Lease or Buy ?

Lease or Buy ?
Financial gurus often ask this question. ACCOMMODATION TIMES suggests you the factors to be considered before leasing or buying.
By A T Bureau
Residential lease rentals are highest ever in the city. With hundreds of thousands of flats ready in stock, rental accommodation supply also in its peak. It all depends on the lease rental and the EMI you are paying for the home.
If the rent is less than EMI it is always better to go for lease. For example, Mr. X purchases a flat of 960 sq.ft. at Kandivali for Rs.20,00,000/-. He takes a loan of Rs. 18,00,000/- on it. His monthly EMI comes just over Rs.18,000/- per month and maintenance Rs. 4,000/-, aggregating to Rs.22,000/- per month. Whereas, in the area, same flat is available for Rs. 12,000/- on rentals per month. If he opts to rent it out, he saves Rs. 10,000/- per month, which will fetch him Rs.8,40,000/- after seven years. Housing finance companies are charging interest only for first eight years. The premium part in the EMI is negligible.
If the EMI is less than the lease rentals, you must go for purchasing instead of leasing. In the above example if the rent is more than Rs.22,000/-, you must consider to save the fortune instead of short term gains. After all, the property rates will increase. The trend in real estate indicates that the rates are marginally move up by 8 to 10 per cent every year.
It is always advisable that owning a home by paying little extra will certainly secure the peace of mind in future.