Buying a home in your hometown or in a big city. What makes financial sense?

The biggest common dilemma for most of the homebuyers is where to buy a home – in your hometown or a metro city. This article discusses the suitability of buying a home in either your hometown or the metro city you are employed in considering a better standard of living. On the contrary, it throws light on the cost of owning a house in a non-metro city which results in lower EMIs. It does not end there, there are other psychological reasons, tax considerations, the emergence of new work from home culture due to COVID-19, etc., which need to be critically examined before making a big purchase.

Should you buy a home in the city where you are presently working, or in your hometown? The latter is likely to be cheaper, but there are several things one should consider before taking a decision. Let us look at some of the important factors.  Affordability and cost appreciation If you’re working in a Tier II city, housing prices will be relatively affordable compared to megacities like Mumbai or Delhi. In Mumbai, even a one-bedroom flat in a middle-class suburb can cost upwards of Rs 1 crore. In such case, you would require 10-20% (20 lakh) of the home's purchase price as a down payment. This is termed as 'one's own contribution' by some lenders. The rest, which is 80-90% (80 lakh) of the property value will be taken as home loan. The total loan amount also includes registrat...