Real Estate Basics

In India, buying a house is considered a milestone. But is it always the right financial decision? Let's do the math.

Renting costs:
- Monthly rent: ₹20,000
- Annual increase: 5%
- 20-year total: ~₹65 lakh

Buying costs (₹60L flat, 20-year loan):
- Down payment: ₹15 lakh
- EMI: ₹38,000/month (for 20 years at 8.5%)
- Total EMI paid: ₹91 lakh
- Interest paid: ₹31 lakh
- Maintenance: ₹2-3 lakh/year = ₹40-60 lakh
- Property tax: ₹50K-1L/year = ₹10-20 lakh
- Total: ₹1.9-2.4 crore

But you also get:
- A house you own (worth ₹1.5-2 crore in 20 years)
- Tax benefits on home loan
- Emotional satisfaction

The verdict: Renting is often cheaper mathematically, but buying builds an asset and gives stability. The right choice depends on your priorities, city, and how long you'll stay.

The sticker price is just the beginning:

1. Stamp duty & registration: 5-7% of property value (₹3-4.2L on a ₹60L flat)
2. GST: 5% on under-construction, 0% on ready-to-move
3. Legal fees: ₹20,000-50,000
4. Home inspection: ₹5,000-15,000
5. Interior work: ₹3-10 lakh (bare minimum)
6. Maintenance: ₹3-5/sq ft/month (₹2,000-5,000/month for a 2BHK)
7. Property tax: ₹5,000-20,000/year
8. Insurance: ₹5,000-10,000/year

Total hidden costs: ₹8-15 lakh upfront + ₹3-5 lakh/year ongoing

A ₹60L flat actually costs ₹70-75L in year one.

1. Keep EMI under 40% of take-home — Banks may approve 50-60%, but that's risky. If one spouse stops working or you face a pay cut, you'll struggle.

2. Down payment: 20% minimum — Try for 30% to reduce EMI and interest. Don't drain your emergency fund.

3. Choose the right tenure:
- 15 years: Higher EMI, less total interest
- 20 years: Balanced
- 30 years: Lower EMI, but you pay almost double in interest

4. Prepay when possible — Even one extra EMI per year reduces tenure by 2-3 years.

5. Compare rates — SBI, HDFC, ICICI, LIC HFL, Bank of Baroda. Rate difference of 0.5% = ₹3-5 lakh savings over 20 years.

6. Floating vs fixed: Floating rates are usually lower and跟着市场走. Fixed rates are predictable but higher.

Meera, 32, earns ₹18L/year. She's deciding between:

Option A: Buy 1BHK in Thane
- Price: ₹65 lakh
- Down payment: ₹15 lakh (from savings + parents)
- EMI: ₹42,000/month for 20 years
- Commute: 1.5 hours each way

Option B: Rent 2BHK near office (Andheri)
- Rent: ₹28,000/month
- Invest the EMI difference (₹14,000/month) in SIPs
- Commute: 20 minutes

After 20 years (assuming 12% SIP returns):
- Option A: Owns a flat worth ₹1.5-2 crore (net of loan cost)
- Option B: Has ₹1.4 crore in investments + flexibility to move

Our take: If she plans to stay in Mumbai long-term and values owning a home, Option A is fine. If she values flexibility and location, Option B is financially strong too. There's no single right answer.

1. Builder reputation — Check past projects. Visit them. Talk to residents. Google "[Builder name] complaints."

2. RERA registration — Every project must be RERA registered. Check the RERA website.

3. Possession date — If the builder has a history of delays (most do), add 1-2 years to the promised date.

4. Maintenance costs — Some societies charge ₹5-10/sq ft. That's ₹5,000-10,000/month for a 2BHK.

5. Resale value — Not all properties appreciate. Check historical prices in the area.

6. Loan approval — Get pre-approved before you shortlist. It shows sellers you're serious and tells you exactly what you can afford.

7. Don't stretch — If you need to borrow from parents or take a 30-year loan, the property might be too expensive for your income.