Recently a Reddit user shared a post regarding this issue, which sparked a debate…
In today’s era, this question comes in the mind of every middle class person that is it wise to buy a house by taking a loan or is it better to save money and invest by staying on rent? Recently a Reddit post has sparked a fierce debate on this question. In the post, the Reddit user said that buying a flat in big cities can prove to be a wrong decision financially and people often do this due to social pressure. Along with this, the user also shared financial tips regarding buying a house or living on rent.
Heavy EMI or low fare – what is the right decision?
A Reddit user said that a normal 2BHK flat in a metro city like Mumbai, Bengaluru or Delhi costs at least Rs 1.5 crore. In such a situation, even after paying 20% down payment i.e. approximately Rs 30 lakh, you will have to take a loan of Rs 1.2 crore. According to the current interest rates on the loan, EMI of about ₹ 80,000 is made every month and this EMI can last for 20 years or more. The Reddit user said that in this long time, you end up paying more money in interest alone than the actual cost of the flat. And until the loan is repaid, you remain a tenant of the bank.
Is it right to invest money by renting a flat?
Reddit user suggested that you can rent such an expensive flat for around Rs 30,000 to Rs 35,000, which means you can save Rs 40,000 to Rs 50,000 every month. Which you can invest in mutual funds, SIP or share market, which can give good returns in 10-15 years. The user said that if you lose your job or face any financial crisis, you do not come under the pressure of debt, which can become a big threat for people with EMIs.
Flood of reactions on social media
After this post, thousands of reactions came on Reddit. Some people completely agreed with it. He believed that financial security is necessary in the present times. He said that buying a house was easy two decades ago, but in today’s times it has become a big risk. At the same time, many people also opposed this idea and said that the rent of such an expensive flat cannot be Rs 35,000 in a metro city and buying a house is not just a financial deal but also an emotional security.
In this debate, some users found a middle path and said that if you have to buy a house, then buy a property whose EMI is not more than 40-50% of your salary and if you cannot afford it in a metro city, then buy a small flat in a tier 2 or tier 3 city and invest for the future. This way, not only will you have a property, but financial stress will also be less.