7 budget tips while buying a new home
The positive vibes echoing within the walls of your home strengthen familial love bonds and offer relief from worries that strain your nerves.
Planning your budget judiciously while buying a new home ensures that you can enjoy those vibes without any nightmare haunting you.
While looking to buy a house, you need to be wise and prudent to grab the best deal without being strapped for funds.
To help you confidently move ahead with your intention of buying a home, 7 budget tips are being shared over here to streamline the financial process.
Applying discretion on monetary issues as first time home buyer will lessen liabilities for sure.
1) Get Your Credit Rating Checked
If you have been thinking to initiate the process of home loan application after finalizing the apartment, there can be significant delays in the same.
The delay primarily is attributable to the time taken in preparing your credit report.
If your credit score happens to be discouraging, your loan application stands rejected and the apartment too may slip out of your hand.
To steer clear of such prospect, you need to have your credit eligibility tested from any reputed bureau.
RBI’s mandate states that you are entitled to one complimentary base level credit report every year. Avail this and plug holes in credit rating beforehand.
2) Be Wary Of Putting All Your Money on Dream Home
A general rule of thumb is that the monthly loan repayment amount should not exceed 30% of income earned per month.
Plan accordingly else you may run short of money to cater to other vital needs. Your dream home can wait for some time. But if you get mired in a financial crisis, it would be difficult to rise above the same.
3) Avail of The Benefits Extended by Pradhan Mantri Awas Yojana (PMAY)
The credit linked subsidy scheme under PMAY offers significant monetary relief for first time home buyer.
Subsidy amount, as determined by your income, is directly credited in the loan account which slashes the outstanding loan principal.
So, if your annual income is in the range of INR 6-12 lakhs, you can secure 4% interest subsidy for a loan period of 20 years. 3% subsidy is available if your annual income falls in the range of INR 12-18 lakhs.
4) Opt For 30 Years Loan Repayment Period
Home loans are available for various time frames. Even if you feel that you are capable of repaying the loan amount pretty soon, it is advisable to opt for an extended period.
Suppose, you have taken a loan of INR 50 Lakhs for a period of 20 years at 8.35% interest, the monthly installment would be INR 42918. The same loan would invite an EMI of INR 37915 for a period of 30 years.
The difference i.e. INR 5000 monthly can be invested in a SIP (Systematic Investment Plan) to harvest significant monetary benefits.
Further, depreciation in rupee component over the years would make it easy to bear the EMI burden in the long haul.
5) Consciously Plan Your Budget
Before buying a new home, you need to appraise your ability to bear the financial burden. Get your earnings and spending mapped on a spreadsheet.
Check whether you would be able to sustain your current income, factoring in value appreciation of goods and salary increments, over the next few years. Seek out the scope for reducing overspending on luxury items and habits.
6) Settle Debts With High-Interest Rates
If you have personal or vehicle loans in your name, they must be attracting higher EMIs on account of higher interest rates. Square them off before availing home loan.
7) Visit A Credit Counselor
If you feel that you are not able to manage your debts properly, you must pay a visit to a non-profit credit counsellor to get everything sorted out.
These budget tips can come in handy whenever you are going to buy a house. Plan your budget ahead of buying the house judiciously and you would never run into any monetary problem.