When you plan to go for acquiring a house, consider the following lest you should regret your long cherished dream go into the drains.
- Choice of Location and staying / renting
Location of your own house is of paramount important factor. Though the cost may vary a lot, you must see the pros and cons of settling for one in a very remote place which might later worry you due to commuting costs, maintenance and less demand of tenents. Nearer the bus stops, railway stations and main roads and basic shopping centres, better would be your choice.
- Getting loan, rate of interest, period of repayment
Before deciding upon signing a contract, find out about the loan availability, conditions, rate of interest, mode of payment etc. Calculate the total value at the end of clearing the loan with interest and find out if your house is worth the value. Income tax waiver should also be considered.
- Equated Monthly Installment (EMI)
Typically, home loans take care of 85% of the cost of the property while the balance 15% has to be borne by the borrower. This 85% constitutes the EMI amount that you pay month-on-month. Ensure that total loan EMIs do not exceed 40% of your take home salary.
- Foreclosure of a home loan
While too much debt is never a healthy way to live, foreclosing any loan after a long period does not have a visible benefit. This is because you would have already paid off the interest part without touching a little part of the principal amount. So, if you hold some surplus, keep an eye on reducing your debt burden
- Tax implication
There are tax benefits to be availed on repayment of home loans. And this will add to your take home pay, which may be added to your saving surplus.
Since a majority considers just the EMIs to be paid as their affordability factor, one must also ensure that other important financial goals may be impacted by this decision. So use a professional financial planners advice to make sure that you are indeed buying a home of your dreams.