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Buying a home has always been a milestone and something that generations have fixated on. It commands a lifetime of savings and a lot of effort.
Authored by Saurabh Garg
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Buying a home has always been a milestone and something that generations have fixated on. It commands a lifetime of savings and a lot of effort. Although, the millennials had conveniently stepped away from that fixation for a couple of years. But as things stand, owning a home is back on the radar.
Nothing can substitute the safety and comfort of having a home when going through a crisis such as the present one. It kind of feels like a shield that one can use to combat the worst that could befall you. However, it also commands a lot of planning. And we have seen the previous generations meticulously working on their finances and familial obligations religiously setting aside money for this big benchmark.
However, if one plans right, buying a home early comes with its own set of advantages. One, consider yourself free of rental woes for the rest of your life. Two, a house is a great physical asset, and therefore free from market fluctuations. And three, it is a great investment option. That is, you can rent it out and start earning a fixed amount every month, just like a monthly salary or pension.
However, you must make a well thought out plan before buying your dream home, despite these appealing benefits and credit options available in the market. And I can tell you this not only as someone who understands this industry but also as someone who bought his house at the age of 36.
Here’s sharing some smart tips to make this happen for real:
Know what you want
Buying a home requires a lot of details and formalities. For example, decide whether you want a ready-to-move-in apartment or an independent house. Are you looking for a 2BHK, 3BHK, or a clubhouse? What location do you prefer, on the outskirts or in the heart of the city? What is your budget, and is it in sync with your current repayment capacity?
Take your time, research on these factors, and then make the final decision. It is better to plan a little into the future because most people realize that the house they bought 2 years back is now not meeting all their requirements. So, makes sense to evaluate your needs for the long term before deciding this.
Compare home loans
It is highly recommendable to compare home loans of various banks to know better and shortlist the best options available in the market. While doing so, check the interest rates charged by banks along with the processing fees, which usually varies from bank to bank.
After going through these offerings and comparing them carefully, you can break down all the charges and know what will be your cost of borrowing. This will give you a better idea of your loan capacity. You can do this easily through Home Loans offered on websites like NoBroker.com that will give you a comparison of all the options and help you choose the best one meeting your requirements completely free of cost.
Plan a budget and stick to it
As we climb up the career ladder, our salaries increase, and so do our expenses. Hence, it’s essential to analyze and evaluate the current expenditure and accordingly create a budget. You can use various apps to manage and track your expenses instead of taking the manual route.
It would help trim down unnecessary expenses and help you save better. It is very important to build a nice corpus for your dream home so that you do not have to compromise on lifestyle.
Know your hidden costs
A lot of people while keeping a set budget forget about the hidden or unknown costs that can go up to lakhs. For instance, registration, stamp duty, and khata (where relevant) will require additional funds that are not always mentioned in bold.
Some builders might not mention taxes and other charges as well in their ads and you would come to know the final price only after visiting the property. You should always ask for the total price and add registration and stamp duty charges to arrive at the final price. Also, if buying a new apartment, you might need to spend on furniture and other things. So always plan for these things when settling on a budget.
Invest, not just save
For buying a house it’s important to first save money. But in today’s times, one must go beyond savings and make investments to receive more massive returns. While a savings account will help you earn an interest up to only 3 percent per annum, which is significantly less to match today’s inflated rates of products and services, fixed deposits (FDs) and recurring deposits (RDs) are much better options with 6 percent p.a. and 7-8 percent p.a., respectively.
Similarly, you can also go for other beneficial instruments such as systematic investment plans (SIPs) that give 10-15 percent interest. Doing so will help you reach your estimated budget faster.
Maintain a good credit score
Remember, in addition to making you eligible for a home loan, maintaining a good credit score (above 750) keeps you in a better position to further negotiate for lower interest rates. It doesn’t feel right to pay more interest on your home loan than the entire principal amount itself. And a low credit score will only exacerbate this situation.
So, it is always advisable to clear your debts and outstanding bills on time. Also, don’t take too many credits from the market within a short time frame, because it will only make repaying more challenging, and you may end up creating more debt traps than you have ever imagined.
Why 2020 is the best time to buy
You may hate this year for the havoc it has created but you must love it because it has opened up many avenues on the home-ownership front. The government has rolled out numerous relaxations that make home buying easier and convenient.
For instance, with the PMAY extension, first-time homebuyers with annual income between INR 6 lacs and Rs 18 lakh can now avail an interest subsidy up to Rs 2.35 lakh till March 31, 2021.
Moreover, RBI’s decision to cut down the repo rate has resulted in a record-low home loan interest rates. Builders and developers, too, are offering lucrative deals such as comfortable EMIs, cashback schemes, refundable booking amounts, etc. A combination of all these factors makes 2020 an ideal period for home buying, and you must grab this opportunity!
Buy Without Brokerage
This is the easiest of all the tips mentioned until now. It amounts to massive savings for the buyer. There are numerous options available today where you can buy a house without using broker services. The process is more transparent, more independent, and more relaxed. This is the most unnecessary expense and the easiest to cut down on.
Follow these smart steps and make sure you carry out comprehensive research before making this big decision. And, if you already have enough savings for at least making about 40% of the down payment, just go for it because there is no better time to buy a suitable home for you than now!
Saurabh Garg is Co-Founder & CBO, NoBroker. Views are personal
First Published: Oct 6, 2020 8:20 AM IST