If You Have, Or Plan To Buy A House, Read This

In a population-heavy country like ours, there will always be a net surplus of house hunters over houses available.

This is why tomorrow’s price will most certainly outdistance today’s, which, by itself is beyond the reach of most of us. Having a comfortable roof over its head has become the most important and integral part of a family’s financial planning.

There are four good reasons for treating the purchase of house property as an intrinsic part of overall investment strategy:

1. The rent which would have been paid for a similar property in the same or similar locality is no longer required to be paid, and hence, in effect it is a notional income. In fact, this ‘fair rent’ is brought under the ambit of tax by the ITA.

2. Investment in house property, as in the case of shares or bullion, serves as a hedge against inflation. However, here there’s a flip side. In practice, unless you are in the real estate business, buying a house is not an investment, but consumption. Surely, you would not sell your residence just because the prices have gone very high?

3. Normally, the repayment is in installments. When the market price keeps pace with inflation and when your own income is expected to rise, you make payment against the original price with money that becomes cheaper day by day. You should therefore, explore the various avenues for taking loans against mortgage of your house.

4. Finally, the most important reason for buying a house is — a nagging spouse!