Nowday buying home will be big dream for middle class people. On every day the price value of House and rent income keep on increase as 10 -12% annually. Let us see which will be best option whether I should go for renting or buying the house . Consider an example before taking any decision
House Property value: 42 Lakhs
Mortage Loan :32 Lakhs
20% amount paid on the current House property value: 10 Lakhs (approx.)
EMI for Housing Loan at current Interest rate : @9.5% -> Rs 29,828
The interest rate may go up to down depend upon on the economic condition of that country. If you consider other parameter like Property tax, Maintenance cost etc. The property value of house will increase from 10 to 20% of current market value of house. In such case you gain more profit compare to the stocks.
Rental Amount Per month –Rs 20,000
First Year RentAmount -Rs 20,000 *12 =2, 40,000 (for first year)
For Almost 14 Year ->2, 40,000*13 = 31 Lakhs
If you consider any increase of House rent amount for every year at 5% on rent income – Rs 12,000 for every years, you have to pay additional on every year.
Buying is preferred as per above calculation. It depend upon on the financial income and before taking any loan , You should have 40% savings and remaining 60% amount will goes to Loan. In most of people are paying 30 to 40% on house rent of their monthly income.