Let’s face it! Buying a home is a huge milestone, one which requires extensive planning. Before you finalise a property, draw up a budget for a new house keeping in mind –
- What your expenditures are?
- Available home loan interest rates
- Housing loan down payment
- Property value in the future
Only after pouring over these factors must you go on to budget planning. Here are a few budgeting tips and tricks for purchasing a home in 2020.
Understand the rule of 25%
Always apply the 25% rule when purchasing a house to make sure your paycheque can afford the loan. Simply put, your EMI should not be above 25% of your gross monthly income. Additionally, you can use an EMI calculator for home loan to plan and monitor your financial situation.
Know expenditures apart from the EMI
We tend to forget the other expenses of owning a house along with the payable EMI until they run into a financial crunch. Set a budget keeping in mind that the eventual wearing away can pinch your finances through utilities, repairs, maintenance, etc. You need to add these expenses to the budget and check whether they suit your finances or not, according to your home loan rates.
Focus on the down payment and EMI share
Down payments decide the stature of your EMI, i.e. a high down payment means lower EMI. Do not go overboard trying to make a massive down payment. Gauge the state of your finances, and go ahead with a down payment you can afford. Also, remember that 30% to 40% of the net take-home pay is usually set as the EMI by lenders. Therefore, using an onlinehome loan EMI calculator will optimally calculate your budget and allow you to gauge your eligibility.
Fix your intent behind purchase
If you intended on buying a house hoping for a good ROI, make sure you analyse your budget with a home loan calculator. Keep in mind the locality, prospects, topography as well as ongoing commerce of the house you want to buy. If you do not make a calculated move, you can end up with poor ROI and an unnecessary burden of a housing loan.
Additional Read: What are must haves when buying a new home in 2020?
Upgrade your lifestyle with Tata Capital’s loans
It is understandable if you choose an EMI plan which uses up a majority of your extra finances, but leave yourself some leverage. Opting for a truly affordable loan means you leave ample room for leading a decent lifestyle. Consider this factor in your budget for a home, or else you may overestimate your repayment ability.
The bottom line here is that everyone deserves to get their dream home but you have to be cautious about the budget and its relation to the home loan in 2020. Tata Capital believes that everyone must get a shot at affordable housing finance irrespective of their financial status.
Additional Read: Why is 2020 the Right Time to Buy a House
Reach out to us to know more about our home loan products and say goodbye to your financial uncertainties today!