If you consider an average Indian household, the first thing that they plan for once their child get into a well-paid job is to get insurance. Well, there is a debate that we can get into on whether it is right or wrong. But, for this blog, we will be discussing what else that we do with our savings.
At 22, most of you would have got into a job that would pay you at least 12,000 to 15,000 a month. Slowly as you grow in your career, the chances are that your salary gets doubled or tripled in three to four years.
That’s when your lifestyle changes — the number of times you go out for movies, restaurant, etc. increases. You would plan for a frequent vacation and of course a new vehicle. This change is behavior pattern something that will instill fear in your parents. They will look out for ways to bring in the saving habits in you. While you would want to stay away from the burden of EMIs, there are no other ways to force discipline into you.
Now that you have decided to go for a house, how do you plan it out?
Here are the questions that will come to your mind before you start the research:
1. I will buy a big house
2. It should change the lifestyle of my family
3. It should be closer to malls, hospitals. Remember, school is not a concern yet.
When should you invest in a house?
The moment your income is three times more than your average monthly expenses, its time to think about buying a home.
How do you plan the budget for your home purchase?
As part of buying a house, you will have to make a down payment, and then there will be monthly EMI. Do not strain out all your savings into your new home. Always have funds to support your family for at least six months in case of any job loss. Apart from the down payment, your 20 years EMI should not be more than 50% of your monthly take home.
For eg, If your monthly salary is Rs 60,000. Then your monthly loan commitment shouldn’t be more than Rs 29,000. Keeping a buffer of Rs 1000 for Interest rate changes from the bank.
How to finalize Location to buy your dream home?
It’s always better to buy a small home near your office than looking out for a big one far away from your office. Reduce travel time to your office and save on fuel or travel cost. It will also take away a lot of stress from you concerning your office work.
Don’t worry about your next job. You can always look out to a rental house near your next office if it’s far away from your current office.
Rent Vs. Purchase
The above paragraph emphasized buying a house near your office. There are possibilities that your office is at a location where you wouldn’t want to buy a home. In such situations, it’s better to go rental. Buying a house is a combination of the following factors:
1. The place has the potential for growth. The plan from Govt. for Infrastructure development, employability planning from local industry bodies.
2. Number of businesses around the place
3. Facilities like hospitals, commercial complex/malls, school, etc
4. Water, sewage system are other important factors to be considered
5. If you are a regular traveler, check for accessibility to the railway station, airport and bus stand.
Investing in a house is an important decision, and you will have to carry it along with you for at least 20 years if you don’t plan your finances properly. The fun of owning a house is lost if the EMI is a burden for you. There are also tax benefits under Section 80 C and Section 24. You could avail them to save additional money.
With new jobs, your salary will increase, and over a period of time, the EMI value would look minuscule. At the end of 10 years, if you see an excellent career growth, you might look for the next home that can help you do a lifestyle makeover.
Start planning when you are young with little commitments, the more you delay you will have a lot more responsibilities in your kitty.