• Millennials nowadays prefer to invest early in their ideal home to minimize the money they spend on rent and to have a property of their own soon. To purchase a property, the first step is to meticulously plan your monthly budget to save for the down payment that you will need to provide from your own funds. In addition to that, a home loan can be obtained. It goes without saying that since buying a residential property is one of the greatest accomplishments of your life, it is also important to obtain a home insurance policy alongside it.

7 Smart Tips to Buy Your Dream Home

1. Be Financially Disciplined
   Financial discipline is crucial if you aim to obtain your dream home. Initially, you must cover the down-payment for the house out of your own pocket, which can range from 10% to 25% of the property’s market value. To gather the down-payment funds, begin cutting costs, refrain from unnecessary spending, pay off your debts, and perhaps look for ways to increase your income.
   
2. Stick to Your Budget
   Organize your expenses, identify how you are spending your money, and create a budget. In today’s technology-driven world, you don’t need to plan manually. There are numerous apps available that can assist you in setting a budget. You can evaluate your income against your expenses and monitor your spending habits.
   
3. Do Proper Market Research
   Investigate the current real estate market prices in the area where you intend to purchase a home. Establish a budget for your apartment and look for properties that fit that criteria. If a large home isn’t necessary, you could start with a one or two BHK home. A house located on the outskirts is significantly cheaper than one in the city for the same square footage. Knowing these aspects will help you determine exactly how much you need to save.
   
4. Plan Investment
   To acquire a home, it’s not enough to just save money; you must also invest it wisely to achieve a better return. For instance, a savings account may provide a maximum interest of 4% p. a. , while a fixed deposit (FD) account offers interest starting from 6% p. a. before tax. In comparison, a recurring deposit (RD) account can yield interest from 7%-8% p. a. before tax. Conversely, some mutual fund investments can provide returns from 10% to 15% (or even more), depending on the specific fund. It is wise to assess all associated risks and make informed investments to obtain favorable returns.
   
5. Set Aside the Money for Future EMIs
   Acquiring a home without a home loan is nearly impossible in today’s market. As many are aware, home loans typically aren’t inexpensive. The EMIs each month will likely surpass the rent you currently pay. It is advisable to use an online EMI calculator to figure out how much you will need to save each month for your home loan repayments.
   
6. Maintain Your Credit Score
   A favorable credit score not only qualifies you for a mortgage but also enhances your ability to negotiate for reduced interest rates. Unfortunately, due to the lengthy duration of home loans, you ultimately end up paying significantly more in interest—far exceeding the principal sum. However, if your credit score is poor, you will be required to pay even higher interest rates.
   
7. Compare Home Loans
   In addition to investigating the type of home you want to purchase, evaluate home loans from various websites to limit your choices. Interest rates commence from 8%+ annually and are typically linked to the bank’s MCLR (Marginal Cost of Funds Based Lending Rate) if you opt for a floating rate loan. Additionally, take into account other factors such as processing fees (0. 25% to 1% of the loan amount), pre-closure fees (up to 5% on fixed-rate loans), and late payment penalties. Assessing these elements will assist you in understanding the true cost of borrowing.

Conclusion

• Purchasing a home at a young age poses a significant challenge; however, it is achievable. Postponing your plans to acquire a home based on the expectation that your income will rise later is not advisable. Just as your income will increase, your other financial obligations will also escalate over time. Nevertheless, if you strategize effectively and adhere to the previously mentioned suggestions, you could soon hold the keys to your ideal home.

Disclaimer:

• The information provided above is for demonstration purposes only. For further information, please consult policy wordings and the prospectus prior to finalizing the sale.