February 2018

 

Buying your First Home? It is evident that you will have several questions in mind as a first time home buyer. We have compiled 5 most important financial aspects to consider before you buy your new home.

Credits : freepik.com

Financial Planning

The first step towards a proper financial planning for your dream home would be to review your current financial obligations such as other loans, insurance amount etc. This will provide you the right picture of your true income. Your budget will be a factor of the EMI that you can pay off and what your monthly expenses are. Apart from this, you should also account for the hidden charges such as registration, stamp duty, maintenance etc, when finalizing your budget & loan amount.

Once you have decided the loan amount, move on to check how much would you be able to put as down payment. Typically, these range from 15 to 20% of the property value, and offer a confidence to the bank about your credibility. You can also choose to take a loan with zero down payment, but this will result in an increase in your monthly EMIs.

Improving Your Credit Score

This plays a critical role in your loan application. Once you have applied for the loan, the lender checks for your credit score, as this is a clear indication of the credit worthiness of the applicant. So it would be advised to check your score with any of the credit bureaus like CIBIL, TransUnion etc. before applying for a loan, and ensure that it is in the better range.

Choosing The Right Loan?

It is important that you do your market research thoroughly, as it will help you select the most suited financing option. With a variety of options now available for loans, one always has the privilege of negotiating rightly with the bank, thus reducing your interest rate and save yourself a lot of money.

But before selecting the right loan, just keep few important parameters in mind: how much loan are you eligible for, what will be the interest rates, how can I get the loan processed with minimal fee, what should be by EMI, what other expenses do I have.

Additionally, you always have the option to choose between the floating interest rate and the fixed interest rate.

Selecting The Right Location & Builder

While choosing the location, keep softer aspects such as connectivity, safety, proximity to markets, schools, public transport in mind. You should also be aware of the future developments planning in that area.

Also, before finalizing a property, do a thorough background check of the builder, as to how many projects he has done, what has been the delivery record, quality of construction, rate of appreciation of previously developed projects etc.

Home Inspection & Legal Due Diligence

Do a thorough inspection of the property you are planning to buy to spot defects, if any. There are many professionals who would do this on your behalf and provide you a detailed report on the current defects as well as the potential damages, if any.

Additionally, there are a lot of legal documents that are required to be verified without which the sale of property is incomplete. Make sure that these are verified and signed. These include Sale agreement, registration, encumbrance certificate etc.

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Source: magicbricks.com