For many people, owning our own house is a pipe dream. The majority of people are aware that it is their most expensive purchase of their lives. All that required to make every penny count and worthwhile is a carefully curated financial plan. This analysis must include a proper balance of various components.
When is the right time to invest?
A wise investment is always well planned and timed. Before, people considered purchasing a house after they turned 40 or near retirement. A house is meant to be lived in, loved, and filled with wonderful memories to be treasured in one’s later years. The very feeling of having a personal connection elicits a sense of belonging and satisfaction, which encompasses all of the lovely desires that define our home sweet home. It may appear safe to invest in your later years, but it is wise to invest when you are young. The earning potential and overflowing opportunities for the millennials and GEN Z has immensely improved and unless channelized, most of their money is spent on things that are depreciates rapidly.
When you are at your most productive, it is better to pay EMIs on home loans rather than rent. Because the latter will only add to be an expense, whereas the former promises to be a lifetime investment. The rent will also rise over time, whereas your EMIs will remain constant even as your income rises. This means that it will become less of a burden over time. Meanwhile, the asset value of your home continues to rise.
As a result, real estate is the most popular investment in India. This followed by gold, fixed deposits, recurring deposits, and other financial instruments such as stocks, indices, mutual funds, and so on. Overall, it is a positive scenario when millennials begin to direct a portion of their income toward purchasing a home early in their careers, which would otherwise be spent on depreciable assets with or without a return on investment. An investment that pays off should be of the utmost importance to us. Investing in real estate at a young age is ideal for ambitious and energetic people.
When it comes to purchasing a house, you should put your best foot forward. At 7% interest, a housing loan is the least expensive and largest borrowing one can make for any expenditure. To avoid missing out on this opportunity, try to obtain the maximum eligible loan for the longest term possible. It is critical to strike a balance between being financially stable and carefully planning our long-term borrowing. To begin, when calculating the maximum EMI one can afford to pay, we must account for basic needs such as food, house rent, children’s school expenses, transportation, emergency medical expenses, and other life-related expenses. For the first 3 to 4 years, you should be willing to forego most non-essential expenses such as new cars, international vacations, jewellery, expensive gifts, and so on, until you are comfortable with your monthly EMI.
Every detail matters, including available savings, overall family earning capacity, future income projections, opportunities associated with other assets, ability to close pending loans and other financial commitments, and so on. The key is to stick to a budget; a home buyer should set aside the required budget for home buying, which is the most he or she can afford. It is advisable and sensible to allocate approximately 40% to 50% of the family income to EMI for lower income households and up to 60% for surplus income households in order to complete the home buying process.
Look out for hidden costs
Most additional expenses, such as common utilities, registration fees, clubhouse fees, GST, maintenance charges, and so on, must be clearly ascertained and understood when planning the budget. There may be additional costs or savings to consider. Rather than spending more on transportation for a distant project, people could wisely direct this budget towards EMIs. Another example is the monthly rental savings you will experience once you move into your newly purchased home. It is critical to check with the seller several times on other major points and seek clarifications, such as whether there will be any claim of increase in built up area sq. ft at the time of handover, which could completely disrupt your plans. Failure to check and work on aspects, on the other hand, may cost us dearly and create financial difficulties.
There have been numerous instances where the home-buying process has become entangled in a complicated tangle. This especially is true if the project delays or continues to linger in uncertainty for longer than expected.
Or, for example, if there is a significant mismatch between the proposed and actual square feet. Being prudent is also a great quality in a customer, and one should always look into the track record and past performance of the developers, by talking to friends or relatives who have previously purchased from the developer, visiting some past projects and talking to some flat owners, checking the RERA website for clarifications and details, social media postings and ratings, and so on. Making a reasonable and logical judgment about the developer rather than relying solely on the Advertisement claims is critical. A price per square foot is also a poor indicator of relative costs since builders do not use a standard method to express apartment sizes.
It is best to compare prices between builders using the RERA carpet area instead of the Super built up area. A home is a major investment where one’s life savings invested for a prosperous future. Homebuyers must understand where and How they allocate their financial and resource resources.
Is it good to invest in real estate?
These days, mortgage rates can be as low as 7%,and most loans cover more than 80% of a home’s price. In light of the recent decline in real estate prices, this is the best time to realize the dream. Generally, an upswing follows every downturn.
Research thoroughly, plan meticulously, avoid unnecessary delays, and then take the leap of faith.
Look before you leap is the true mantra for getting house buying right on the first try. Remember that it is the most secure long-term investment you can make.