should i buy a 2.5 cr flat?

[hallie4]

Hi, me and my wife are looking to buy a 2.5 cr worth flat (under construction) in a premium locality in Delhi NCR.
a bit about my financials:
Combined, we both net a salary of 5.2 lacs per month, and additional bonus of about 12 lacs per anum, and stocks of about 50 lacs per annum
we dont keep much liquidity in hand but have about 67 lacs in MF, 6-7 lacs cash, 25 lacs in vested stocks ( and 30L unvested esops , but cant say what happens to it in future)

we already have a small home loan of about Rs. 32 lacs and paying 35 k per month in emi for the same. it was dor a house bought dor parents in hometown.
We also own a shop on hometown worth 25 lacs, just for small investment. gives hardly 7k per month rental income

we currently live in a rented apartment paying Rs. 50k per month.

the push for trying to buy home was due to rising rents and inconvenience since landlords can anytime ask to vacate.

Is 2.5 cr house too much for us given our financials? of course we will be taking a huge loan (about 1.9-2 cr)

 

[hasta_lavista]

@hallie4 Sir if you are netting 5+ lakh per month as a family what's stopping you from waiting and saving 70 lalkhs in 2 years and then buying the same property when it is being sold post completion.

This has advantages as below

1) save lot of interest as down-payment is larger than what you would make now
2) waiting for 2 years removes all risks that builder might or might not encounter before delivery. Saves your money being stuck if builder screws up.

I know post completion the rates might be a bit higher but you can more than cover for that by saving on interests as I noted and it gives you optionality to pull the plug on your idea to buy or not over the next 2 or so years.

 

[mnewyork]

@hasta_lavista 2 years later? the same property? Delhi? Prime location? Wouldn't be surprised if it gets sold at double the price rn

 

[raymondpembrose]

@mnewyork Still doesn't beat the risk of non completion.
PS: my property in Bangalore is in court case from past 4 years due to builder default on his loans

 

[spyderco]

@raymondpembrose This is so true. I have two friends whose money has been stuck in under construction projects for the past 4 years. The risk is not worth it.

 

[rascoeb]

@hallie4 I understand your confusion. My input: salaried people should remain in rented house.

Pros
1. You can relocate as per office location. This is big plus ( my POV). I mostly change my house as per our ( me and wife) work office location. Can shift to Noida / Delhi / Gurgaon , or even better New Gurgaon, Dwarka Expressway easily depending on office location
2. Increase or decrease home size ( and hence expenses) basis requirement. We started from small 2BHK, moved to 2+1, then post kid ( and parents living with us in Covid) to 4BHK. Now we might ( still thinking, depends on rent hikes ) again move to 2+1.
3. Even paying 50K per month is 6L per Annum. Purchasing 2.5 Cr home will drain all savings + huge EMI. You might pay 60-70L down payment, equivalent to 10 yrs rental. And then pay EMI of 1.5L per month for rest 20 years.
4. We are now looking for best schools in city, so probably optimize home choice as per school location.
5. 5 of my close friends who purchased property in their original work location, left the city ( examples in Mumbai, Hyderabad, Bangalore, NCR) when they got very good offer from another location and now still living on rent.

Cons
1. Rent paid won’t help in building any asset.
2. Shifting places ( I have changed 3 homes in past 7 years) is indeed a pain for 2 weeks
3. No permanent neighbors ( can be pro or con depending on type of neighbors you get)

I understand Permanent home means peace of mind, sense of stability etc. and cannot be equated to excel sheets on returns. Home is meant for living.
But having that 60-70L in liquid form always also gives peace of mind and sense of security (if you are first gen top earner in family, then this holds true).

 

[sheenky]

@rascoeb This is seriously sane advice. While your investment will have you pay interest, that money is better invested in other forms and increase your net worth.
I honestly don't even know what the joy of owning a house means because you just have so much more freedom with rented spaces.
Houses deteriorate fast and your situations change as the years go by. Why not enjoy the comfort of a beautiful space for a fraction of the cost and enjoy that money for better experiences in life.

Should you? I don't know, because that's subjective to who you ask. If your family wants it, and you can afford it, that's all the validation you need to do it.

 

[sherrick0915]

@hallie4 So you are making 5.2*12=62.4 lpa post tax + 12 lpa bonus +50lakh stocks = 1.22 crores pa

In that you have 50k rent+35k emi -7k rental income+ maybe 50k other expenses=1.28lpm*12=15.36
Throw in a couple of vacations and unexpected expenses, let's say 22 lakhs total.

So, hmm,, you make 1.22 crores - 22 lakhs - tax for bonus and stocks, let's say 20 lakhs (if not included). So easily 80 lpa is your savings.

I guess the question is what makes you think you can't afford it?

 

[hallie4]

@sherrick0915 actually I'm good with affordability.
so question is not "can I?", but "should I?".

for can I, calculator has already given me answer

 

[bonnielynn]

@hallie4 "Should I?" Can only be answered when you compare Needs vs Want.

 

[researchguy]

@hallie4 If the "can" has been solved, then the "should" is a Hell yeah!

 

[emi00pm]

@hallie4 Better to buy a bungalow somewhere.

 

[barbs]

@hallie4 Smash it

 

[malieta]

@sherrick0915 What about MF, cash, stocks ? ( 120-125 L approx )
So 80 plus this ~ 2 Cr ?

 

[cowherder]

@malieta I read that as M**fing Cash, that too in Samuel L Jackson's voice

 

[carleannah]

@cowherder Yahi to Badshah hai!!!

 

[malieta]

@cowherder Lol

 

[alberta]

@hallie4 Pull the trigger. You can afford it. How safe is your job situation?

 

[hallie4]

@alberta just joined a new company, which us known to be fairly stable. I would say pretty safe, but you never know, its private sector after all

 

[misselisa007]

@hallie4 OP if you are a techie than your job is not safe (faang, tier 1 layoffs), please be on the safer side, probably prepay the existing loan and wait out the recession storm