Finance

Easy Ways to Evaluate Your Home Affordability

Home Loan

Even if you have a dream house in your mind, it all depends on what you can afford with your income. Your dream house should be something you can afford, but people sometimes stretch their finances to buy the perfect home they desire. And doing this might lead you to financial problems and stress, which won’t be easy to get rid of.

Over the years, there have been changes in the attributes one seeks to have in their dream house. For millennials these days, buying a home is about self-expression along with purchasing the most prominent property they can afford. The aspirations of today’s youth have reached high levels without much thought. And this is all due to an increase in income levels and ease in getting credits for loans from banks and housing finance companies.

Buying a dream house can be a costly and risky decision, but people still stretch their finances to get the house they want. One should know that the banks only lend up to 80 to 85% of the value of the property and so the home buyer has to make the down payment of the house with his/her own funds if they go for houses worth more than they can afford. Half of one’s life savings is finished in making these payments and securing the home loan.

If you go for buying a luxurious house, there are few things you need to keep in mind. They are:

   • You need to be prepared to pay a higher amount of property tax and home insurance premium.

   • If a luxurious house is in complexes that offer facilities like a pool, garden, clubhouse, etc. you may need to pay 8000 to 10000 maintenance charges to your society from time to time.

   • A big luxurious house means spending more money on maintaining the house paying for the bills and also repairs. The bigger the house, the more will be the cost of all these.

   • If you go to a high class and fancy place, your lifestyle might also change and turn into an expensive one. Since you spend all your money on paying the down payment and debt of your home loan just for a fancy house, changing your lifestyle will not be possible after that.

   • Maintaining your interiors with your exteriors will also require a huge amount of money.Getting value for your money

You will never get the full value of the property you bought if you think about selling it. And investing is another wrong decision, along with this.

Also, if you bought a house that is under construction, you may face delays in handover. Severe cash crunch may make the developers leave projects incomplete for a long time. Tax advisors would ask you not to take a large home loan to avail of tax benefits if you are opting for a home that is under construction.

Is it worth it?

Buying a home for a middle-class family comes with lots of compromises. They use all their money to buy bigger luxurious homes but give in to the polluted environment, water and electricity shortages and other lack of facilities.

Buying a dream house that costs more than you can afford can also bring a hole in your financial status. You may have to compromise with your household needs and other expenses as there will be a decrease in your income and savings.

Buying the house which you can afford within your income doesn’t only help you maintain a financial life but also helps you pay less EMI and have low-interest rates to your home loans. It can help you save money and not compromise on living a comfortable life.

It’s not worth to live in a house that has eaten up all your savings and income and forces you to compromise in living a comfortable life.

One should look for conveniently located starter house which fulfills their aspirations but fits in their affordability. You can always go for buying a bigger house by trading later.

One should have a realistic approach and expectation before deciding to find a house. You should research and look into all the aspects like property prices, location, your aspirations, your affordability, and home loan schemes before buying any house. Make a clear understanding of what you can afford and what loan debt they can pay according to your income.            

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