I am 40 years and work in Bengaluru. I am actually from Jaipur Rajasthan, but now I work in Bengaluru. I have rented a 2 BHK house and pay a rent of Rs 12,000 a month. I feel this is better than taking a home loan and buying a house of Rs 50 Lakhs. I intend to settle down in my native place. Do you think it is wise to stay in a rented flat till I retire, or go for a loan to buy a flat? Please advise
Rental yields of most properties including those in Bengaluru are in the range of 4-5% a year. But, the banks charge a much higher interest on home loans (say 9-10% a year). Even with tax benefits, renting a house is a better option. Buy a house/property only if you are confident of good returns (capital appreciation) in a few years. If the value of the property you plan to buy does not double every 4-5 years, it is better to stay away from buying this. However, you can still proceed with a flat after all it has great amount of emotions attached to it.