Buying a home is a big step and unless your great grandaunt just died and left you a heiress, you will have to have a smart money plan to fund that dream home (even if it isn't a penthouse)! That's why we got you some tips from people who've been there, done that and some expert advice too...
1) Cut back on expenses
Sure you are planning to take a loan but a little extra saving could go a long way. Besides, you will need money for a down payment (15 to 20 per cent of the cost of the home), stamp duty and taxes. And then there is setting up your home too. Bottom line: It's time to cut corners and curb expenses."I began saving for my home five years ago. We cut back on travelling expenses because that was eating into our finances," says Melvin Fernandes who moved into his new apartment about a month ago. Find out what your main expenses are and cut back on that. It could be eating out, clubbing, compulsive shopping or even electricity bills!
2) Invest the money NOW
What you save might not be enough to cover a down payment. You need to invest right."Keep your money largely liquid but look at a three to five year horizon for saving," says Vinay Singh, a certified financial planner. He recommends SIPs (Systematic Investment Plans), bank fixed deposits and company fixed deposits as they have no lock-in period. "Just make sure to opt for reliable companies," he warns.
Gold is also a good investment against inflation. But instead of gold bars or medallions, Vinay suggests ETF (Exchange Traded Funds) where you buy units that can be redeemed anytime. But you’ll need a demat account for this.
3) It's all about the budget
If you can afford a bungalow by the sea in a metro city, good for you. But if not, then you might need to set some criteria and a budget. This will help you close in on a location as well as the exact home you buy."We knew we wanted a flat in a new building. We also wanted the railway station, the market and a good school for the kids in the vicinity. So we moved further into the suburbs where we could get these facilities in our budget," says Pooja Seth who moved out of her in-laws' home when her second child was born.
4) Think investment
Just because you have budget constraints doesn't mean you need to move to some remote village. Scout the market, speak to people and find about areas that are developing – may be a flyover, a multiplex or a metro in the offing?"I bought my home in an upcoming area because I know the property rates are bound to increase once the infrastructure and other facilities improve," says Erica Gonsalves whose flat has appreciated by 13 per cent in the last one year.
Twenty-nine year-old Anita Salve bought a one-bedroom flat in Ghatkopar, a central suburb in Mumbai, right next to the junction where the Mumbai Metro is coming up. The price of the flat has appreciated six times over since and she hasn't stop gushing yet!
5) Get the right loan
When the wait is finally over and it's time to get your home loan, Vinay gives us some tips on how to choose your home loan and your provider too.
Opt for a scheduled bank instead of multi-national banks. They are not so quick to raise interest rates, levy charges etc and are equally flexible when it comes to pre-payment of loans.
If the rate of interest is low, opt for a fixed rate. If not, a floating interest rate would be a better option.
Make sure your EMI is not more than 55 to 60 per cent of your salary.
Try not to let your loan tenure go beyond 15 to 20 years.
Avoid taking other loans (for car or setting up home) at the same time. Also avoid using your credit card at will.
Lastly, make sure you have a five to six month contingency fund so that you don't default on your EMI payment.
Best of luck house hunting.....
0 comments:
Post a Comment