Property Laddering Explained: There can be no more happiness than having your home. It is the dream of many people to buy your own big house. But often the idea of buying a house puts you in many suspicions. It is often very difficult to realize this dream due to rising property prices, high interest rates on home loans and other financial difficulties.
However, amidst all these difficulties you do not need to avoid or forget this dream. You can also buy a big house of your choice in your chosen city or metropolis by adopting small schemes such as ‘property laddering’.
What kind of investment strategy will be adopted?
The concept of property laddering is usually effective, but often very few people know about it. Under this, you have to invest in Tier-2 or Tier-3 cities. Property prices remain stable for many years in far-flung areas or slow developed cities. At the same time, prices grow rapidly in the rapidly developed cities and commercial zones near the metros.
For example, property prices have increased rapidly in cities like Ludhiana, Ambala, Greater Noida, Pawai, Rajkot or Vadodara, and investors have received very good returns on their investment.
Idea is very easy, by investing small and small in real estate, you can realize the dream of buying a big house in the coming tomorrow. You start with a small property in a small and emerging area. Keep it for a few years, sell it when prices rise. After this, invest this money in a big and high price property. Many families have gradually made good assets gradually.
Demand increases as the population grows in developed cities, causing double the prices of property in a few years. For example, you buy a house for Rs 35 lakh, it becomes 60-65 lakh rupees after a few years. In this way you get a very good return. Overall, property laddering is a good way to move forward in real estate. And you can make big property by starting with small investment.
What is a property laddering and how does it work?
Now suppose you have your property in a developed city, which is expected to get good returns. You book a new property in the metropolis for Rs 1 crore, the bank usually gives 75-80 percent loan. In such a situation, you choose 75 percent loan option. That is, you gave Rs 25 lakh down payment and now you have to pay 75 lakh rupees in the installment.
When you have given 20 percent i.e. about 15 lakh rupees, then sell your small property, and pay your loan. Suppose you paid Rs 65-70 lakh, then you will get a profit of Rs 5-10 lakh.
Apart from this, you can sell your old property and invest directly in a new house of Rs 1 crore. In this situation, suppose you gave 25 lakh rupees with your savings and took a small loan of the remaining 15 lakh rupees. In this way, the loan burden on you will be reduced and you will be able to repay the loan quickly.
Also, under Section 54 of the Income Tax Act 1961, you can also get a discount on long term capital gains on selling residential property. In this way, buying new property by selling old property proves even more beneficial.
Always pay attention to buying the right property
Whether you buy property for the first time or for the second time, it is very important to choose ‘right property’. Choosing the right property makes your financial health better. Remember, you can realize the dream of buying a big house by taking smart and right decisions.
You should always dream big and try to realize them. You can make your dreams come true only by taking smart and right decisions.
(This article for Moneycontrol Hindi has been written by Atul Manga, who is the CEO and co-founder of Basic Home Loan)
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