Planning to buy your first house or flat? Do you think, you are ready to buy a house? Do you really know how you should prepare yourself before applying for a home loan or do you know how you will deal with the emergency situations after getting into debt? In this article I will share a simple list of 5 things you should consider before buying a house of flat. Indian reality sector is booming like anything and definitely you should buy your first property asap if you have budget or plan in place.
Top 3 Checklist before buying a house in India
If you have enough money to buy a flat or house, then this article is not for you. This article is perfect for someone who is a working person and planning to buy his/her first house by taking a home loan. So, we will judge the situation as per the loan taking capability and also the repaying capability.
How Down payment you can pay?
Generally banks offer upto 85% money as home loan and rest 15% you have to pay up front which is called down payment. Some bank pay offer more loan, but this is a general rule followed by most of the national and private banks. Now the cost of the flat is Rs 50 lakh, then you have to make sure you have Rs 7.5 lakh before applying for home loan. Can you manage this much amount? Have done proper savings to meet your down payment target?
How much EMI can you bear?
Generally there is a thumb rule that one should not take EMI more than 50% of his/her monthly salary. E.g. If your salary is Rs 50,000, then you should look for a home loan with maximum EMI of 25,000 only. Generally if you take a home loan of 25-30 lakh for a period of 20 years, then your approx EMI will be near to Rs 25,000, considering home loan interest rate as 9-10%. Now if you can manage a down payment of Rs 5-10 lakh, then you could go for a flat of Rs 35 lakh max.
Are you in a settle Job?
These days many people are working in private firms, where there is no guarantee of job security. But if you are working with some big brands like TCS, Accenture, IBM, Deloitte etc and also working for some hot technologies like SAP, Java, Web Designing etc or you are working for Govt job with good salary, then you can safeguard your earning for longer years. In such a case taking a home loan for 20 – 25 years will help you to reduce the EMI burden.
Looking for the prime locations?
Let’s say you are ready with all down payment and other stuffs to buy a house of Rs 50 lakh. But the property prices gone up in the locality you are targeting for. In such a case what would you do? Will you wait further to accumulate more money or you will go little further to get a house as per your budget?
What are your upcoming goals beside home buying?
Have you analysed what are your short term goals besides home buying plan? You and your family might be happy to buy a new flat. But what about other upcoming plans like baby planning or putting your kid in a proper school, buying a car, go for a holiday with family etc. Have you planned for them accordingly or simply putting all your money for the house? If that is the case, you have to make sure that you will be able to increase your monthly salary to a significant level to meet all these requirements.
So, how are you feeling now? Are you same excited to buy your first house? If not, then you have not planned your personal finance goals in a proper way and planning to buy a house. Take time and plan accordingly to avoid future hassle.