 30L.

Consider the following equations:
Cost of flat = Rs. 30,00,000/- (all incl)
Loan = Rs. 20,00,000/-
Own funds = Rs. 10,00,000/-
Loan details = 15 years at 11% pa (fixed for entire duration)
EMI = Rs. 22,732/-
Loss of interest on own fund per year at 10% pa for one year = Rs. 1,00,000/-
Loss of interest on own fund per year at 10% pa per month = Rs. 8,334/-
Total cost of ownership for 1st year = Rs. 3,72,792/-
Total rent paid for 1st year (8k x 12) = Rs. 96,000/-
Money saved = Rs. 2,76,792/-

Assume that after a year, a similar property is available for Rs. 25,00,000/- and the fixed interest rate is down to 9%.
Cost of flat = Rs. 25,00,000/- (all incl)
Loan = Rs. 15,00,000/-
Own funds = Rs. 10,00,000/- (this includes the Rs. 2,76,792/- saved from previous year)
Loan details = 15 years at 9% pa (fixed for entire duration)
EMI = Rs. 15,214/-
Loss of interest on own fund per year at 10% pa per month = Rs. 8,334/-
Total cost of ownership per year = Rs. 2,82,576/-

Of course, there are too many, ifs and buts and assumptions. But suffice to say that renting is better till next six months at least.

but there is a slowdown in market,banks are reduced to give the loans at less interest,so we can take advantage of this situation those who have money with them.ofcourse anywhere floating of money raises some money after all wat do u say........

Originally Posted by samrat

but there is a slowdown in market,banks are reduced to give the loans at less interest,so we can take advantage of this situation those who have money with them.ofcourse anywhere floating of money raises some money after all wat do u say........

Do not buy simply because money is now cheaper.

1. Buy for what is worth the money. From 2004 to 2007, property prices tripled for no reason at all other than because there was more demand than supply.
2. Will you pay Rs. 400 for kg of grain when realistic price is Rs. 40/-? No, unless your existence depends upon it.
3. Renting is the cheaper option. I am not saying that you should live in rented acco forever. But one or two years should be OK.
4. Many people look for new flats/homes only when a good 10-15 year old property could be had for a steal. A 10-15 year old property will sell for less than 75% of the going rate in the area and with the money saved, you can renovate it to your liking.
5. Gyms, Clubhouse, Sauna, Jogging Track, Swimming Pools, Tennis Court in the complex is very good to have but do think ... you are paying for them ... first in terms of extra premium at the time of purchase and then higher maintenance charges. So decide whether you really need them and going to use them regularly? A nice fitness center may be just nearby providing the same facility - and it will be pay per use.

info rocks.
You made it clear just4kix.