A 5-point guide to buying a home

'When are you buying a house?' That's often the first question that well-meaning friends and relatives pose to young people who have just gotten married or have just started their first job. While it's okay to buy one house to live in, buying a house as an investment is often a poor decision. Unlike in developed countries, residential property in India yields very low rent. Even in metro cities in India, rental yield (annual rent as a proportion of market price) seldom goes beyond 2 or 3 per cent. Many people wrongly believe that property markets can earn them phenomenal capital appreciation. This belief is quite often based on someone telling them that their property has appreciated 30 times in 50 years. It is only when you convert that into annualised returns that you realise it's a 7 per cent return. Once you factor in the interest you'll pay on your home loan, the 'return' is often in the red. But while property may not be the lucrative investment it is thought to be, owning the roof over your head is a different matter. The tax benefit on home loans together with the amount you s

This article was originally published on May 12, 2021.