Tips for Buying Your Dream Home at a Young Age

December 16, 2021

[TIPS FOR BUYING YOUR DREAMHOME AT A YOUNG AGE]

Countless youngsters are now seeing merit within the proposition that it’s better to start out early when it involves possibly the largest investment of their lifetimes. Then there are people who want to shop for a little house quickly as a pure investment move. In fact, in line, a novel survey of over 1,800 salaried men and ladies across 12 Indian cities, buying a home overwhelmingly tops the list of important life goals.

And buying a home early has certain advantages: you either get to spend a significant a part of your working life freed from rent woes, or the house continues to supply great returns as an appreciating asset. You’ll also make it a good source of additional income (and bring down your loan EMI burden) if you intend to rent it out. That being said, you wish to tick certain important boxes if you’re reaching to buy a house at a young age.

Here are some tips that you’ll find useful.

1. Be financially disciplined to make Down-Payment Financial discipline is that the cornerstone to creating this dream affordable. You wish to pay the down-payment on a house from your own pocket. This will be anywhere between 10% and 25% of the property’s value. If a 2BHK apartment costs around Rs 60 lakh, then the down-payment is between Rs 6 lakh and Rs 15 lakh.

To build your down-payment fund, start cost-cutting, avoid wasteful spends, clear your debts and will be attempt to expand your income pool. Let’s discuss some important pointers during this context: 2. Follow Your Budget where does most of your monthly income go? On rent, groceries, dining out, shopping, entertainment? Start analyzing this. Categories your expenses and determine how you’re spending your money and so make a budget. During this digital age, you don’t must do anything manually. There are many apps out there to assist you set a budget. You’ll compare your income to expenses and track how you spend your money. Watch: ITR: the way to claim exemptions in ITR from FD, PPF this can facilitate your bog down on frivolous expenses and nevertheless your down-payment.

You don’t should interrupt your lifestyle expenses completely, just trim them. As an example, if you’re currently eating out 10 times a month, cut it right down to 5 or 6 and avoid wasting money. Similarly, rather than buying ‘branded’ groceries for cooking reception, consider switching to ‘house brands’ or generic ones which will come cheaper. The identical goes for 1

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December 16, 2021

[TIPS FOR BUYING YOUR DREAMHOME AT A YOUNG AGE]

skipping expensive gym subscriptions to figure out from home, taking conveyance (or even a bicycle, if that’s feasible) to figure, so on then forth.

3. Research on Your Dream Home We all dream of owning a home, but does one have the small print sorted? Are you looking to shop for an apartment, an independent house, a condo? What number bedrooms does one want? What amenities are you willing to procure – car parking, natatorium, club house? Where will it's situated – within the heart of the town or on the outskirts? The cost of owning a house varies supported all (and more) factors mentioned above. for example, a house within the outskirts costs way but one within the city for the identical square footage. Knowing these details means you’ll know exactly what proportion to avoid wasting. However, it’s crucial to line a budget that’s in line along with your current repayment capacity. From time to time many select a house that they can’t really afford, and struggle with the EMIs later.

4. Don’t just save – Invest Simply setting aside your excess income in a very bank account might not fetch you adequate returns. Consider investing it. Let’s compare some options for clearer understanding. A bank account will earn you a maximum interest of 4% p.a. a hard and fast deposit (FD) account will earn you interest ranging from 6% p.a before tax. A recurring deposit (RD) account will earn you interest ranging from 7%-8% p.a before tax. In contrast, some openend investment company investments can give between 10% and 15% (or even more), counting on the fund. FDs and RDs are risk-free, i.e. they're not stricken by market fluctuations.

Yes, mutual funds are risky and depend upon market conditions, but they need the potential to beat inflation within the long term. This could be an excellent advantage because you’re saving today for a house tomorrow. The identical house will cost more tomorrow due to inflation. So, higher risk = higher reward. Also, usually the younger you're, the more risk you'll take due to your fewer financial commitments.

5. And put aside the money for Future EMIs Buying a home without a consumer credit seems impossible today. And residential loans don’t come cheap. You’ll need to pay EMIs each month, and that’s likely to be far more than the rent you’re paying currently. So, use a web EMI calculator to work out what quantity you'll must put aside every month for your loan repayment. Once you’ve a transparent figure, it would be an honest idea to begin channelizing your savings and investment returns to line aside that much amount each month even before you truly start repaying your EMIs. This can be a decent rehearsal of how you’ll cope with your finances when the EMIs actually begin.

6. Indurate Other Expenses For example, stamp tax (from 5% to 7% of the property value), registration cost (at least 1%), memorandum of title charges (0.1% of the loan amount), interior decoration, electricity connection, water system, so on so forth. There also are brokerage fees, legal fees, home 2

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December 16, 2021

[TIPS FOR BUYING YOUR DREAMHOME AT A YOUNG AGE]

insurance, etc. too. While it would be difficult to accurately consider all the non-loan charges, attempt to have a minimum of an estimate, and strategize accordingly (your EMI savings, discussed within the last point, are of great help).

7. Improve Your Credit Score A good credit score (above 750) not only causes you to eligible for a consumer credit, but also increases your negotiating power for lower interest rates. Thanks to the long tenure of home loan interest rate, you truly find yourself paying plenty more as interest – far more than the principal amount, in fact. But if you were charged the next rate of interest thanks to a poor credit score, you will find yourself paying way more.

So, if you have got an honest credit score, you may get a lower charge per unit. Improve your credit score by promptly paying your outstanding dues fully, not applying for too many credit products within a brief period, not utilizing over 30% of your master card limit and correcting credit report errors, if any.

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