There comes a time in every individual’s life when he or she wants their own home. When some dream of a villa, some others are probably imagining their own studio apartment. Even as the size of the apartment differs, the dream remains the same. You make your dream come true, here are some things that you should care for before planning to buy a house.
After a short hiatus, hopes that demand for homes will rebound are on the rise again. This comes on the heels of the government’s move to recapitalise banks to strengthen the economy and ensure credit flow. With the Centre promising to bring realty under the Good and Services Tax (GST) ambit, there are talks of property prices coming down. The uncertainty over the Real Estate Regulation and Development Act, 2016 is also beginning to clear out with most states setting up an agency under the Act. All these factors are set to stoke the revival of the realty sector that had for some time slumped.
The decision to buy a house cannot be an emotional one. It requires a huge investment and therefore a thorough financial planning is necessary. Following are some home buying tips for you before you take the leap:
Setting a budget: There is an old English saying “Cut the coat according to the cloth” meaning one should buy according to the one’s ability to purchase. Hence setting the budget is the most essential part of buying. First make a good estimate of your needs such as the area of house required and location and set your budget.
Arrange for the down payment: If you are taking a home loan, then arrange for the 20% down payment that you have to make initially. Banks provide loan of 80% of the property value. The rest 20% has to be borne by the buyer. Though 20% appears to be a meagre amount, the actual sum may be a big one. For example, if you are you are in the process of buying a house worth Rs 1 crore, 20% would mean Rs 20 lakhs. Also, it is better to make a down payment of more than 20% just reduce the loan burden.
Be aware of other costs: Apart from the 20% down payment, some other payments will have to be made when you buy a house. These include registration fees, loan processing fee and stamp duty. These can go up to 5% to 10% of the total cost. Sometimes, car parking is not included with the house and one has to pay for it separately. If excluded from the property price, then you have to pay for it separately. Hence arrangements need to be made for it too. Other costs will also require payments for interior decoration and furnishings.
Bank loans: Before taking a loan, compare the interest rates of various banks and choose wisely. Currently, bank loans start from 8.35% for a tenure of 1 to 30 years. There are benefits for women separately. Also ensure that you maintain a good credit score under Credit Information Bureau of India Limited as that will help you secure a loan faster.
Be prepared for the worst: One can never tell when bad times befall and hence one should always be prepared for it. When you buy a house, it is advisable that you keep aside atleast 6 months EMI for use at your disposal. This will help you tide over difficult times if they should befall without defaulting on your loan.
Curb credit card expenses and clear debts: When you do the financial planning to buy a house, it is always better to rid yourself of other expenses like personal loans, unsecured debts, car loans and credit card bills. Not only will these relieve you of a burden of loan repayment, it will also give you a good credit score as well. It is very difficult to maintain two loans even with two working members in the same household. Hence, it is always advisable to fully repay any outstanding amount prior to taking a home loan.
Insurance: Your house is unique and needs protection. When we all think of locks and latches, we neglect securing our house with an insurance. House insurances cover risks through fire, theft, explosion, natural calamities like floods, earthquakes, and other instances of riots and terrorist attacks. When you are looking at how to buy a home, make sure that you get it insured as well.
Builders now provide all kinds of assistance to home buyers who wish to buy a property. Home loans, insurance and registration are all taken care of but what requires your utmost attention is the financial planning before buying a house. Start planning as early as possible for that house that you dreamt of and soon it will be yours. As renowned author Paula Coelho has written: “When you want something, all the universe conspires in helping you to achieve it.”