Sunday, 16 September 2012

Mumbai Real Estate

The average rate of property in Mumbai suburbs is 10 Million rupees. So how the financial numbers work to get one such property.
1. Required Annual income = 2 million rupees ( 20,00,000/-) i.e monthly Rs 1,65,000/-
2. Loan provided by Bank 75% of property value = 7.5 million rupees (75,00,000/-)
3. You need to shell out from savings (if you possess) = 2.5 million rupees (25,00,000/-)
3. Monthly EMI = Rs 83,000/- for 20 yrs.
4. Amount paid over 20 yrs to bank = 19.92 million rupees (1,99,20,000/-)

So to buy property worth 10 million one pays 19.92 million rupees. Does this make financial sense plus consider all uneven things that can happen in due course of 20 yrs??

Instead of buying property if one stays in rented house, the benefits...??

1. Rs 2.5 million of initial investment if invested in secured government bonds for 20 years gives Rs 11 million in return.
2. Rental expense with 10% hike every year is Rs 17.18 million for same property, still Rs 2.74 million less than loan amount to be repaid for 20 yrs.If this 2.74 million rupees amount is invested in secured government bonds over 20 yrs it gives you Rs 11.15 million.
3. Maintenance cost of property over 20 years Rs 1.5 million
4. Property tax over 20 yrs Rs 0.6 million (with 2012 rate)
5. Total saving generated from renting property is Rs 24.27 million over 20 yrs
6. The most important thing renting gives flexibility to change cities/localities as per requirement of job/schools for children and many more.

Buying property at least in Mumbai has no rational. And how many people have annual income of 20,00,000/- in Mumbai...????

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