For instance, a one BHK unit in upcoming locality near Manyata Tech Park in Bengaluru would come around Rs. 35 lakh verses Rs. 90+ lakh for a 3 BHK unit. That’s roughly 3 times more. While a large family definitely requires a 3 BHK unit, it does not make sense for a young couple. But the fact is that a bigger house comes with higher expenses. Let’s look at other ways one can benefit from a smaller house.
- Low fixed costs – A smaller house has lower property taxes, insurance costs and lower utility bills. In addition, the required EMIs are also lower.
- Achieve financial goals – It allows you to save more and have an awesome savings ratio. Invested in the right instruments, you are sure to achieve your other goals in life at a faster rate.
- Contingency Corpus – It gives you the financial leeway to have a larger emergency corpus take care of any unforeseen events. Reduced financial stress is achieved.
- Debt Free – You can become debt free faster. Image not having a EMI to pay and getting to take that extra vacation every year.
- Retire Early – Even smaller amounts contributed towards your retirement early on make a humongous difference. For instance, Mr A starts investing Rs. 5,000/- per month from the age of 25 till he is aged 60 years and accumulates Rs. 2.74 crores, but Mr. B starts at age 30 years and accumulates only Rs. 1.70 crores even if he invests Rs. 10,000/- per month until he is 60.
- Extend help – It allows you to help your friends and family in need. The ability to retire early can allow you to follow your passion, spend time with your children and parents.
While buying a house it is important to understand how much you can afford. One should ensure that they don’t have an EMI to pay through your financial future.