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Understanding and sorting out your finances before buying a home is an important process. Read on about how to go about it responsibly and smartly.
Your first house is always a moment of pride in your life. A financial plan to buy a home will help you achieve this milestone you’ll forever remember because of its significance for you and those you love.
Whether you live in a buyer’s or seller’s market, you’ll want to purchase a house as soon as you find the ideal one.
However, it is not always that straightforward. Several financial factors will decide whether you can afford to buy a home and the conditions of your mortgage.
Understanding the prerequisites for purchasing property might make buying a home easier to manage.
The younger generation sees no need to purchase a home; they want to buy a home as an investment and are taking advantage of favorable market circumstances.
Unfortunately, purchasing a home is not so simple; there is preparation and study involved, and we’re here to assist you in figuring out how to buy a house in 2022.
Figuring out whether you can afford a home
The first step that goes into purchasing your home is knowing whether or not you can afford it.
Many young people get into a situation where they get dazzled and enamored by the idea of a new home and end up taking loans they can’t afford - affecting them for the rest of their working lives.
The first thing to note is that you shouldn’t spend more than 30% of your take-home salary on loans.
If you have other loans or commitments, you have to prioritize those before the home loan.
Don’t be disheartened - if you continue working earnestly, your salary will increase, and soon, you’ll be able to put aside a little for the home loan.
You also need to see the amount of savings you have in the bank and create multiple sources of income/invest in good plans that give you great returns.
Factors to consider before creating finances for a home loan
There are a few factors to consider before you decide whether you want to take out the necessary finances for a new home. These include:
Understanding requirement
Many of you might think that the budgeting for a home comes before the actual need, and you’re right. That is the first step in the purchasing process. However, in the current era, many things have changed.
There has been a massive change across multiple aspects of real estate, including financial assistance, designs, and even flexible payment options for starters.
Even if you forgo the current scenario, it’s always a good idea to conduct detailed property surveys across pricing and see which options work. This will ease your decision to finalize what you need.
One of the most important factors in determining your home purchase is your lifestyle. This includes:
i. If you’re working from home or commuting to work
ii. If you’re looking for amenities such as a gym or swimming pool within your property
iii. You have kids going to school/college and need a place that’s closer to their institutions
All these factors will give you a better idea of the property you’re seeking and help you make a better decision.
The budget
The next step in your process is forming a clear budget parallel to the requirement. You need to sort out a minimal spending number on your savings, investments, and income.
Also, a 10% buffer is good in case expenses rise later. This will give you the required flexibility for buying a new home.
The location
Most people buy a home in their current location until they migrate to another city for work.
If you’ve spent your entire life in one location, you end up becoming emotionally attached to the place and would want to prefer buying a home.
However, there are a few who change locations to match their lifestyle, and there are a few aspects that differ from city to city:
i. The infrastructure (H4) - trains, metros, cabs, autos, roads, etc.
ii. Education (H4) - Schools/colleges and other educational institutions
iii. Essentials (H4) - Hospitals/diagnostic centers, grocery stores, health and fitness clubs, gyms, etc.
Property surveys
Ensure you conduct a property survey, keeping your lifestyle and budget in mind. The process of property finalization needs to be done once you select the developer.
You might like an apartment, but if the developer isn’t trustworthy or has a good track record of following government regulations, you may have to choose another property.
Select your home
Once you finalize your location and have a list of multiple properties to choose a new home, you need to check a few important factors:
i. A well-designed flat with little or no wasted space. It must be adequately ventilated and have enough natural light.
ii. Designated parking for the owner, and much better if limited guest parking is allowed.
iii. 24-hour CCTV monitoring as well as staffed security.
iv. Green apartments featuring rainwater harvesting, solar power, solid waste management, and energy-saving LED lighting systems.
v. An on-site maintenance staff to handle household utility concerns such as power, plumbing, mechanical, and so on.
vi. Health and fitness amenities such as a gymnasium, pool, table tennis, squash, running track, and so on. Even tiny apartment buildings now include a little rooftop gymnasium and a small sports area.
Developer finalizing
Your process of purchasing a home shouldn’t end at the selection. You also need to consider a few other factors:
i. Checking the RERA certification for the developer
ii. Checking the reviews of the developer
iii. Visiting previous projects and speaking to buyers to know their experiences
iv. Checking the quality of construction and delivery of previous projects
v. Once you’ve done the necessary checks, ask for flexible payments
vi. If you can wait for a year or two, then you could opt for a flexible paying option with the project development
Payment plans
This is among the most critical aspects of buying a home. There are a few things you need to consider while devising a proper plan:
i. Having a clear budget with or without the need for a bank loan
ii. Checking out the developer’s payment plans and also the interest rates, EMI, repayment, and foreclosure charges
iii. Keep a budget of 10-15% for the interior design work
Once you know the agreement value, you can account for your savings registration charges and stamp duty.
To conclude
Purchasing a new house is not a one-day affair but a multi-month or multi-year process. As a result, it is always preferable to carefully follow each step to have a pleasant, happy, and rewarding experience.
Your objective is to save money to purchase a home. Then begin implementing these suggestions and resolve to doing all necessary to attain the objective.
Saving money might be difficult. If you cut your expenditures, don’t assume you have to give up your way of life. Nobody can prevent you from reaching your objective if you develop these behaviors.
Purchasing a property is not easy, but postponing the purchase may also be ineffective. You may also have to make some sacrifices, but it will all be worth it when you acquire those coveted keys!
Yes, your income will rise in the future, but so would your costs as you take on additional financial responsibilities. So, educate yourself and learn how to handle your money effectively.
