Buyers run the risk of not being able to pay the EMIs on time LISTING the priorities while buying a home helps in selecting the right one
How big a house can you afford? It is very important to answer this critical question before you proceed to buy a home. Experts point out if you overstretch your budget to buy a house you want, you are at a risk of not being able to pay the EMIs on time.
This can then lead to a whole lot of other issues.
If one has clear ideas about the facilities they would like to have for the home, list them down with a clear levels of priority.
When outdoors in search of the house, this list will help you to sacrifice small things as you have the big picture in mind. Your real estate agent or broker will also show you the appropriate places.
The composition of your house will also make a difference in your wants and needs. Do you have small children? Parents? A domestic help living with you? The needs will vary in each case.
Down-payment tool: In the current scenario, the Indian residential property market is sluggish because property prices have gone through the roof in cities like Mumbai, while there has been an increasingly slower-selling build-up of residential property developers' inventories in Delhi NCR, Pune and other cities.
Another reason is the recent hike in lending rates. This has made it harder for intending home buyers to acquire property. In this scenario, purchases on the residential property market have to be looked at with more care.
When you buy a house, you need to make down payment that typically starts from a minimum 20 per cent. Naturally, any down payment, which is based on your savings and existing assets, would not allow you to over-buy. Once you answer how much cash can I afford for down payment, chances of over-buying will minimise.
Follow 20-28-36 rule: One can also follow the 20-28-36 rule for making your home loan calculations. According to this popular formula, the down payment should be 20 per cent, the monthly home loan payments (EMI) should not be over 28 per cent of the household gross annual income and the total monthly payments for all debts including the home loan payments should not exceed 36 per cent of annual income.
In our country presently, while evaluating home loan proposals, lenders have slightly relaxed rules. They offer EMIs up to 35-40 per cent of the gross monthly salary and EMI up to 40-45 per cent of the gross monthly salary for home loan plus other debts.
The lender will be happy if you take a bigger loan within their prescribed limits. So, the onus is on you to be within limits. A bigger house is always attractive. The premise that most borrowers will earn higher incomes and so outgo as a percentage of salary will never be out of sync has its pitfalls. With rising interest rates and inflation, the disposable portion of salary has become smaller,
