Owning a home tops the wish list of many people. It involves a lot of emotional ups and downs. One moment we are excited about the buy and next moment we get too anxious to think about the financial commitments that are about to begin. But the decision to buy a home should not be driven by emotional needs or under any kind of family or peer pressure. The decision should be backed by well-managed financial investment planning.
To avoid the stressful experience, let us guide you to plan it well in time and with care and thorough research.
- Start investing early in your career:
First time home buyers generally go for home loans. Banks usually allow a loan up to 65 to 85 percent of the value of the property. So, even if you avail a loan to buy your home, you need to arrange the rest amount for down payment. Bank starts loan disbursement once your portion of down-payment is completely paid. So, investing early in your career helps to get the desired corpus within the right time. Applying for a home loan in the late 20s or early 30s is helpful as banks then can allow you a loan tenure for a longer time which will actually reduce your immediate EMI load.
- Arrange the down payment:
Invest in mutual fund SIPs to arrange the down payment money as SIP allows you to invest money for a long term. Depending on the type of fund and tenure of the investment, a return of 10 to 18 percent return is assured. Suppose you have chosen a 3 BHK apartment in Rajarhat, Newtown worth Rs. 50 Lakh. For down-payment, you need 20% of the amount that sums up to 10 lakh. So, if you invest INR 10,000 every month in mutual fund SIP with a return of 16% per year, in five years it will become INR 9.2 Lakhs which is a pretty good amount.
- Avail PMAY-CLSS benefit:
Pradhan Mantri Awas Yojna (PMAY)-CLSS scheme is very helpful for the first time home buyers belonging to middle-income group. If you or your family member do not own a home anywhere in the country, then you are eligible to avail the benefit of this scheme. Under this scheme, you are entitled to get upfront interest subsidy from the government while applying for a loan and this significantly will reduce the EMI burden. Even if your parents own a home, you are still eligible to avail this scheme with very low interest. The scheme is ending with this financial year, i.e March 2019.
- Clear existing loans:
Buying a home is a matter of huge financial investment. So, when you decide to apply for a loan, clear all your previous debts like personal loans or car loans. It is very difficult to serve other loans along with home loan considering the huge liability of the loan amount. Clearing unsecured loans also improve CIBIL score before availing the home loan.
- Consider EMI Emergency fund:
No matter how small the EMI amount be, it is important to keep 3months EMI amount as the reserve. This will be the emergency fund in case due to some unforeseen situation, you are unable to pay the EMI on time. For this, make sure you have a regular source of income. Be sure about the stability of your job. Any fault on EMI payment can destroy your credit score and credit worthiness for future.