The answer to it is simple – MONEY and plenty of it. Wish we all had a money plant making all our dreams come true. Jokes apart, it is possible with disciplined savings and the right home selection. By right, we mean a home that gives you the luxury you seek and comes within your budget. There’s no denying that a home loan will come as a big help in your pursuit of buying your Aashiana, a Hindi term fondly used for a house. But even that may not be enough. We will detail that and more to help you buy your dream home.
Start Saving More to Buy Your Dream Home
Without a doubt, buying a home is the biggest dream for people today. And the reasons are obvious. The lifelong comfort and no hassles of frequent shifting from one place to another that remain with a rental accommodation, along with the restrictions imposed by the landlord on entertaining guests, eateries, water facility and more.
However, when you look at India’s real estate market, prices go skywards every year. Property prices have surged by around 20% in the top eight cities across India over the last two years. So, start saving now instead of waiting for a job promotion that invariably raises your salary. Use your salary hike to save even more.
The general rule advocates saving 10% from your salary every month. But to buy a home, you might have to save around 15-20%. The best part is that it is possible for most bachelor people at least.
How Will Your Disciplined Savings Help You?
Let us cast your mind back to our earlier statement expressing that a loan may not be enough to buy a dream home. It indeed is true.
Home loans are disbursed upto 75-90% of the property value. Loans upto 30 lakhs account for upto 90% of the property value. Whereas loans between 30 and 75 lakhs are at upto 80% of the property value. Lastly, loans above INR 75 lakhs account for upto 75% of the property value.
So technically speaking, you need around 10-25% of the property value in savings. This percentage range is called the margin money you need to pay to the property seller.
As the property is mortgaged and the lender sends a team of certified architects to evaluate the property value, don’t be surprised if they value the home less than your estimates. In such a case, the loan amount will lessen, making you pay more on margin money.
What’s more, you need to pay the processing fee of around 1% of the loan amount plus GST.
The cost structure gives you an idea of the extra savings you need to make your dream home come true.
How to Plan Your Savings for a Dream Home?
Plan your dream home journey for two to five years. See your income now and add 10% every year. There’s no denying a serious salary hike in between. But planning should factor in the salary increment one usually gets in today’s corporate world. This will help you identify the home you should buy on a loan.
Let’s consider an example to understand it better.
Example – You earn INR 60,000 every month. Say if you purchase a home in 3 years from now, your monthly income will likely be around INR 80,000. You can bear EMIs of upto INR 35,000. So, you should search for a property whose EMI falls within this bracket. Given the prevailing home loan interest rates, a property worth upto INR 50 lakh will stand feasible in your case.
Shall I Check the Home Loan EMI Calculator to Decide My Property Purchase?
Yes, please! The home loan EMI calculator will help you estimate the installments you will be paying throughout the loan tenure. It works based on the principal loan amount, interest rate and loan tenure. You can access the calculator online as lenders and loan aggregators keep it on their websites.
For example, a 40-lakh home loan for 20 years will come to you at an interest rate of 8.75% per annum. This will lead to an EMI of INR 35,348.
Conclusion
Disciplined savings will help you buy your dream home and enjoy the comfort that it brings. It’s all about being a step ahead when it comes to buying a home. Read more such Insightful updates on personal finance and other important matters only on zarooribaathai.in – The Voice of Truth.
