Help my known (f), about Buying a house with your wise advice

[fesh]

I'm posting on behalf of my acquaintance (41 F ), she's divorced and live with her 14 yr old daughter. She moved out of a toxic marriage with 0 Alimony. Now she's earning 30K-35K P.M. and her expenses are around 20K. She has savings of around 4 Lakh and 5.5 L to 6L worth of gold.

Currently she's living in a rented premises and wants to buy a house. 1 BHK is costing around 17L to her but she's confused about buying it or not.

She can't take home loan as her income sources are unorganised, like she works as home tutor and tutor in different local institutes working 8 to 10 and fetch 30-35k p.m.

So corpus is around 10L
And deficit is 7 L.

Now she's confused, either she should take some loans from distant relatives or friends OR wait for 1-2 years more and save more.

 

[cjones325]

@fesh Save more. Also, kudos to her strength.

 

[fesh]

@cjones325

Save more

Thanks for the advice, but the rising cost of the houses are worrying her.

kudos to her strength.

Thanks from her side

 

[nzgrills]

@fesh I am also in my 40s embarking on journey to first house as the sole breadwinner. Self owning home is very important, considering the skyrocketing rents. Our dependents should have a place to stay even if something happens to us. Also, noone can throw us out of our own home, we can live peacefully and not at the mercy of "society" which sometimes has problem with independent women.

If it's a matter of 1-2 years, she can try to save and then purchase home. She can check about any pmay or loan schemes for women. Bank loan may also be possible if she can show the tution money regularly being deposited in bank?

I am salaried employee, I've saved more than 50%, rest planning for loan. Best wishes for her house.

 

[fesh]

@nzgrills

I am also in my 40s embarking on journey to first house as the sole breadwinner.

Firstly I wish you the very best ahead.

She can check about any pmay or loan schemes for women.

Thanks for this advice,will look into this.

Bank loan may also be possible if she can show the tuition money regularly being deposited in bank?

Actually, she teaches at small coachings so every txn done there is in cash only and not regulated.

 

[jazzz]

@fesh With 35k PM she comes under LIG category for PMAY, if she applies for PM Awas Yojana she can get 6.50% interest subsidy for home loan upto 6.5 lakh

Assuming 3% interest remaining and 20 years tenure, she can get house in 3600 Rs EMI

 

[lookintochat]

@fesh

Now she's earning 30K-35K P.M. and her expenses are around 20K.

So saves 10kpm. That's 1.2L annually. Will take 6 years to pay off the loans to relatives and friends...

What's her rent (since she won't need to pay rent, this could help her return the money faster)? And will her friends/family charge interest? And is her income consistent? Does she and her daughter have medical insurance?

Get her to answer the above questions...

 

[fesh]

@lookintochat

So saves 10kpm. That's 1.2L annually. Will take 6 years to pay off the loans to relatives and friends...

Yes around 12-15 K she saves.

What's her rent

6K

And is her income consistent?

Yes, like in tutions you can't be 100% sure but 95% her income is consistent with this 30-35.

And will her friends/family charge interest?

No they will not. Actually one of her colleague (who is a retired old man from govt. Teaching service, can help her. He treats her as his daughter)

Does she and her daughter have medical insurance?

No they don't have but she's in touch with insurance agents and buying health insurance in this quarter only.

 

[lookintochat]

@fesh

buying health insurance in this quarter only.

Okay, this solves any health related costs.

Yes, like in tutions you can't be 100% sure but 95% her income is consistent with this 30-35.

That's great.

No they will not

That's great. But ensure that they know that she won't be able to pay back entirely for a few years. Otherwise they could become another headache.

What's her rent

6K

Yes around 12-15 K she saves.

Assuming she saves that 2-5k for some other expenses that might pop up, she can pay back 16k every month. So she'll pay everyone back in less than 4 years, which is very good according to me.

Only thing she may need to consider is education expenses for her daughter. Her daughter should be in 8th/9th. She won't be able to afford any expensive tuitions (which are kinda important especially for 11th-12th if she takes Science). Thankfully college fees in India is low (as long as she goes to an aided college) for 11th-12th. For her graduation, she can get a scholarship/subsidy due to her family being poor.

Just ask her to think a bit about the above. If this is set, then there is no issue in buying a house right away.

 

[infinity25]

@fesh Before buying the house she should have at least 6 months of savings ideally a year . rest 7 lakh is doable , she can repay her relatives or friend in about 6 - 7 years (1.2 lakh per year ) , also look out for different societies in your city they provide loans at very low interest ( but will need recommendation ) , good luck to her .

 

[fesh]

@infinity25

she should have at least 6 months of savings ideally a yea

Okay, will consider this.

also look out for different societies in your city they provide loans at very low interest ( but will need recommendation )

Will surely look into this and see if it is possible..but the problem in getting loan is her unorganised earning.

good luck to her

Thanks from her side.

 

[athena31]

@fesh The daughter will soon need educational expenses funding. So, I would save and try to have more cash / liquidity in hand.

 

[fesh]

@athena31 So how should she approach the purchase of house. I agree on the part where you said, daughter will soon need educational expenses.

Her opinion is that if she will buy the house with her savings + gold + loan from known ppl... Such that her house is free from any bank loan and bank can give her daughter education loan.

 

[rae46]

@fesh Buy as soon as possible. Not rush because prices are going up but as soon as she finds a good house.like this 17 lakh one

Take loan from distant relatives...life has been hard its ok to take people's help and repay them

Parallelly, she must start depositing all her income in the bank and then spending it, making invoices and organizing it like a business... it might sound like a big deal right now.

But no, it's just depositing the cash In the bank or taking money in UPI and then spending it.

End of the year, any CA or even she herself can file her income tax return under 44ada . This way banks will give her a loan after 6 months to one year.

Learning all of the above will only take 1-2 hours of free YouTube videos

 

[mommaof2]

@fesh I will tell you the incorrect way, but many use this way to get a loan. Many agents help you show that some salary is getting credited in your account, and then post 3 months, the change is reflected in the civil score. Use this income to show that you can repay the loan you get the loan. Very limit banks approve this as their paperwork or checks are not that good.

May not be the best advice, but this can help her get the loan.

 

[br4nd0n]

@mommaof2 Does the CIBIL score consider income, or only the repayment of loans?

 

[mommaof2]

@br4nd0n They get you an income, a small loan, n whatever they credit in account they take back as loan repayment. This increases the civil score and also shows that you have income coming. Also, they can help her streamline her income by producing actual receipts over a period of 3 months to show that you have decent income coming.

 

[br4nd0n]

@mommaof2 Wouldn't that be a 100% debt to income ratio? Surely not healthy for the credit score.

 

[mommaof2]

@br4nd0n So here I am trying to tell you there is a way. You need to check with someone who can get you all the details and charges it will incur.

 

[seawolf1957]

@fesh Think about selling gold jewellery or taking gold loan.