Your budget depends on your loan eligibility, your personal savings and a0ny gains from selling any property or any help from your parents. Ideally your budget for buying a ready to move flat should be 5 years of your gross salary and if it is under construction flat then your budget can be your gross salary of 6 years. For example if your package is Rs. 20 lakhs per annum then your budget will be 1Cr. If you want to stretch out it can be 6 times of your package. This formula is applicable to those who want to give 20% amount from their savings and 80% amount from Loan.
Now suppose you are earning Rs.20 lakhs per annum and your wife is earning Rs.10 lakhs per annum then your total budget should be your 5 years gross salary and half of 5 year gross sala ry of your wife because ladies have some personal expenses and other obligations. If your budget is Rs.1.5 Cr then It does not means that you should buy flat of Rs.1.5 Cr. If you want to buy flat at a particular location where you are sure that price will appreciate and also rentals are increasing you can go but if you want to diversify your risk you can buy a 2bhk of Rs.1 Cr for your own living and a one bhk of Rs.40 lakhs for rental income and remaining Rs.10 lakhs liquid cash you can have for emergency purpose or for investing in new opportunity. One other scenario will be like you invest Rs. 1 Cr in flat for self use and other Rs.50 lakhs you can buy any land with loan. Any permutations and combinations you can do depending on your savings and your loan eligibility. Sometimes it also happen that you budget is Rs.80 lakhs but property you like is of Rs.1Cr. In that case you can ask money from our parents/friends for purchasing property or you can sale any existing property that is not giving good rental yields or any land that price is stagnated. It is suggested not to buy property situated at poor location. You have to consider property like Stocks you own. If any good property is not in your budget like suppose 3BHK is out of your budget then you can go for 2bhk or buy some land in any developing area so that you can buy flat after some time by selling that land. This is called hedging of properties. If you are just sitting with cash and waiting for good opportunity or confused and not able to take decision It may possible that price of the property that you want to buy will increase more than what you actually saved in next 4-5 years. For example, if your savings is Rs.20 lacks and your loan eligibility is around Rs.80 lakhs initially but you like the flat of Rs. 1.25 Cr so you have short of Rs.25 lakhs. Now you try to save additional Rs.25 lakhs in 5 years and now your total savings will be Rs.45 lakhs and loan eligibility is increased to Rs.1Cr as your package increases but it may possible that flat that cost was Rs.1.25 Cr will cost after 5 years will be Rs.1.65 Cr considering only 6% inflation per year so still you are lagging behind Rs.20 lakhs so sometimes it is required to stay invested in real estate instead of sitting on cash. Suppose if you bought a land from your Rs.20 lakhs saving and if it got appreciated at the rate of 15% including 8% inflation then you will get around Rs.40 lakhs after 5 years and with additional savings of Rs.25 lakhs and increased loan ability of Rs.1Cr you can buy flat of Rs.1.65 Cr.
