Financial Planning you required before you buy Dream Home. If you are planning to buy your own home. Then you have to keep a few points in your mind before buying your dream home. Buying own home is quite difficult for the middle-class family because it is not only a financial transaction. It carries lots of emotions and feelings.
Points to keep in your mind: Financial Planning Before You Buy Dream Home
- Loan Amount
- Monthly Household Expenses
- Other Liabilities
- Existing Loans
- Budget for interiors
- Emergency Fund
- Loan Amount
If you are availing of the loan facility then you should be ready to contribute a minimum of 20% to 30% of the property value. This amount should not be raised through loans or debt. It should be your savings to avoid the loan burden. Ideally, it is advisable to contribute at least a 40% down payment from savings to reduce the loan burden. After this, there are many other costs like Stamp Duty and Registration charges, which constitute 5%-10% of the total cost.
- Monthly Household Expenses
As buying a home is a huge financial transaction. We need to cut our household expenses. It is not an easy task because we are used to a specific lifestyle. It is critical to keep aside at least 6 months of household expenses as a reserve to meet any future financial deficit.
- Other Liabilities
We need to maintain the checklist for the other liabilities like Insurance premiums, Kids’ School fees etc. and how they will be paid.
- Existing Loans
We should clear all the other loans like car loans or personal loans etc before taking a home loan. Otherwise, it will impact the CIBIL score.
- Budget for interiors
Most people tend to overspend on House Interiors after a property purchase. It’s a major expense item. It is critical to fix the budget for Interiors in advance.
- Emergency Fund
Life is uncertain and we have to maintain an emergency fund for any uncertain expenditures like health expenses, family functions etc. Financial Planning is incomplete until we have at least 6 months of household expenditure in your emergency fund.
The above points will help you in financial planning for your own home.
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