Finances Management Tips

Your home purchase will be one of the most expensive things you’ll ever do. So, knowing your financial situation and getting ready for the costs would be a good idea.

Managing the down payment: If you want to buy a home for Rs 40 lakh, you have to come up with a down payment of at least 20% of the price of the home. Before you buy a home, you should either save for at least 4–5 years or look into what you already have. For example, you could sell some of your investments, such as fixed deposits, ULIPs, mutual funds, and even life insurance policies. Try to avoid taking money out of your retirement funds, like PPF and EPF. You could, however, borrow money from your PPF or life insurance policy. You can also get a gift of money from your parents or other family members to use as a down payment. It is not a good idea to get a personal loan to help with the down payment because the interest is so high.

Getting the right home loan: Despite what most people think, there are different kinds of home loans on the market. The type of home loan you choose should depend on your income and expenses, but not just those two things.

Before finalizing a home loan deal with any lender, it’s best to know everything you need to know about their policies, facts, terms, and conditions. So, the choice of bank or other financial institution from which to get a home loan is also a very important one. Also, you have to decide if you want a fixed interest rate or one that changes.

Take note of the extra costs: When you plan and manage your finances, don’t forget to account for the costs that come with owning a property. These may include, among other things, the cost of stamp duty and registration, the cost of moving, brokerage fees, and the cost of furnishing the new property. Before figuring out the total cost of ownership, it’s best to add up these costs.

Have a fund in case something goes wrong. Don’t spend all your money on buying a home. You need a backup fund in case something unexpected happens. In any case, you should at least be able to pay your monthly payments and take care of your other living costs.

Keep your home loan safe: It’s smart to get your home loan insured. This would protect your finances in case of an unplanned event or disaster. In this case, the insurance would cover the payments that were still due.

Show your best credit behavior: how you’ve dealt with debt in the past is the best sign that you’ll be responsible for your future debts. They are taking a break because of late payments and accounts that are being collected on. Think about how reliable you have been as a borrower.

Maintain your CIBIL score – A good credit score is anything above 750. Before giving out a loan, most financial institutions look at the credit score as one of many checks. Before getting a home loan to buy a house, it is best to pay off all other loans or debts. Even if you don’t have good credit, you may still be able to get a loan, but the terms and rates may mean you pay more than you should.

With a good CIBIL score, you can get a low-interest rate, a bigger loan amount, a loan faster, and more time to pay it back.

So, good financial planning not only helps you keep track of your money, but it can also help you buy the house of your dreams.

Disclaimer: The opinions shown above are mainly for informational reasons and are based on market research. Deal Acres is not responsible for any actions made as a result of relying on the provided material and makes no representations as to its accuracy, completeness, or reliability.