Wednesday, June 27, 2018

Can I afford to buy a home given my current income levels? How do I calculate Home Affordability?

Author: Sachin Gupta | Find me on Twitter
 
This piece of blog is meant to illustrate if the home you are buying is affordable or not, given your current income levels.

For many of us working in IT/ITES; Auto; Manufacturing; other services sector, buying a home is a long-term financial commitment. On one hand, we have the aspirations of owning a home while on other hand we have the obligation to fulfill that aspiration. This is where a quick home affordability analysis would help us a great deal given our current financial situation.

Step 1:
Assess your current household income (include your spouse salary to it)
Household Income = your current take home salary + your spouse take home salary + other sources of income

Step 2:
According to global standards, one should allot maximum of 40- 50% of household income for home loan EMIs.
As an example, if your net household income is 1 Lac rupees, allot maximum of 50000 rupees for paying EMIs.

Step 3:
Most banks offer floating home loan rates, Therefore, we will only consider floating home loan rates here.
Analyze current home loan rates (It would help if you have the data for last 5 year home loan rates, because interest rates tend to move up & down in cycles)
As an example, let’s assume home loan rates are @ 10.5% and tenure of the loan is 240 months.


Step 4:
Calculate the home affordability ratio which is
Value of home /your net household yearly income
In this example, the net household income=1200000
Value of home=6260142
HAR (Home Affordability Ratio) = 6260142/1200000, that comes out to be 5.21.

As a thumb of rule, the home affordability ratio should fall between 4.9 and 5.4 for the home to be considered affordable.

Therefore, before proceeding to buy your home, doing simple maths would go a long way in assessing the value of home that you can afford.



Have any Questions?
 

Tuesday, June 12, 2018

5 most brutal accidents in the recent history of infrastructure projects


We are all accustomed to high levels of safety when it comes to construction of infrastructure projects these days. From bridges, to railway networks, to Metro line construction, to expressways, to dams, we expect nothing less than ordinary. The factor of safety in today’s construction is very high and therefore we don’t get to hear massive tragedies at infrastructure projects.

However, it was not all that rosy; it took human beings hundreds and thousands of years to reach these levels of safety. Here we present 5 most brutal accidents in the recent history of infrastructure projects.













Thursday, June 7, 2018

Celebrities’ amazing homes and guess which celebrity own these homes


Home decor is a personal and subjective choice and often reflects the personalities. Take a look at celebrities’ amazing homes and guess which celebrity own these homes!