Financial Checklist for Buying a House

Buying a House

Today there are many young investors who dream of buying a house, right after they land their first job. No one can deny the fact that ‘buying a house’ is a huge investment and, therefore, it is important that youngsters look before they leap. Here is a checklist for young investors before they start shopping for that dream house –

Have you saved some money?

Even before you start checking out your dream home, you will need to save money. How much money do you have to save? It depends on your housing budget. Banks would give 80% of the loan and in some cases 85%, while the rest 20% of the amount will have to come from your pocket. That apart, you will need to pay for the registration charges, stamp charges and your deed checked by a lawyer. There are hundred myriad expenses related to the process of buying a house. Are you financially ready to take the plunge?

Can you pay the EMI month on month?

For most investors, the basic idea behind buying a house is to invest on something that they could call their own, rather than pay rent month-on-month. However when you buy a house on loan, you do need to pay EMI month-on-month. It is critical to calculate the amount that you can spare for EMI every month. Some people draw their home budget based on the EMI that they can shell out every month. If you are going in for a fixed EMI every month, then it is important that you factor in expenses, unpredictable expenses, layoffs and no-raise situation to get a realistic figure.

Do you have cash to cover your home interior expenses?

For most of us, ‘buying a house’ does not just involve EMI or home loans, some will have to do massive restructuring and repair work even to live in the place in the place. Most home buyers who opt for second-hand homes would have to invest some amount in repair work. Anticipating this expense and saving for it in advance, would be a prudent measure.

Do you have insurance coverage?

Life insurance, medical insurance and property insurance are a must in today’s volatile world. Life insurance is a worthy investment that one can contribute to all their life. Medical insurance is another important investment. You never know when you will fall sick or have an accident and need hospitalization. Property insurance is another investment that most investors consider important as it safeguards the property against damages and vandalism. And you will need to plan for these insurances even before you buy the property and budget your salary accordingly.

Are you eligible for a home loan?

There have been many cases where first time buyers they approach a bank after shortlisting an apartment and to their horror, they discover that they are not eligible for a home loan. Today, any loan will be sanctioned only if your credit score (Cibil) is above 750 points. All banks have access to Credit Information Report (CIR) that will show your debt or loan history. If you have diligently paid your previous loans (study, vehicle or personal loan) then you will no worries on this score but if the proposed EMI is higher than your salary, then your home loan application will be rejected and with good reason too.

Your dream home nestles amidst the beautiful bird haven of Chirping Woods. Do check it out.

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by Sridhar Kulkarni via Shriram Properties Bangalore