The full-page ads are back. So are the stories in some parts of the media where “experts” are advising you to take advantage of the low interest rates and bargain basement prices to invest in real estate. The real estate corporate brokers are pushing the narrative of aisa mauka phir kahan milega (when will you get this opportunity again). You could be an entry-level buyer wanting to “settle down” with a roof over your head. You could be an ultra HNI who has exhausted his allocation into equity, debt, gold and dollars, now has a chunk left for real estate and are looking for distress deals to soak up the cash. Or, you could be a Greater Noida survivor who is beginning to forget that nightmare and is again sniffing the wind for the next boomtown story that is unfolding next to the metro line and airport. Whatever your situation, do the math before you take the leap to the other side, away from financial assets. And if you are the average Mr X investor who plans to leverage to invest—beware! There are three categories of buyers out there—which one is you?
One, the own-home buyer. Home loan rates are indeed very low starting at 6.9%. Blend in the tax break and the effective rate drops down further (exact drop depends on tax slab, interest amount and other factors). For a person looking to buy a home to live in, who does not have the money to buy the house outright and is planning to live in the city for many years, the argument holds ground. If you are going to be buying anyway, now is a good time with rates so low and property prices still very bearish. But you need to remember to keep the EMI at 30% of your take home or less. And this will mean a larger down payment than what is possible on home loans. Also remember that these are floater rates, and if inflation rates were to go up, these will go right back up. Fixing yourself down into a fixed rate loan (if available) is a good idea but these are already in the range of 8-12% and are subject to revision if you look at the fine print of the deal.