Homeownership and real estate are among the touchiest topics in personal finance

Some influencers and educated young people prefer renting over buying.  Some millionaires are crying over faulty land deals. Everyone has at least one property dispute case in a joint family.

Then some 28-year-olds believe their value on the marriage market will only improve if they buy a matchbox with a home loan. 

Add to that, today there are 45-year-old software engineers silently patting themselves on the back for their passive rental income as they sit in their notice period, not even bothering to find their next job.

About the Author: Ayushi Mona Singh is the Global Projects & Recruitment Marketing head at a large MNC. She is a prominent marketer, startup consultant, author, and community builder through initiatives like Broke Bibliophiles and ShelfChat. She frequently contributes to FreeFincal out of her passion for DIY education and empowering middle-class Indians and women on their path to financial freedom.  

Irrespective of your stance on the joys and perils of real estate investing, the intent of my article is simple:

• I will share my learning, experience, and opinions – personal finance is personal, after all! 
• I intend to speak to someone who may not have the benefit of immense generational wealth or NRI money. 
• I address everyone, but especially want to call out educated young, single, working girls like myself – most of them never even aspire to buy a home!
• I write this primarily for first-time buyers, but it could also be helpful for those who’ve made a purchase and need to reassess. I am presuming you are looking at your first property to self-occupy or first non ancestral property to lease or rent.
• Lastly, this is not an article on Rent V/s Buy – the intent is to help should you aspire to be a buyer in your 20s, 30s, 40s or beyond! The internet and AI can help you with the calculator should you need one. 

So, without further ado, here goes:

Should You Buy A Home?

Many people think the home-buying journey is about having 2, 5, or 10 crores to purchase their house. It’s not. 

It’s about having maturity, street-smartness, and absolute clarity about your own financial and life goals. For the average person who went to an average college and got a degree in medicine, engineering, finance, or marketing – I guarantee you have a coddled view of the world. Your understanding stems from lunch break conversations with colleagues, your own shock and awe at the builder prices, and your parents’ oft-repeated wisdom of ‘land prices always increase’.

The first thing you must know is that anyone can get scammed. 

When an entire country of people is fervently mad about owning a house of their own, they create enough vultures to prey on their vulnerabilities and insecurities. 

And everyone from a gig worker to a CEO has been a victim of this! 

So, even before you decide to check if you have enough money in the account, you need to check:

• Are you buying without emotion, anxiety, or pressure?
• Are you buying because you need (now or later) or want (because you’re pressured)?
• Are you willing to study all aspects of real estate as a disciplined student – from ‘a contour survey’ to ‘RERA guidelines’ to ‘environmental clearances’?
• Are you going to decide by gut (Great builder! Ready to move! Great view) the way you were choosing your rented flat or build a detailed framework of what is mandatory, what is optional, what is discretionary, what are your price slabs, and so on?
• Have you thought of the purchase as part of your life? Or as a standalone goal? How does this purchase impact everything else around?

First, answer these hard questions independently (not with your father, in-laws, siblings, or kids) and then decide your readiness.

Even before you start, I will tell you what no real estate agent tells you – real estate is opaque, and it’s not the money in your pocket but your diligence that makes all the difference. 

Why Buy A Home?

I know I said that this is not a rent versus buy article, but here are some reasons I believe homeownership is superior:

• Most landlords in India are largely awful, exploitative, and discriminatory. Of course, you can find a great landlord and stick to his house like glue, but for how long?
• A home gives most types of demographics a level of comfort, especially those with elderly parents, young kids, or those who are elderly themselves. Everyone will age, and for that reason alone, one needs a roof over their head that is not under a court case or where one doesn’t have underlying anxiety of a 5% jump every year.
• EMIs decrease as the years go by; rents increase as the years go by – most investors simply never have the discipline to earn extra from the EMI-Rent gap. If there is cake in the fridge, you will eat it, and if you have surplus over your rent, you will spend it – not invest it. Or, at least spend more than you should have. 
• Quality of life is dependent on more things than rental yield, and most middle-class, retail investors do not have the cold, calculated deep know-how to succeed in financial markets!

Can I Buy A Home?

Buying a home makes sense as long as you don’t go beyond your financial abilities to get there. Many people calculate this incorrectly. 

Is your liquidity need taken care of? Don’t buy a home unless there is enough liquidity with you in terms of emergency funds. A home purchase decision puts incredible pressure on your emergency fund requirements because you are required to keep at least 6-10 months of EMIs in your liquid funds. You should factor in all your monthly expenses and EMI expenses and then get to the down payment!

Where do you have the money?

Many people have the money, but it’s locked in illiquid assets (PPF, NPS) or trapped till a certain time (ELSS, Tax Saver FDs). Many people are reliant on selling another home or gold to get there, which means you will have to get the best price first and even wait for months or years!

Now, suppose you have a big emergency fund; you have the down payment or even outright financing (maybe with parental or spousal support) – you need to understand the components of home financing correctly. 

1. Your Agreement Value exclusive of all taxes and hidden charges: Banks will only fund 75% – 90% of your agreement value, so your down payment may have to stretch a lot longer. You may run into a dream home where a corrupt previous owner wants cash – how will you deal with that? 
2. Government Charges: If you are constructing, you will have to pay tremendous GST on every single item, from cement to your modular kitchen charges. Even if buying a flat, your state will have its own stamp duty and registration charges – it adds up a lot! This is also the main line item that people try to reduce by engaging in black money dealings!
3. Loan Processing Fees: The reality becomes quite different from what is quoted on the bank website. You will pay the processing fees, you will pay legal charges for an independent opinion, you will pay baksheesh/honorarium to many people along the way to extract old documents for verification, and you will have CERSAI and a bunch of miscellaneous bank fees mysteriously debited. You only understand the calculation when you’re done with the calculation!
4. Monthly Fees: A purchased house still means maintenance, property taxes, and upkeep costs. Are you buying a house you can afford always or just now? Remember this when amenities lure you (how much tennis are you going to play!). There are multiple miscellaneous charges that come up in integrated projects – it’s a choice that’s yours; just budget for this header because your monthly EMI may be 3 lakhs, but your actual monthly cost could be 3.5 lakhs!
5. GST on under-construction properties – Extremely avoidable by making a simple decision to not rush into builder-created frenzies. 
6. Interiors: A huge, huge cost above land, construction, or the flat that many people will simply neglect to plan for. You will double your budget if you are lucky, quadruple if you are the average person. Generate a practical cost sheet 3 years hence for your under-constrcution 4BHK – you will be surprised by the cost of curtains and bathroom fittings! 
7. Brokerage, Commissions and Corruption Costs: We are in India, after all! You would be very lucky to escape brokerage but the other two you realistically cannot. 

When Should I Buy A Home?

Ideally, not too early. 

A lot of people believe in buying as early as possible these days. It usually helps men look professionally stable on the arranged marriage market; loan availability and inventory surplus make it look lucrative and so on. But the timing of the decision is very critical:

1. Will you have the money when you need the money? Many plans look attractive – pay 30 lakhs and chill for 5 years, but depending on how 5-6 years go, it can make paying the pending 2 crores, with interior and registration costs, a headache often. Suddenly, you realize you spent a lot on your wedding or, God forbid, a health treatment, or the markets are in the red. 
2. Your eligibility is not your affordability: Greedy financiers will make everyone eligible, but just because you can get a loan for 2 crores – should you take a loan for 2 crores?

What happens to your ability to invest? What happens to unplanned expenses? 

1. Buying a home is only a part of life – whether to occupy, invest, or earn passively from. You need to understand the impact on your professional, personal, and social life.

Let’s understand through scenarios:

Say Ramesh is 26 and works in Mumbai; he can’t buy a home there on his 24 LPA salary, so he buys a property back home in Indore:

• Now, he still needs to pay rent in Mumbai
• His elderly parents need to find and manage tenants as they have moved into the new house and rented the old one out
• After spending on living in Mumbai, EMI, and sending money back home, his 40,000 SIP in a poorly performing market will never be enough for retiring with full financial freedom 
• He has a hectic job and can’t take 3 months off to upskill and look for a new one till he has an outgoing EMI, even as arranged marriage talks begin, which will only increase future financial outgoings

Now, say Ramesh is 37, has a 4-year-old, earns 38 LPA, and his wife earns 15 LPA. They can potentially:

1. Afford a 1 BHK in a not-great location in Mumbai, giving them the chance to give their child a more comfortable environment close to a good school
2. Simultaneously afford a decent 2 BHK a little closer to his workplace on rent while paying EMI on a good 4 BHK in Indore, partially prepaid through sale proceeds from selling an ancestral home, because there’s no pressure to show an ancestral property in the marriage market

Now everyone has their own life (for instance, a 26-year-old whiz who sells his startup should buy whatever they want, wherever they want, but they’ll be 0.0001% of India’s population in that age group to independently have eligibility, affordability, and a large enough treasure chest to spend from!).

What Kind of Home Should You Buy?

Everyone has their own dream image of their dream home. The challenge is that home purchase is rarely an individual decision, and often social, spousal, or parental pressure leads people to make wrong decisions. I am not talking about individual choices (Big Balcony or Swimming Pool) but fundamentals. Here are a few to get you started:

1. Buying a house too small – People think of their immediate needs and think they’ll upgrade years later when they have 2 kids, but by the time 2 kids arrive and they have spent on IVF, education, and whatnot, they can’t afford their dream 4 BHK, and the 2 BHK becomes cramped. A 3 BHK would have been sensible. Think of the largest ever number of people you see living in the house in the next 5 to 15 years – and take a call.
2. Buying a house too large – Many people who’ve dreamt of a dream home want to live in palatial settings only to realize that maintenance triples, maid costs triple, their children want to live with their spouse independently, and they aren’t throwing parties every weekend. Rationalize for your realities, not for your wishes.
3. Location, Location, Location – Make a decision sheet on your location decisions carefully.
   1. Views change as redevelopment happens
   2. What is posh becomes painful due to poor commute infrastructure development
   3. Promised roads and lands never arrive, but floods whenever it rains, do…
   4. The Big 3 – Access to schooling, health, and professional opportunities

Standard choices – You may think that saving 40 lakhs on a great home is a great saving if your house is in an inner lane or near a cemetery or a busy road – only to find that renting is difficult and reselling is even more! 

Maybe you don’t believe in Vastu, but if you buy a compliant house, selling it becomes a selling point; buying a home with good connectivity helps you when you live there and helps tenants who get to be close to the office. So, if you compromise, remember you will compromise on selling timelines. 

This of course, doesn’t matter if you never intend to sell, but can you predict the future? If not, then buy a stable, predictable plot or unit!

1. Ready to move is the ideal stage – unless you’re an expert at predicting construction prices, macroeconomic policy, and the exact kind of crowd that will move into the place where you want your kids to grow up! With added GST and anxiety for the win! Every builder has investor units – don’t buy into the FOMO. Worst case, you can buy Resale in the same unit more realistically down the line. In financial markets, buyers are desperate. In real asset markets, the sellers are (they just hid it better). 

Who Should You Buy From?

There are genuinely no guarantees. Tier I builder, local builder, friend, relative, or stranger – everyone can scam you or anyone can give you a good deal.

In general, the golden rule is to never be rushed, disrespected, cheated, sidelined, or refused legal/processing/due diligence support. You must thoroughly investigate whoever you are buying from – whether it is the books of a listed company or the track record of the broker negotiating. 

Some shortcuts to minimising (but not guaranteeing) a slightly better experience:

• Power brokers (if you have the wealth)
• Power builders (if you have the wealth or bank support)
• Frequent sellers (say NRIs with 38 properties in a township – they don’t care to cheat, you are just a tick mark in their property manager’s spreadsheet)
• Avoiding people with large/messy families, avoiding homes with open loans, avoiding under-construction projects where the builder has more defaults or delays, avoiding people from other religions (Succession laws in India can confound you!)
• All clear titles, documents, and property history available
• Avoiding politicians, bureaucrats, lawyers – anyone who can wring you dry by virtue of their asymmetrical knowledge of corruption over you
• Approved Financial Projects from leading banks (it doesn’t guarantee completion but a few trustworthy large banks backing a project is better than none!)
• RERA yes, but also other clearances – as many as you can independently vet – such as occupancy and environmental clearances. A CERSAI search is more beneficial than your uncle saying to ‘trust him.’

The Actual Buying Experience

Negotiate (or learn to negotiate by reading books and trying your hand on other scenarios). Most salaried and professional class people are absolute nincompoops at real-world success, so they will overpay substantially or worse, become happy thinking they wrangled a deal when that is what the other side wanted them to see.

Here is my guidance to you:

• Speak to the right person: Often you will be handed off to the lowest monkey on the sales ladder; speaking to her/his superior can help you exact a bigger and more decisive discount
• Ask for add-ons. You will be surprised how much you can get.
• Don’t settle. You will be astonished that corner units are, yes, available. 
• Some charges are imaginary. A house on the 12th floor costs the same as the one on the 2nd floor so ask for a justification of the floor rise (if there is a view that’ll never change, sure – if not, bring it down).
• Read on ‘loss aversion bias’ so you are not manipulated or have regrets
• Understand artificial scarcity. There are millions of empty homes in this country! What are you missing out on? Nothing. 
• Don’t let your desperation show if you are invested. Don’t let the other party gaslight you into making it seem like a bug is a feature (it’s very lively here – when it’s just plain noisy for instance).
• See the house 6 times (mornings, afternoons, nights, weekdays, weekends, public festivities) through from the first view up un till registration. Stop taking pictures and videos. Observe and listen!
• IndexTap, CRE Matrix, Propstack, Zapkey, ChatGPT, Claude and all are all your friends. Use them! 
• Be prepared: A friend’s brother bought a distressed-sale flat in a great locality 5 minutes’ walk from his office in Central Bangalore, simply because he spotted it in the nick of time and had the agreement of sale and token money and pre-approval handy. 

Many people know all about property rates and circle value but don’t have the token handy for a hot property, nor do they know how to reject a lowball offer or deal with Anchoring bias. Worse, they waste time grouping up with 5 other friends hankering for ‘group discounts’ when they can simply save that money by negotiating well, timing it right, speaking to the correct person in the sales office, showing up with an actual token, and most importantly – having a checklist using which they can quickly assess if what is on offer is a match. 

Home Loan, Financing & Due Diligence

Few people in the older generation believed in credit, but youngsters are fed on a diet of Credit Card points, Car Loan EMIs, and daring to go the extra mile.

Now, whether you buy outright or partially is your decision to make (personal finance is personal, to reiterate), but you need to do the math on your home loan!

Here is my advice:

•  Even if you don’t need it, take a loan. Banks have an intensive process of due diligence with property inspection and more accurate valuations. I have seen more rich people than poor people take loans for this reason. Most middle-class people are busy selling gold or asking for a loan from parents to buy something outright. The headache is worth it! You buy a house a few times (if you’re lucky) in your life, but they sanction dozens of loans in a day. Use the service; it’s worth it! Ditto for furnishing costs – don’t ruin your credit card balance or your emergency stack; put it as an add-on (it’s cheaper).
• They can’t mandate life insurance for the heck of it – if you have life coverage that totals up from work and personal, send them the policy documents and don’t be sold into buying one more policy.
• Property insurance is cheap (and effective). Take it from an insurer of your choice, not the bank-mandated one. Send them an email saying it’s covered. 
• Loan processing is a service, and unlike modern mobile banking, doing it face to face with a trusted provider is best. Most people go the SBI route or an equivalent PSU bank route for lower rates and better due diligence. Try to take a loan from a systemically important bank where you already do your business (helps to negotiate and get better support!)
• Understand the Fixed Income to Obligation Ratio (FOIR) so your EMIs and fixed income leave room for some disposable income and investment income. A Bank may give you more money; that should not mean you take it!
• Check your CIBIL score before you negotiate and take a copy to the negotiation table for the rate.
• All banks have minor processing variations, but avoid tangling with agents and just visit your trusted branch. 
• Enhance your netbanking security and phishing vigilance – scammers know this through multiple intermediaries involved.
• Thoroughly read the bank agreement with you – and understand every aspect – ask about any terms you don’t understand.
• If possible, undertake a small education, personal, or car loan before a home loan experience. Many people who make such a huge financing decision without an equivalent retail lending experience suffer more psychologically through the process and repayment both.
• Create a document kit to negotiate across multiple banks early on, especially if you are a non-salaried individual, where they need more conviction to lend. 
• Get aligned on timelines and processes between bankers and builders/sellers to avoid undue mental pressure. Ask both for a formal schedule and a step-by-step timeline, and ask AI to fill in the gaps!

Female Home Buyers

Owning a home is very contentious for women in India, as they merely shift from parental to the partner’s house. As a woman myself, who’s a strong advocate for women’s financial health, here are a few things I encourage you to keep in mind:

• There are loan rate concessions for women.
• Select states have registration concessions for women.
• Buying a home makes you economically independent. 
• Hindu Succession (Amendment) Act, 2005: Grants daughters equal coparcenary rights (joint-heir rights) in ancestral property by birth, placing them on equal footing with sons regardless of marital status. Don’t let men steal your rights!
• As soon as you own an asset (financial or otherwise), make a will as a married woman; a married woman retains complete and independent ownership of any property she purchases or receives, and her husband or in-laws hold no automatic right to it.
• Everything you own is absolute property, allowing you full control to sell, gift, or transfer it without needing consent.
• Buying with a husband? It’s best that you both transfer from individual accounts to the loan account to have a clear trail of joint ownership in case of future property disputes.
• Get your life insurance amended under the Married Women’s Property Act. It will protect your separate property and life insurance policies from claims by your husband or creditors (that means the bank!).
• Under central schemes like Pradhan Mantri Awas Yojana (PMAY) Urban 2.0, the house must mandatorily be registered in the name of the female head of the household to claim the interest subsidies.
• If a property is jointly owned and co-funded by a married couple, both individuals can independently claim deductions under their respective tax filings.
• Lastly, have your husband prepare a docket of original documents – statistically, women outlive men, and most women are absolutely confused about how to manage this in case of the partner’s death.

Phew! 

At the end of the day, buying your dream home is about more than just finding the perfect place to live; it’s about making a dream come true without putting your financial future at risk. With careful planning, the right financing option, and a clear understanding of your budget, owning a home can become a realistic and rewarding goal. 

Disclaimer: I have written this article for informational and educational purposes only. The views and information shared here are intended to provide a general understanding of housing finance and should not be considered professional financial, legal, or investment advice. I understand that home loan options, interest rates, and repayment terms may vary depending on individual circumstances and lender policies. I encourage readers to conduct their own research and consult qualified professionals before making any financial decisions. I shall not be held responsible for decisions made solely on the basis of this article. This is merely my experience and perspective.