7 Financial Aspects You Must Consider Before Buying a Home

Apart from security and a status symbol, a house is also denotes an investment. The only way to ensure a good investment is to research about it thoroughly before investing. The same rule applies while buying a home.

Here are 7 financial aspects you must consider before buying a home:

1. Debt to income ratio:

This percentage is your monthly income divided by the fixed monthly expenses. It shows how much income you will be left with once you have paid your monthly bills and your house’s EMI (maximum limit 40 to 50% of your salary as per bank standards). Don’t forget to consider your car loan’s EMI and insurance scheme payments while calculating your expenses. Ideally, the ratio should not exceed 36%.

2. Budgeting:

While deciding as to how much you can afford, apart from the per square foot rate, don’t forget to keep a surplus budget of 10 to 15 lakhs. This amount is needed to cover the registration cost, stamp duty, service taxes, maintenance, etc.

3. Home loan v/s your age:

Banks assess your loan eligibility depending upon your earning years. The younger you are, the longer the tenure of the loan and smaller the EMIs. The closer your retirement age the more limited your loan capacity gets and the bigger the EMI. You can increase your loan amount and tenure if you opt for a younger co-applicant.

4. Location matters:

To make sure that the price of your house or land will appreciate with time, find out what all infrastructural developments are proposed in that locality. The more IT offices, reputed educational institutes, malls marked for your area, the pricier your house will get upon resale.

5. Convenience and finance:

It is important to keep in mind the proximity of the market, banks, public transport facilities, etc. while selecting the location of your home. Having a house with better connectivity to offices and schools/ colleges may fall a bit expensive initially but it can save a lot of diesel/ petrol costs eventually.

6. Down payment:

The larger the down payment, the smaller the loan and lower the EMI. It saves a lot of interest payment as well. Keeping in mind your financial security, the down payment should not be less than 20% of the price of the house. The older your age the bigger the down payment will have to be as you won’t be eligible for a huge loan.

7. Banks financing the project:

To save your money from a fraud, get the APF (Approval Project Finance) number of the builder/ project verified from various banks. A valid APF number denotes that the builder has got all the necessary legal approvals and the house is safe to invest in. Buying a home is a big decision that involves a huge share of your savings and earnings. Choose Aparna Constructions to secure the investment of your dream home.