Buying a house is a dream come true for most individuals. But financial planning for buying a house is one of the most critical and daunting tasks that need to be done before you move ahead with the purchase. So if you are unsure about the budget and planning you need to consider before purchasing a house, we have good news for you. In today’s blog, we will discuss 8 important points that you must consider when planning your budget before getting a house.
Let’s jump right into it.
Your monthly household expenses
For most middle-class Indian families, buying a house is a huge financial stretch. To pay for a house, you need to have a clear picture of your monthly expenses so you can find out scopes of reducing them. This is not an easy task as all of us are used to a particular lifestyle. Moreover, you must keep at least 6 to 12 months of your monthly household expenses aside to meet any unforeseen crisis. You and your family will also need some time to adjust to the new lifestyle when you reduce your monthly household expenses. Hence, the budgeting for purchasing a house tends to take a year and at times more.
When you visit or consult with any apartment builder in Chennai, you will have an idea of the amount you need to apply for a home loan. But this isn’t so simple. At present, banks are offering 80% of property value as a loan amount. In some cases, if the property value is 30 lakhs or less, you may get 90% of the property value sanctioned as a loan. The rest of the money, which is 20%, will come from your pocket. Ideally, you should be able to pay 40% of the loan amount as a down payment to lessen your loan burden. Add to this other costs like stamp duty and registration cost that constitutes around 5 to 10% of the total cost of your property.
Budget for interiors
Believe it or not, depending on the apartment builders in Chennai from whom you buy, the cost of interiors can be a lump sum amount of money. Since this amount cannot be financed by a bank loan, you need to plan and budget for it before you purchase a house. If you are purchasing a fully furnished villa for sale in Mogappair, you may be able to cut down on the amount of money spent on interiors. However, unfurnished flats and houses will require a significant amount for furnishing them.
Calculate maintenance cost
Whether you purchase an apartment from apartment builders in Chennai or opt for an independent house for sale in Mogappair, you need to calculate the maintenance cost for the property you are about to purchase. Those buyers who prefer to buy apartments with luxury amenities like swimming pools, community halls, gyms, etc. would need to spend extra money for all year maintenance.
Now that we have covered the financial budgeting tips required before buying a house, let us take a look at some more essential tips for buying a house-
Check your affordability
Before you decide to visit apartment builders in Chennai for buying an apartment, figure out how much you can truly afford. Ideally, you should not spend more than 30% of your salary on loans. This also includes other outstanding loans that you might have while planning to buy a house.
Your CIBIL score
A bank determines your creditworthiness by checking your CIBIL score. Hence, if you are a young professional who has just started your career, the chances of having loans and too many credit cards on your name are mostly low. CIBIL score is calculated on the basis of payment history, (whether you have paid your EMIs on time or have defaulted) and credit mix (secured and unsecured loans).
Determining the location of your house is another crucial step that you need to carefully consider. If you have children or have plans for a family, then make sure to choose a location with well-reputed schools nearby. Families with elderly members also need to look for homes that have easy access to medical facilities. Working professionals might want to live close to their workplace to cut down on time spent commuting.
Look around for the best home loan options
Don’t rush the process of a loan application. Instead, compare multiple loan options to figure out which home loan works best for you in the long run.
Check the real estate market
Just like any other market, the real estate sector goes through its phase of ups and downs. Hence, be aware of market conditions, check for forecasts from market experts. Talk to experts if necessary before you make the decision of buying a house.
Prepare of down payment and save for EMIs
When you plan to buy a house, you should be prepared to pay 40% of the total property value in the form of a down payment. This will not only reduce your loan burden but also help you to reduce the loan tenure. Save money for at least 6 EMIs in order to avoid defaulting in case of any emergencies.
Buying a house is a big decision. It involves planning, budgeting and patience to ensure that you make the correct decision of buying a house. We hope that with this blog, you can now make good choices for yourself and your family. You can also take help from financial experts to plan your finances before getting a house.