Opinion on buying house in BLR

[sethk]

I’m 25M, i have savings around 55L(including PF) and most of it is invested somewhere in form of equity, debt or bank deposits. I don’t have dependents as such, mother is a government employee and father has a small business and younger brother is also employed. My family is suggesting me to buy a 2 bhk in BLR. I’ve 3 years of experience as of now. Take home is good(slightly upper side of 2L) for now, I’m working in a very early stage business for growth. So i can improve take home easily by switching into an MnC. Now the 2 bhk that I would like to buy will cost more than 1 cr easily. My mom also wants to put in her savings in my flat cuz it’s staying in bank deposits only. Will it be right to buy a home in this case, let’s say I’m not going out of BLR for atleast 5 years and i will get married in 3 years and we don’t own a car yet but I would like to buy one second hand for my convenience.

P.S. I take my career very seriously so i wanna take risks as I’m young now. I have left one MnC to join small startup with good growth prospects. I don’t really want to switch things for only money.

 

[hannahhansen]

@sethk If your risks are limited to working in startups or compromising somewhat on salary, then I think you could be fine. You have good financial support. However, if you plan to start something for your own, then debt trap is a big big no. However low the EMI be, you won't be able to afford career gap or loss of salary and forget about saving a big amount to invest in your startup.

 

[sethk]

@hannahhansen I’m not planning to start anything on my own for some years.

 

[sethk]

@hannahhansen I checked one of your posts, while saving this big amount, what expenses have you incurred till this date? Just asking

 

[hannahhansen]

@sethk Those savings include my parent's savings too as I shared my full income with them. My major expense was 30L in my house in tier 2 city. No loans to date.

 

[sethk]

@hannahhansen I see you’re staying with your parents in your hometown. No loans are great. I hate them too, it just creates too much pressure instead of being free.

 

[moliomarker]

@sethk Then why considering taking it? You will have that loan for a good 10-15 years

 

[redwards12]

@sethk Above 2lakh in hand = 44 lpa ! If you can't buy a 2 bhk , who can ?

 

[sethk]

@redwards12 It’s 35+ not 44. I save taxes as much as i can.

 

[redwards12]

@sethk I never thought that was possible , but if you are doing it and are interested in saving tax , than why not take a home loan ( interest rate almost borders inflation ) and take tax benifit too

 

[sethk]

@redwards12 That’s what my actual question is “should I be buying it?”. Most of the people I’ve talked to in startup industry don’t consider investing in real estate as a viable option. I want a different perspective on this. My wedding will probably cost me a good amount if I’m not wrong. So that’s the issue here.

 

[resjudicata]

@sethk great job dude.You have really came a long way in terms of your saving amount at such a young age.I am exactly same age as you and I am still not even close to that figure.But just curious,why do you feel you need to invest hefty amount for your wedding program which happens for a day or two and people are going to forget everything once they fill their stomach and go home.Probably they would also try to point out even small shortcomings and will make big issue out of it behind your back.I know this is unrelated to what you asked but I just want to get a perspective on this as I never have been able to make sense about this.

 

[sethk]

@resjudicata I’m also in the process around making sense of this though. I have assumed it in the worst case possible that’s it. I used to have same opinion as you that why we need a wedding? As later i have observed some societal norms after college, I am recollecting my thoughts around this. I think with time the clarity will come. For now, I’ve just assumed for a general case.

 

[resjudicata]

@sethk good luck and more power to you bro

 

[redwards12]

@sethk See man , your mother is investing too.

Many people fail to see basic economics , you are not spending money to buy a house but just converting currency from liquid form to an house. Sell house , if it doesn't work out 5 to 6 years down the line

 

[sethk]

@redwards12 With an investment mindset, this advice is helpful.

 

[moliomarker]

@sethk You should be fine. Keep emergency fund (including 6 month expense + 6 month EMI) in liquid (savings/FD). Rest you can use as down payment. Also do not in any case break your PF for home purchase.

Also estimate amounts you would need for car and marriage 3 years down the line. Divide that by 36, to see if you can afford saving that much amount even after paying the EMI monthly. If yes then you should be good to go in those perspectives.

Prefer ready to move in flats so you don’t have to pay EMI and rent both.

Also you are right, don’t take career decisions based on financial situation alone, especially when you are already at a good income.