Can I Afford That House?

Well, if you are staying in a rented house, you should buy a house you can afford any time. But if it is for investment, you can wait till interest rates decline.

These were the consensus opinions of two experts - financial planner Gaurav Mashruwala and Kartik Jhaveri, director, Transcend, on Boom News's show #IndiaHangout.

Reserve Bank of India (RBI) left its lending rate steady at 8% recently while announcing its monetary policy review, and said inflation will be a key concern before deciding on interest rates.

Saugata Bhattacharya, chief economist, Axis Bank, said interest rates will be steady for a long time. "However, growth will be driven by consumption. More jobs and market rally will push the wealth effect."

Jhaveri was of the opinion that it is better to opt for floating rate home loans. "And don't prepay loans now; wait and invest wisely so that you can repay when the rates are lower."

Mashruwala was of the opinion that if real estate is for personal use, it can/should be bought any time. "RBI is now at a stable interest rate regime. You can wait-and-watch before splurging on luxuries."

Jhaveri said the investment ratio should be 1:1 i.e 1 in real estate and 1 in non-real estate. "And equity is the best option for a longer term horizon."