- Date : 20/12/2022
- Read: 4 mins
Currently, many people have a house as their ultimate life objective. While individuals used to wait until later in life to buy their first homes, a lot has changed in recent years. Due to the ease of getting a loan today, the current generation tends to purchase a home quite early in their working lives.
The idea of owning a house is an ultimate life goal for many people nowadays. Read more to know how you can buy a house of your own without any pressure!
Also read: How to financially plan your first house?
What should you consider while buying a house without any peer or family pressure?
A huge choice like buying a home requires preparation on both a financial and emotional level. Here are some essential factors that will empower you to decide based on mathematical and practical factors whether you are prepared to purchase a home or not.
Savings and Down payment
If you plan to purchase a home outright, the most important and possibly the only question to address is whether you have enough money in your savings account to cover the cost of the home you want. Banks and other financial organizations can't just give you the whole loan amount if you request for one. While it varies from bank to bank, the loan will never exceed than the 90% of the home's valuation. Therefore, in this scenario, the savings for a down payment should be equal to around 10% of the home's price.
The most important requirement to meet before even thinking about purchasing a home is strong financial status. Although banks have their own standards for determining the amount of loan you qualify for, you should not really rely your choice on those requirements. You must be able to assess your monthly outgoings and determine how the additional responsibility of a loan might affect these. To prevent loan defaults, which will damage the credit score, it's critical to keep a stable debt-to-income balance. A person should be carrying a debt load of roughly 35%, but a mortgage can increase it to 45–50%. This might be an issue, but the proportion could be even higher if you possess extra income sources, such as your spouse.
If you earn a salary, be sure you have a stable work before applying for a loan. Make sure you don't retire without completing the mortgage payment if the loan has a long term. If you retain this doubt in the mind, it won't be much use. In any situation, you must try to prepay the debt before the duration is up.
There are several tax advantages for home loans, which aims to decrease the load. These exemptions are merely temporary and subject to modification when the Budget is presented, but according to the existing rules, customers are eligible to deduct up to Rs. 2 lakhs from the sum of interest paid on a home loan while the property is occupied by you, your family, or is empty. Corresponding to this, principal repayments up to a maximum of Rs. 1.5 lakh can be carried off under Section 80C.
Condition of the market
Finally, consider the market situation, specifically if you're purchasing a home as an investment. The real estate market is erratic and frequently among the first to be influenced by a recession. Take a close look at the community you would like to purchase a house within as well as the current housing market conditions.
Housing market conditions, one’s employment status, down payment, and savings are the significant key points that one should consider to take a calculated decision before buying a house.