Does Buying A House In Mumbai Make Sense? Mumbaikars Give Us The Dope!

By | December 9, 2017

In this edition of our Mumbai series, we ask Mumbaikars what makes more economic sense. Buying or renting a house in Mumbai? Let’s take a look!

Does Buying A House In Mumbai Make Sense? Mumbaikars Give Us The Dope!

The real estate market in India might be going through a slump these days, but that hasn’t stopped people from aspiring to buy their own house in Mumbai. The recent sale by Swiss chemical giant, Clariant, of its 87-acre land to the Lodha Group for Rs. 1,154 Crore, has heightened buyer sentiment according to some.

With the debate still open, we decided to take matters into our own hands and ask Mumbaikars whether buying a house in Mumbai is worth it. Let’s see what they have to say.

For marketing professionals, Samir and Sanjana Parikh, aged 30 and 28 years respectively, buying a house in Mumbai is an investment they’re not ready to take on.

Says Samir – “We both work 10-12 hour jobs and with constant travelling, we hardly get to spend time at home. We also don’t know where we’re going to be in the next 2-3 years. Buying a house for a premium in Mumbai, at the moment, is out of the question. It’s wiser to invest that money in a Fixed Deposit or start a SIP to secure our future finances.”

Additional reading: 5 Unbelievably Simple Hacks For A Quick Home Loan Approval

A middle-aged couple, Mr. Kanha Sawant and Mrs. Alka Sawant, both bank employees, have been saving up for their seventeen-year-old son Kamal’s higher education and earmarking some for their retirement corpus.

But, Mr. Sawant has always wanted to purchase a house – “Having a house can act as a great safeguard against any sort of financial calamity in the future. You can always use your house as a collateral against future loans like a Car Loan”.

Amol Gupta, finance professional in a telecom company, dismisses the idea of buying a house as he quips – “People who have Rs. 2 crores and earn Rs. 5 lakhs every month can afford to buy a property in Mumbai. Middle-class people earning Rs. 8-10 lakhs every year are compelled to live on rent until we manage a shade in Dahisar or Mira Road at best.”

Additional reading: Tax Saving Tips When Clubbing Income For A Joint Home Loan

For journalist, Ishita Mistry, it isn’t such a difficult decision to make – “If you don’t have any family pressure to buy or own a house in order to get ‘settled’, go ahead and rent. The hassle of shifting every 11 months is a small price you pay, but the benefits of better cash flows and a better lifestyle are definite pluses when you don’t have a big decision like buying a house to take care of. ”

Stockbroker, Jitesh Kamath does the math for us – “A 2-BHK house would cost close to Rs. 1.2 crores. If you put in Rs. 40 lakhs as down payment and take a loan of Rs. 80 lakhs, the EMI for 20 years comes to Rs. 76,500 per year.

You also lose around Rs. 23,500 in interest that the Rs. 40 lakhs down payment could have potentially earned. So, your total cost per month comes to Rs. 1 lakh. With that amount, you can easily get a similar house on rent in Mumbai for about Rs. 40,000 – 45,000 a month.’’

Additional reading: Understand Home Loan Balance Transfer

For Komal Tiwari, who has only recently moved to Mumbai, buying a home is always better than renting one. She says – “While renting a place, you save on maintenance, parking, stamp duty and other things, but the outflow of cash in the form of your monthly rent will lead to no positive appreciation. Instead, it will become a liability.

On the other hand, even though buying a house, in the beginning, maybe a huge financial burden and incur significant expenses, these expenses are short-term/one-time expenses. Buying a house is an investment which will only lead to positive appreciation.”

Additional Reading: 3 Golden Investment Tips To Help You Buy A House

The variety of opinions documented above show how tricky buying a house in Mumbai can be, and why it should involve careful and realistic financial planning. One wrong move and all your other financial plans could go for a toss.

Evaluate your monthly spends and savings to see if you can afford the Home Loan EMI. A high EMI outgo can put your household budget under pressure. If you’re considering a Home Loan, shop around for the best rates and don’t settle for the first offer you get.

Check out attractive deals on Home Loans at BankBazaar. We have a wide range of fantastic and affordable offers to choose from.

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