With rising population and shrinking spaces, a big home is getting far from the reach of a family with an average income. Many buyers want to own a big house over and above their financial capacity based on the following misconceptions:
Buyers thinks that a home is not purchased everyday so put in everything to avoid any regret in the future. (Fact: It’s better to assess space required and buy accordingly than to buy an oversized house.)
A big house can be rented/sold partially if not required but a small house cannot be stretched if more space is required in the future. (Fact: Small house can be sold easily to buy a bigger house if required in the future.)
Only big flats are available at a good locality. (Fact: Small houses are more in number and it has wider market than the bigger homes.)
Buying a big flat would help in gaining higher social status and it helps in impressing friends or relatives. (Fact: The way you live is more important than where you live.)
Deciding on downsizing
Apart from the aspects discussed above, sometimes property agents make a false commitment or employ other tactics to earn more commission from the buyer.
There are many instances where a buyer finds it difficult to pay the EMI having purchased an oversized home.
It is always better to downsize the home and shift to a smaller one to avoid falling into the debt trap.
It may be wise to settle for a smaller house if one falls into any of the following situations:
Jobs that require shifting often: The job may force you to shift the place temporarily or permanently, in such situations it is better to own a small home because fund involvement is very low and it is easy to sell such property fast.
Weak financial position: The fund arrangement is a big issue while buying a house. If buyer finds it difficult to arrange funding and there is no certainty to increase the flow in future then it is better to change the plan and buy a small house.
To Save Money: The buyer can save money by buying a small house because it costs less and related expenses like registration, maintenance, electricity charges etc. are lower when compared to a bigger one. Money saved can be invested to earn a good return through other financial instruments.
To find a locality as per choice: A big home at a posh locality has a higher price tag, which is out of reach for many buyers but one can afford a small house at such prime locations and enjoy the benefits.
The smaller house is easier to resell because of lower cost involvement and the option to convert it into commercial property.
Downsizing can be assessed by noting down the unused space in the house:
If there are one or more rooms which are left vacant without any use for a long time.
Bathrooms or kitchen which are not used often, could have extra vacant space or there could be free space left idle for long time that can be considered while downsizing.
If one or more family members have shifted to another place for job, study etc, it could increase the scope for downsizing.
Keep the least used stuff aside and take the space into account for calculating the extent of downsizing.
Calculate and add the unused and released spaces at home as identified above and subtract it from the total square feet area of your home, the result would be the size of the home required after downsizing.
Home buying is a very delicate decision in every person’s lifetime. While buying a home, “the bigger the better” or “smaller the smarter” logic applies only if the buyer feels comfortable with the idea.
Saving money, living in a cozy setup and easy adaptability are also factors that can help a buyer to finally decide on downsizing.
— The author CEO, BankBazaar.com