February 2018

 

When the point finally comes where you are ready to invest in your own flat, there are many considerations that are likely to confuse you. However, the most confusion that Indian middle-class homebuyers usually face is whether to a smaller or a larger flat. One of the biggest contributors to the confusion is that home purchase is rarely, if ever, done without consulting others.

The outcome is that while you may feel that a 1 BHK is perfectly adequate for your current needs, your family, friends and colleagues may be of the opinion that you can and should purchase a larger unit. Here are some guidelines to help you resolve the confusion.

As of now, Indian families are divided into two broad buckets - the joint family and the nuclear family. Though the joint family system is made up of more than just one family, there tends to be a high degree of overlap between these units. Members of individual families engage in a lot of inter-unit socializing, and there are a lot of shared responsibilities related to children and elders involved. If you belong to a joint family and firmly believe in the related values that you have grown up with, a larger home is definitely a wiser choice.

The nuclear family is a fairly recent introduction on the Indian socio-cultural landscape, but it is now a rapidly growing trend. Nuclear families develop as independent units that have little or even no overlap with a larger family configuration. Inherently small, they either have one income earner or are dual-income households.

When a young couple wherein both the wife and husband are earning members applies for a home loan, they often find themselves on the receiving end of determined efforts by brokers and housing finance companies to convince them to opt for a larger flat. "Why limit yourself to a 1 BHK when you can easily afford a 2 BHK?" is the argument put forth. A small nuclear family should not be influenced by such reasoning. Rather, they should take such a decision only on the basis of:

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How many children they intend to have

Their preferred style of socializing - some families place more value on privacy, while others get more satisfaction out of having a lot of people over frequently.

Their financial plans and aspirations other than home purchase. Do they plan to do a lot of traveling? Will they want their children to have the opportunity to study abroad? Is early retirement an attractive proposition? Financial preparation for such plans will have to start early on.

There are also other factors to take into consideration while deciding on what size of flat to take. A larger flat definitely offers more living space and therefore convenience. However, apart from the higher capital cost, it also entails more effort and expense to maintain. A young couple without children and at the start of their respective careers may not wish to allocate a lot of money towards hiring outside help, and may even prefer to do a lot of household chores themselves.

Finally, India has also seen the emergence of the ultra-independent young single who has no immediate plans to marry and is fully focused on his or her career. Unless they happen to already be in a very high pay bracket, a larger home at this point in their life may turn out to be nothing but a millstone around their neck.

A flat should be chosen on the basis of current requirements and financial ability - 'right sizing' is definitely an operative concept. A larger flat should ideally be the result of upgrading rather than initial choice, since upgrading is always an option for people with upward mobility.

A 2 or 3 BHK is definitely the right choice to make towards mid-career. By this time, the children have arrived, their education is fairly well mapped and there is good oversight of all financial aspects. This period, and the period close to retirement, is the ideal point in time to decide on the family's final home. In most cases, bigger is definitely better at such a point.

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Source: moneycontrol.com