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7 Smart Tips for Buying Your Dream Home

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Millennials these days prefer investing soon in their dream home to save money they give out on rent and have a property for themselves soon. To buy a property, first and foremost, you need to plan out your monthly budget well to save money for the down payment you have to pay from your own pocket. Apart from that, home loan can be availed. Needless to say, if buying a residential property is one of the biggest achievements of your life, you also need to avail a home insurance policy with it.

7 Smart Tips to Buy Your Dream Home

1. Be Financially Disciplined

Financial discipline is essential if you want to purchase your dream home. First, you need to pay the down-payment on the house from your pocket, which can be anywhere between 10% and 25% of the property’s market value. For arranging the down-payment fund, start cost-cutting, avoid wasteful spending, clear your debts and maybe try to expand your income pool.

2. Stick to Your Budget

Categorize your expenses, determine how you’re spending your money, and then make a budget. In this modern era, you don’t have to do plan manually. There are many apps out there to help you set a budget. You can compare your income to expenses and track how you spend your money.

3. Do Proper Market Research

Check out the prevailing real estate market rate of the area where you wish to buy a home. Set a budget for your flat and search for that type of home accordingly. If there is no need for a very spacious home, then you can go for a one or two BHK home initially. a house in the outskirts costs way less than one in the city for the same square footage. Knowing these details means you’ll know exactly how much to save.

4. Plan Investment

To buy a home, saving money is just not enough; you will also have to invest in getting a higher return smartly. For example, a savings account will earn you a maximum interest of 4% p.a., while a fixed deposit (FD) account will help you get an interest rate starting from 6% p.a before tax. On the other hand, a recurring deposit (RD) account will earn you interest starting from 7%-8% p.a before tax. In contrast, some mutual fund investments can offer between 10% and 15% (or even more), depending on the fund. It is advisable to consider all the risk factors and make a wise investment to get a good return.

5. Set Aside the Money for Future EMIs

Buying a home without a home loan is next to impossible these days. As we all know that home loans don’t come cheap. EMIs for every month is likely to be way more than the rent you’re paying currently. It is advisable to use an online EMI calculator to determine how much you will have to set aside each month for your home loan repayment.

6. Maintain Your Credit Score

A good credit score not only makes you eligible for a home loan but also increases your negotiating power for lower interest rates. Unfortunately, because of the long tenure of home loans, you end up paying a lot more as interest – way more than the principal amount. However, if your credit score is bad, you will have to pay even more in interest.

7. Compare Home Loans

Besides researching the type of home, you wish to buy, compare home loans from different websites to narrow down your options. Interest rates start from 8%+ per annum and are usually pegged to the bank’s MCLR (Marginal Cost of Funds Based Lending Rate) if you choose a floating rate loan. Also, consider other aspects such as processing fees (0.25% to 1% of the loan amount), pre-closure charges (up to 5% on fixed-rate loans), and late payment fees. Considering these factors will help you determine the actual cost of borrowing.

Conclusion

Buying a home at an early age is a challenging task; however it is not impossible. Delaying your plan to buy a home in future, considering your income will increase later, is not a good idea. As with income, your other financial commitment will also increase as time goes by. However, if you plan well and follow the above-mentioned tips, you can soon have the keys to your dream home.

Disclaimer:The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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