Having own house is almost dream of many of us. Some of us are so much having passion of keeping own house which is making life more stressful. Our smart and conscious decision can make life stress free. So first we have to decide whether own house is required.
We really need own house ?
Yes we need our own house. This will be the shelter for us and our family in case of any emergency or in bad time. We need to be very careful while purchasing own house as purchasing higher budgeted house may create big burden on us which will impact our life for 15-20 years. It is always advisable to buy own house well with in the budget so the re-payment of the loan can be done comfortably. Those are having house gifted by their parents can purchase property if required as investment if it is giving significant income of source as rental.
For any house we all have some sort of thoughts which defines some parameter of house set-up and these parameters will always helping to make house more expensive. To meet these parameters we need big chunk of money which compelling us to find the way to borrow money from different sources as loan which is tangibly increasing stress level in our life.
Parameters which actually enhance house cost
Many parameters are actually affecting the budget of house so we should be very much careful about the parameters which is playing major role to enhance the house cost. First we will understand about the parameters….
- Reputed Area/ locality
- Well develop nearby Infrastructure
- Connectivity from work place
- Education facility for Kids
- Entrance facing
- higher floors
- Electricity / Water availability
- Internal finishes
- And many more
We need to prioritise the main object which should be achieving the goal of financial freedom which actually make you enjoy in own house. In metro cities or A class towns the cost of 2-3 bhk house start from 40-60 lakhs which goes higher if we more focus on above parameters. Even rupees 40-60 Lakhs is huge amount for any working class those has just stared earning or earning from 7-9 years. If you are earning from 4-5 years your maximum budget will be between 25-35 Lakhs. Even this amount is enough to screw up our lifestyle as we have to manage monthly instalments of borrowings.
What should be the parameter for your first house?
Getting into the trap of expensive house you need to understand the priority which is first is to contribute the fixed amount towards financial freedom corpus and after which we need to calculate what should be the budget for house, based on which we should actually find out the parameters which is reasonably good.
Why we need very good location… even we can choose good community which is little outskirt and well connected by mode of transport with better amenities and finishes. These parameters will allow us to work with in the budget and reduced borrowing burden which help to continual increment in corpus for financial freedom.
Right decision can also make your property value high
Now a days the cities are expanding at very faster pace and even if you buy property in out skirt of city, after 10-15 years even out skirt locations will become prominent locations where after these years you can see good growth of infrastructure & mode of transport like shopping malls, play areas, educational institutes, metro, road transportation, wider roads. Most of the out skirt areas are well planned with wide infrastructure and after full development it will give you best property value and rental value.
Even if at the time of buying the house the infrastructure & amenities are not full filling our living requirement then we can chose to buy house at outskirt location which can be given on rental basis. This will generate monthly rental income and this can allow us to take house on rental basis at good living location with contribution of some additional amount.
We can understand better with these two different case studies.
Case Study -1
A person was living in B class city. He was earning reasonably. After few year of working in early years he had decided to build house for him. In year 1996 he had decided the budget for land & construction as well. He approached out skirt location to buy plot of around 1300 sf-ft area @ Rs 210/- per sq-ft. He has seen the area and found all the roads are muddy which is connected with around one kilometre away tar road. He has paid land cost around 2.85 Lakhs altogether. After which he had start constructing the house and invested around 4.5 lakhs in construction of single story house. As the nearby infrastructure was not good he had given his house to on rent and he was residing in rental house at good location of the city where infrastructure & amenities were reasonably good. After around 15 years due to expansion of city the development took place and also population has sufficiently increased along with shopping area, tar roads, transportation facility etc.
As now the facilities nearby of own house are meeting his living requirement so he had shifted in own house. He started enjoying dream of living in own house. Now after 23 years he is still living there and his property value is now Rs 85 Lakhs.
In this case once you purchase the house you got fulfil dream to having own house, after 15 years you are enjoying living and now after 23 years your property value gone up so high which is giving you feeling of rich.
Case Study – 2
A person hails from B class city now shifted to metro city due to his job. He is having the same dream of having own house. He is always looking opportunity in job to boost his income and is ready to change the job or city any time if he is getting good enhancement is his CTC. In last 5 years of his initial professional carrier he has changed three job and one city. His location is not fixed as he is open to go to any other city where carrier options are giving good opportunity and salary hike. But still he is having dream to have own house.
Finally he decided to buy own house in metro city where he was living before. He has finalised the gated community project which is outskirt of the city and also suits his budget. He purchased 2 bhk flat all including around of 31 Lakhs. He was living in other city with his family. After 3 years he got possession of his house and he has given on rental basis. He is getting income of Rs 9k per month which is helping him to contribute towards loan borrowing. Now he is having own house and now further focusing to clear up the loan as well contributing money towards corpus for financial freedom.
In this case also once you purchase the house you got fulfil with dream to having own house, and now this also start generating monthly income by rent and if you clear your loan borrowing early the this earning will become your second income which will increase around 5-10% every year which is present increment rate of rental income. Also you should focus to clear off all the loan borrowings by age 40.
Very few of us are lucky to have gifted house by parent for those this newly owned property will become passive income sources which can be contributed towards corpus of financial freedom.
Now for all of us is most important that by our age 40 we can able to take own debt free house which actually help us to give confidence and further boost moral to save money towards corpus of financial freedom.