Many people dream of owning their own flat. But before spending a lifetime's savings on buying one, it is important to carefully calculate the financial aspects. Buying a flat is not just about saving on rent — it also involves loan interest, maintenance costs, taxes, and the potential returns from alternative investments.

A. K. M. Azhar, a salaried employee, has booked a flat in Bosila in the capital. He has taken a 20-lakh-taka loan from a private bank with a five-year term to buy the flat. However, even before moving into the flat, he already has to pay a monthly loan installment of 45,250 taka. On top of this, he also bears his current house rent and other family expenses. As a result, a large portion of his monthly income is going toward loan repayment.

A report by Prothom Alo, highlighting this picture, noted that there is a difference between buying a flat to live in and buying a flat as an investment. When making an investment decision, it is not enough to calculate only the savings from rent — one must also consider how much income the same money could have earned if invested elsewhere.

For instance, suppose buying a flat in Dhaka requires one crore taka. If renting a similar flat along with a garage costs 40,000 taka a month, the annual rental expense comes to 4 lakh 80 thousand taka. But if that one crore taka were invested elsewhere at an average return of 8 percent, the annual income could be around 8 lakh taka — about 66,667 taka a month.

In other words, buying a flat saves on rent on one hand, but on the other hand, that money can no longer be used for alternative investments. In economics, this kind of forgone potential income is called opportunity cost.

Whether the flat's price will rise in the future is also important for investment purposes. A flat's value depends on the location of the area, the age of the building, construction quality, connectivity, urban development, and future demand. However, there is no guarantee that the price will necessarily rise over the long term.

On the other hand, living in a rented house allows one's capital to be invested elsewhere, and it is relatively easier to change the type of investment in case of urgent need. But buying a flat locks up a large sum of money in a single asset, which can be difficult to liquidate quickly when needed.

The calculation becomes even more complex when buying a flat with a loan. For example, if someone pays 50 lakh taka from their own savings and takes another 50 lakh taka as a bank loan to buy a one-crore-taka flat, the loan interest and installments will increase the actual cost of the flat. In addition, registration, taxes, fees, and maintenance costs must also be considered as part of the total investment.

However, financial profit is not the only consideration in deciding to buy a flat. Factors such as the security of living in one's own home, creating an environment of one's choice, avoiding landlord-related hassles, and having a long-term permanent address are also important. For many, the value of owning a home is also part of the security of retirement life.

According to experts' advice, before buying a flat, one should consider the potential returns from alternative investments, the total cost of the loan, future price appreciation, and the risk of locking up capital. Most importantly, it is essential to ensure that enough savings remain on hand to meet the family's urgent needs even after buying the flat.

Overall, the report advises that the decision to buy a flat should take into account one's income, capacity to repay loans, future plans, and risk tolerance.