It is an age-old idea that a house can be bought only during your retirement after saving a part of your income during your entire work life. More and more youngsters now understand that when it comes to buying a dream house, it is always better to start early. Houses are now bought even, with the intention of just investment as this asset is constantly appreciating, and gives high returns.
Thus, even if it means starting small, people have started buying houses and applying for housing loan at a much younger age. The sudden upsurge in urbanization, forcing people to settle down in metro cities for employment reasons, has also increased the need for buying a home as no one wants to reside in rented accommodations anymore.
People are more willing to pay the EMI for a home they will own in the future rather than paying rent to someone else, which will only be a liability and create no asset for them.
Here are a few tips to help you manage your funds to buy your dream home
1. Credit Score
- The importance of credit score cannot be stressed enough. It affects almost all factors of your loan – home loan eligibility, loan amount, interest, lender’s trust, etc. Your credit score is an indication of your discipline, dependability, and sincerity. Always maintain a respectable and high credit score. Ensure that you do not default on your payments and clear your bills and dues on time.
2. Set aside funds
- Create a surplus before you decide on buying a house. Financial institutions will require anywhere from 5% to 10% of the amount as a down payment for the mortgage loan. Calculate the amount you will need to pay as a down payment and the amount of monthly installment that you would have. Ensure that you have a regular flow of income to cover your monthly installments as well. Defaulting on any future installment will harm your financial history.
3. Budget Well
- Decide on your budget, and do not give in to temptations. You should calculate the amount that you can afford to buy a home and not exceed your worth. Otherwise, it would become a financial burden for you, and you may get caught up in a cycle of debts. Hence, ensure that you make a budget, understand your expenses, and accordingly decide on a mortgage loan amount.
4. Overheads
- Set aside some funds for any kind of overhead expenses. You may need funds for the interiors of the house, stamp duty cost, registration cost, electricity, water, parking lot, etc. There might even be some tax quotient involved and hence, you should set aside some emergency funds in case of an unprecedented, unexpected expenditure.
In conclusion, remember buying a house might sound like a distant dream but convenient and affordable mortgages would help you achieve this much sooner. Always invest your savings rather than just saving them to earn more. Follow these steps diligently, maintain your budget, calculate and control your expenditure and you can easily avail of a home loan to buy your dream home.