I’m 40 years outdated and presently servicing an equated month-to-month instalment (EMI) of Rs55,000 for my excellent residence mortgage of Rs25 lakh. I can afford to pay one other EMI of Rs45,000 with my present obligations. I even have a mutual fund corpus of Rs15 lakh which I wish to use for making the down cost for one more residence buy. My query is, ought to I purchase one other property given the current market uncertainties? Or, is there any different recommendation for me?
– Name withheld on request
Answer by Raj Khosla, managing director, MyMoneyMantra.com.
Covid-19 is a real black swan occasion and uncertainties proceed to linger. It is necessary to make knowledgeable cash selections whereas defending enough liquidity for emergency use. First up, you need to consider your money move necessities for brief, medium and long run objectives prior to creating a borrowing choice for funding functions.
Currently actual property market is buyer-centric. If you had needed to purchase property for self-use, you possibly can definitely go forward with the property buy choice and lock the perfect rate of interest supply. However, with an current residence mortgage EMI to serve, you need to chorus from aligning surplus funds for the acquisition of extra property and escalating month-to-month EMI legal responsibility to Rs1,00,000.
You shouldn’t eat your current corpus for making an actual property buy within the expectation of both worth appreciation or for beneficiant and steady leases. Note that annual rental yields within the residential property phase are roughly round 2%. In the present disrupted situation, there may be the chance of not with the ability to discover a good tenant. The EMI hit will proceed relentlessly, even when the property will not be incomes any lease. Furthermore, value appreciation might take one other 5-10 (or longer) years to materialise. So not a good suggestion to spend money on actual property for leases. Given your availability of funds, you’re greatest suggested to partially or absolutely prepay your current residence mortgage.
Alternately, it’s pragmatic to contemplate advantages. Your month-to-month surplus of Rs45,000 might be invested in mutual fund SIPs. Avail {of professional} recommendation and decide your life objectives and danger urge for food. Accordingly go for a very good mixture of quick time period liquid funds, financial institution FDs and long run fairness funds to construct a diversified portfolio. Regularly evaluate and rebalance your funding portfolio.
Last however not the least, you also needs to commit an enough cowl for all times and medical health insurance wants for self and household.
(Queries and views at [email protected])
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