Are you all set to buy your first home? Well, everyone must be advising you to go for the property that is “affordable” for you. Now, this is a term, which differs from person to person. What is affordable to others, may not be affordable to you or vice versa. To decide your affordability, what you need to do is to work out a budget for the entire process. Yes, you read it right. Also, you need to budget more than just the value of the property you are going to buy.
We have listed out a few things that you need to keep in mind while fixing your budget and starting to house-hunt.
1. Get a clear understanding about your finances…how much you have in hand, how much of that you can use for the down payment of the property, your loan eligibility, etc.
2. Factor in the costs associated with home buying. Include transaction costs like registration fees, stamp duty charges, and other processing fees while working out the budget.
3. As a thumb rule, your monthly EMI for home loans should not exceed 35-40% of your total income.
4. Do not take a larger sum of loans even if you expect a salary hike soon. Paying more than 50% of your income towards home loan EMI is a recipe for disaster. If the hike is not as per what you have expected, it would lead to the same scenario for you.
5. Keep aside money for the interior work you need to get done after you take the possession of your property.
6. Work out the approximate maintenance and other charges you would need to pay every month or quarter after occupying the property if you are staying in a gated community.
7. Get an estimate of how much you need to pay as property taxes etc. once you get possession of the property.
Buying a home is no small job. It is one of the largest purchases you do for yourself at a specific period of life. You cannot indulge in whimsical buying and disposing of either. Hence it is extremely important to fix a budget that incorporates all the factors we have mentioned above. Sticking to that budget is another thing you need to be careful about.
As the old adage goes, you need to “cut your coat according to your cloth.” Your home is the coat here and your finances the available cloth.
Happy home buying!