The rent vs buy a house decision is a dilemma that the majority face while buying their first home. It is one of the tough decisions of life. Why?
Because when common men decide to buy a house, they are actually making a decision to lead a less-abundant lifestyle. Hence, along with money, buying a house also needs a lot of willpower and motivation.
In some cities of India, residential property has become so expensive that some people decide to continue living in rented apartments. They just cannot afford to buy a decent home. Check the home affordability calculator.
While people are living in a rented apartment, they make a decision, to buy their own home. Paying rent is a lot easier than paying an EMI. How? Let’s see this with an example. But before that, let’s use a calculator.
Home Affordability Calculator
|Net Salary (Rs/month)||This value should be the average "MONTHLY SALARY" credited in your bank account in Last 12 months. This is not your CTC. If you are entering a value of Rs.1,00,000 - it means Rs.12,00,000 (=Rs.1,00,000x12) was credited into you salary account in last 12 months|
|Rent (Rs/month)||Indicate the average monthly rent you are expected to pay in next 12 months|
|Other Loan EMI (Rs/month)||If you have multiple other loans EMI, kindly enter the cumulative value of all EMI's here.|
|Asset Size (Rs.)||You must enter here the total value of savings plus investments (cash, FD, mutual funds, stocks, gold, etc.)|
|Expected Home Loan Interest (%)||If you will avail a home loan, what is the expected interest you will be charged by the bank/lender|
|Loan Tenure (Years)||What will be the period for which you are expected to take the loan (7,10,15,20 years?)|
|Purchase Price of Home||Value||Remarks|
|Your EMI Affordability (Rs.)||This is the maximum value you should pay per month as your home loan EMI|
|20% Downpayment (Rs.)||This is the minimum downpayment you are expected to pay to avail a home loan. Zero (0) value indicates you've enough asset to buy the property without any loan|
|Value of Home (Rs.Lakhs)||This is the maximum you can spend to buy a home with your net income (or Asset size)|