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

[fesh]

@seawolf1957 Selling gold jewellery as taking a gold loan will increase the loan amount.
Btw what's your advice on this.

 

[seawolf1957]

@fesh Personally, neither me nor my family is very fond of gold or gold jewellery, so I happen to also save on locker rent, lol. But in your friend’s case she may be having some jewellery and she may have some emotional attachment with that. If yes, then she can consider taking loan against gold jewellery.

Secondly, one can take loan against some eligible insurance policies too.

But decision should be taken by her after considering everything. Take ideas from this place but take your own decision.

Just don’t forget one thing - don’t exhaust all the savings in purchasing the house, some emergency funds must remain with your friend. There are many other expenses too that come after one purchases a house like registration cost, municipal tax, electric connection, paint and furnishing etc. So take an informed decision.

 

[avoiceof1]

@fesh My god, this is heart breaking!! So, I will start with a disclaimer. I am not a big fan of gold as either savings or investments but I understand how it is for some people. Having said that she needs to plan on these lines: down payment will be around 20% or so. She can sell the gold and pay off the initial part of 3-4 lakhs. Remaining she should invest in some instrument that gives at least > than home loan interest rate but this depends on her risk appetite (which is probably low).

The interest part is always draining and if she is able to convince relatives to loan the amount at a low rate of interest, nothing like it.

I think you mentioned that she works from morning till night. If possible ask her to advertise in nearby shops and other areas about her tuition classes if she can teach weekend batches at her home. So, in one go she can get more kids under her roof than go and teach at other’s places (am presuming she does that though). I do not think it is a good idea to invest all her savings on this house as one does not know when there is an emergency requirement.

 

[fesh]

@avoiceof1 Chances of her getting a home loan is pretty low as her earning is unorganised.

convince relatives to loan the amount at a low rate of interest, nothing like it.

Her knowns are not asking her to pay interest but she's in dilemma of taking this loan of 7L from them now and buy the house or to save more and then take something less than 5L from relatives.

I do not think it is a good idea to invest all her savings on this house as one does not know when there is an emergency requirement.

Ya I agree with this, and that's why she's confused, though I will ask her to consider this before taking decision.

 

[fesh]

@avoiceof1

If possible ask her to advertise in nearby shops and other areas about her tuition classes if she can teach weekend batches at her home.

She has some students who come to her house for 1-2 hours but her house is small (1 bhk of around 40 sq. Yd.) So she can't host many students there in one go

 

[avoiceof1]

@fesh Well, it’s a catch 22 then! Of course she has considered location, convenience, etc for the house in question but do check out about Low Income Group housing initiatives. I don’t know much about that but someone here might know and share some valuable insights.

Also, 5 or 7 lakhs is not much different in my eyes (but then am not in her shoes so I might not be objective about this). However, if it helps her to save money in commute, amp up her income, etc then it might be worth it to take the plunge now with help from relatives.

 

[gracenotworks]

@fesh If just 2 people to stay, I would suggest her to get one constructed at low cost. Should come within 10L, if you know the stuff.

 

[fesh]

@gracenotworks House within 10L, how's that possible. She lives in Delhi btw.

 

[gracenotworks]

@fesh That's why I said that it's possible when you take construction into your own hands. Read about low cost construction techniques. Had you guys been in Kerala, I would have helped you out. However, I believe Delhi being the capital would have far better options for materials than any other state.

So do a thorough research on it, if time permits. Else save for now, and buy one later.

There is also the option of pre-fab houses (eg: house made of shipping container) if you are interested.

 

[fesh]

@gracenotworks

There is also the option of pre-fab houses (eg: house made of shipping container) if you are interested.

Never heard of something like this.

That's why I said that it's possible when you take construction into your own hands.

Actually what I have mentioned of 17L is a flat of 1 Bhk

 

[gracenotworks]

@fesh Prefab houses are a thing. In future, when housing crisis becomes mainstream, you would hear more about it.

Okay, if flat if what you prefer, then please go for it, I thought you guys were looking for an independent house.

 

[sarahhh]

@fesh If she can get interest-free/low interest loan from relatives, and she is confident that this is the area where she wants to live for a long time, then she should go ahead with it.

 

[fesh]

@sarahhh

she can get interest-free/low interest loan from relatives

Yes she can.

she is confident that this is the area where she wants to live for a long time, then she should go ahead with it.

Her opinion is to buy the house and live until her daughter's education and to save more till then. With two ppl earning and the increased cost of this house which she will buy in future, they can switch to a better place and better home.

 

[sarahhh]

@fesh Moving to a better house later can happen as per circumstances later. But for now, she should be prepared to live in this house for a long-term if she is looking to buy. Don't buy with the intention to upgrade soon. Treat the upgrade as a bonus later.

 

[kingjoseph]

@fesh The best option is to buy the house 'if' her relatives can help with the interest free loan. Lets be practical nothing's better than an interest free loan.

Also if she can't get money from her relatives 6K per month rent is doable and she should save and buy a house after 1-2 years.

 

[rocbishop]

@fesh I would suggest ask her to look into government programs and schemes for women, there are many hidden ones she can find, ask her to apply for yogana and all she might get some money or loans through there too govt approved ones

 

[rae46]

@fesh Also find out how to do tutoring for American kids.. earn in dolars

 

[xmysticgohanx]

@fesh Shouldn’t there be some government schemes she can take advantage of? Raising a child as a single parent isn’t easy. I’m sure there would be some government support

 

[o2bwise]

@fesh Given situation: If Expense is 20K/Month, she needs atleast 36L as savings (invested)

And then another 10L savings to buy house and rest on debt (Do not touch the savings for house)

I would recommend the house can wait - she needs to save more

 

[bradly64]

@fesh If your friend is getting all her payments in her bank account directly then you can check with the likes of bandhan bank they have loan schemes which specially meant for people who are self employed or working in unorganised sector but have income proof in the form for bank statements.

Loan from relatives is not suggested as it will make her owe more than just the money.