Homes are like having children – it’s a big decision, and they change your life. Buying a home involves numerous micro-decisions, which are fraught with worry. But if at the end of it all, you feel you have got a great deal, and you love what you got wholeheartedly, then you have successfully bought a home!
Here are six dos and don’ts to help you do just that.
Optimise EMIs
EMIs are a necessary evil when it comes to buying a house. But there are different ways in which you can make the EMI work better for you. At the outset, consider paying a larger down payment if possible as this will reduce the tenure, and therefore interest, of the loan.
Make use of unexpected windfalls like stock dividends or a matured bond repay chunks of the loan and reduce the principal amount to a great extent.
Fine tune your EMIs periodically to adjust to salary increases. Ideally, 40% to 50% of your take home salary should be used to pay off EMIs, and this percentage should be concurrent with bonuses and salary raises.
If you can, do consider taking on a shorter term EMI. The instinctive response is to go in for a lower EMI so that you don’t compromise on your current lifestyle. It might also seem overwhelming to pay Rs 35,000 every month instead of, say, Rs 27,000. But in the long-term, this strategy is wiser as you will end up saving dramatically on interest rate payouts.
Distinguish between want and need
How many times have you seen a home and just “fallen in love” with it? All of us would love to have a kitchen island, a bedroom with French windows or a living room that has a view. But do we really need these? That’s the distinction that is essential to make when buying a home. If you are a young family, you will definitely need two bedrooms, or even three, but you don’t really need an Italian style modular kitchen. Usually, additions like these end up inflating the final price of the home without adding any actual value.
Also, think deep about how much home you really need. And where you need it. Do you want a four bedroom house or do you need it because you have a big family? Do you want a house in that upscale neighbourhood where living costs are higher or an upcoming area that’s more affordable? Asking these questions and really determining your want vs need based on future goals and plans will help you make a balanced decision.
Having space and being in a well-to-do neighbourhood might be great but you would not want to spend most of your days in gloom worrying about the big loan you have to pay off. Draw the line between really affordable and barely manageable, and this will immensely help you in the long run in having a decent lifestyle even as you deal with EMI’s.
Indulge in some DIY
Another way to both save money and enjoy your house to the fullest extent is to indulge in some DIY. Paint your own walls, wallpaper the bedroom, plan out the interiors. These are tasks that could be fun when you have friends or a spouse to help out. Besides, it saves you the big hassle of managing painters walking all over your house, and the money that you will save on an interior designer can prop up your loan that much more.
Paying bills on time
A trustworthy credit score is mandatory for you to qualify for a home loan. One of the things towards building up that score is ensuring that you pay your bills on time. Rent, credit card bills, vehicle loans are things you will need to keep track of closely and pay without delay. Let alone defaulting on loans, even missing or delaying a single payment can damage your rating on CIBIL.
Test your home ownership skills
A good way to test out your home ownership mettle is to do a trial run before you take the plunge and buy a house. Most of us tend to be lax on maintenance when it comes to a rented house. A loose doorknob? Leaky faucets? Ah, the landlord takes care of the repairs.
But in your own house, you are in charge of it all. Pay attention to all the repairs that come up and note the costs. Every month, keep aside a sum of money that will ideally go towards maintenance fees and repairs. Managing these finances will give you an idea of how easy or difficult it will be for you when you finally get your own house.
Don’t try to get the market right
All of us wait for a perfect time for everything. Trying to time the real estate market to get the perfect price is mostly a wild goose chase because it’s a near impossible task. Similar to the stock market it is always in flux, and it’s only going to complicate your decision-making process further. When it comes to buying a house the only perfect time is when you have money in hand, and you have found a house that matches most of your requirements.
