Too much of debate on whether you should buy a house or rent a house. Lets look at some facts….

A 24 year old takes up a job at Rs. 3L p.a. soon his salary increases to Rs. 6L and he is only 27 years of age. Let us assume for a while that his salary at the end of his earning life is Rs. 1 crore per annum.

Assuming he retires at 55, it means he got about 31 years of working life. On an average let us assume that he earned about Rs. 15 crores in his life. Now let us assume he pays about Rs. 3.5 crores as Income tax and 50L as other deductions like canteen, bus,..etc. So he has about Rs.11 crores. Assuming he buys 4 cars at an average cost of Rs.14L…that is another 50L gone. Now he has 10.5 crores.

From this he has to pay for his house, maintenance, food, children’s education, car maintenance, vacations, repaying own education loans, medical, parents medical and other expenses…

So how much is left for a house?

let us say he buys a house for Rs. 2 crores. So his total repayment will be about Rs. 4 crores + furnishing..say Rs. 50L over the life time of the house.

Now he is left with Rs. 6 crores for his

a) own education loan repayment with interest

b) marriage – own and presumably 2 children

c) day to day living

d) medical expenses, medical insurance, ..etc.

e) looking after parents

f) vacations including foreign vacations

soch lo…ghar lena hai?

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  1. Fools buys houses and wise people lives in it. This has been quoted long ago.

    Its all cartel that has destroyed the life of millions. Banks are part of it, so for whole life you earn for banks loosing your mental peace.

  2. Atul

    that is because I understand the property market not because i love properties. And i answer queries on how to fund property purchase, not whether to buy or rent or gift

  3. Subra, this calculation is too simplistic :).

    You haven’t factored in inflation 🙂 which would make the 1 crore at the end of 31 years much less 🙂

  4. obviously what i have done is wrong…i have added up 100 of 2016 with 100 of 2046..just saying..where is the cash to buy a big 3bhk even in Nerul…unless there is parental support..

  5. Ever wonder what will happen if the income tax benefits and deductions for insurance premium and home loan interests are abolished ?

  6. you have explained the topic in one of the simplest way but its sad people dont have open minds or dont have mind to process this masterpiece.
    its a pleasure to read your blog.

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