Buying a home is the largest investment in anyone's life. Buying for the first time requires good understanding on various aspects such as setting the right budget, deciding on the type of property, location, amenities, builder reputation, and getting the home loan to buy your dream home.
Like our first date or our first job, the purchasing of our first home is also one of the most significant moments in our life. It is a dream come true for most if us. However, buying a home requires a lot of careful planning and financial due diligence. Here are the top tips for you if you are buying a home for the first time.
The first thing you need to do is to get a fix on the budget. Prices of homes will very widely depending on the type of property and location and it is important to get a very clear idea of your budget. You may want a high-end property in a posh neighbourhood, but it may not be within your budget. One way to get an idea of your budget is to use a home loan eligibility calculator.
By using a calculator, you can figure out your max eligible home loan amount, monthly repayments for a certain loan amount by considering a reasonable interest rate and a tenure of 15 - 30 years. For this it is important to look at your financial commitments because as a rule the total EMIs (equated monthly instalments) you should be paying across all loans should not be more than 40 per cent of your take home income.
Also refer Home Loan Affordability Calculator to know the affordability for your profile.
This will depend on your budget. You need to decide what type of house you want. Most of us living in big cities would be buying an apartment. Consider factors like the number of rooms depending on the number of family members, parents, children requirements and so on. Try to arrive at a best fit depending on your budget and your requirement.
Also consider the purpose of buying a home, whether you are buying to live or buying for an investment? If you are buying to live, how long you are planning to stay are some of the aspects to consider. If you are buying for an investment, considering the target tenants and their tastes before zero in on the type of property would be a good idea.
Choosing the right location is an important factor when buying a house, especially in a big city where commute times can be long. Your work location, distance of schools from your house and access to public transport and nearness to train or metro stations are some of the factors you would need to consider. Other factors that you need to keep in mind is a good neighbourhood and closeness to markets. The budget will also play an important role here because home prices vary a lot depending on the location.
It is important to decide on the amenities you want. Nowadays apartment complexes are equipped with swimming pools, gyms, spas and clubs. Decide which amenities would need. For example, if you have little kids, a play area is a good thing to invest in. if you have your own vehicle, you would need a garage or a parking lot. It is important to choose the amenities carefully as all these will add up to the total cost of your home.
Since purchasing a home is a big commitment, it is important to check the credential of the builder. Check the track record of the builder and see whether it has delivered projects on time in the past. You can also speak to customers and see how their experience has been with the builder regarding the construction quality and delivery of what was promised. Avoid fly-by-night operators with no track record who are making big promises. If in doubt, a ready-to-move in unit is the best to avoid many issues with the builders.
Since a home is a big-ticket purchase, very few people can pay upfront for a loan. Hence, one needs to avail a home loan. You can talk to your existing banker, but it is a good idea to compare home loan rates and features offered by several lenders. Having your home loan approved is one of the most important steps when buying your house. A home loan also offers substantial tax benefits.
As a best practice, keep your home loan tenure as short as possible. Cumulative interest payments long tenure loan is very high. As an example, total interest payment for a 25 year home loan is 160% compared to 55% for a 10 year home loan.
For a first-time home buyer, the process of buying a home can be daunting. However, following these tips can help you plan properly and make your first home purchase an experience to remember.