Buying a home is always a dream for everyone, especially in India, where purchasing a house is always considered one of the most significant achievements in someone’s life. But you need to finance your home smartly, which requires proper planning, informed decisions, and long-term thinking. Earlier in the 1970s and 80s, only people aged 40 and 50 were financially able to buy properties, but now the time has changed, with too many loan options due so this now people in their 30s have easy access to home buying. Moreover, nowadays there are so many real estate agents who can help you in deciding how you can finance your home.
Below are the points which you can keep in your mind while planning to buy your dream home
Pre-Purchase Planning
Keep Eye on Your Financial Health: You must check your financial health before taking decision of buying your dream home. Evaluate your income, expenses, savings and current debts.
Save Some Money for a Down Payment: You should aim to save at least 20% of the property value for the down payment. The more down payment you will pay, the lower the principal loan amount, which will lower your monthly EMI if you are going for a loan option.
Budget for All Costs: You should keep in your mind there will be many other expenses also like stamp duty, registration fees, processing charges, property taxed, insurance etc. You should have your budget set accordingly.
Check Your Credit Score: Keep an eye on your credit score also keep your credit score at least 750 or higher it will help you for securing competitive interest rates. Pay your bills, EMI on time. Avoid taking any new loan before applying for home loan.
Choosing the Right Loan
Compare Loan Options: Before applying for loan and choosing any bank or lander you should compare interest rates, processing fees and repayment flexibility. Even a small difference in interest rate can save you a good amount of money over a long tenure.
Choose an Optimal Loan tenure: Always choose loan tenure as per your requirement if you can payback your loan in short time then you should go with shorter loan tenure in this EMIs will be high but you will get significant savings on total interest. On other hand long tenure provides lower EMIs but a higher overall interest burden.
Consider Floating Interest Rates: Try to go for floating interest rates because floating interest rates are often lower than foxed rates and have no prepayment penalties for individual borrowers. This allows you to save more money when market rates fall.
Check Government Schemes and Tax Benefits: You should keep an eye on government-backed schemes, also as Pradhan Mantri Awas Yojana in India, which may give you interest subsidies.
Smart Repayment Strategies
Keep Your Payments Regular: Whenever you have surplus funds like annual bonuses, tax refunds or maturity of any investment use those amounts wisely and make partial payments towards the principal amount. This will reduce your outstanding balance and shortens the loan term.
Increase Your EMIs with Rising Income: As your income grows, don’t forget to increase your monthly EMI payments. This is one of the most effective ways to reduce your loan tenure and save on interest.
Maintain an Emergency Fund: Make sure you don’t exhaust all your savings on the down payments or on other expenses. Keep some emergency fund covering at least 3-6 months of living expenses to manage unexpected financial challenges.
Use Joint Loans Strategically: If you will apply for a joint home loan with spouse or family member can increase your eligibility and potentially offer higher tax benefits to both applicants.