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Written by Ranjan

Monday, 10 May 2010 20:54

Question: As a government employee, I earn approx. Rs 35000 per month and my monthly expenses are around Rs 25000/-. I want to buy a house. Please suggest a financial plan on how to buy a house.

Answer: First, understand the difference between wants and needs. Do you really need a house? Or more importantly, can you afford to buy a house?

Second, borrow money only when the thing you buy goes up in value. You will say that the house will increase in value. But will you be able to take advantage of the increase? The increase is of notional value to you.

Third, you also need to contribute 15-20% of the house value upfront. Nobody gives you a 100% home loan. Do you have the amount ready?

To our mind, you need to focus on building a corpus through investment rather than think of buying a house. Decide on your priority.

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