Why some budget homes create big-budget problems later

It’s easy to get overwhelmed by the floodgate of decision-making that opens once you decide to buy a home – ‘Do I buy a ready-to-occupy, or under-construction property?’ ‘Should I invest in an apartment in the town centre, or a row-home/villa in a quiet suburb?’ The list goes on… It helps to structure your queries in the order in which they naturally flow. This will help avoid your ideal budget home becoming a costly problem later.

What can you afford to buy? This may seem like a daunting question. But again, by breaking the exercise down into a step-by-step listing of steps and queries, you can greatly clarify things. Running through the following checklist can help you make your decision in a structured way, that suits your specific needs.

  1. How much do you presently earn? Remember to factor in taxes
  2. How much of your savings will be needed for the down payment? How much will you need set aside after down payment for emergencies?
  3. List your present expenses and (and any expected in the near future – school fees, insurance premiums etc.)
  4. Take a step back to figure out luxuries that can be deferred for now. You’re buying your home after all; luxury holidays can be down-sized or even cancelled for a year if needed.
  5. Clear off as many outstanding debts as possible. Home ownership is expensive, you don’t want to be saddled with any avoidable debt if you can help it.
  6. Calculate monthly home-ownership costs (EMI, utilities, staff salaries etc.) by asking friends and family who presently own the kind of home you aspire to purchase. It’ll help you estimate the percentage of monthly earnings that you can expect to spend, if you bought a home in that specific locality.
  7. Assess your loan eligibility via your preferred bank. Knowing this amount will give you a realistic idea of the budget range you should be limiting your home search to. No point in visiting properties that are out of your reach. You could possibly stretch yourself for a home you loved, but actually can’t’ afford – an expensive mistake, that’ll catch up with you eventually.
  8. Double-check your document due-diligence. Your bank will do a thorough check if you’re taking a loan, but you could run the papers past a friend or family member to be doubly sure of clear titleship.

By taking the time

  • to get your finances in order,
  • ensuring that your savings – both for your personal needs and home down payment – are adequate
  • and to do your market research thoroughly,

you will be ensuring that your new home not only meets your present and future budget correctly, but that it goes on to become a source of joy for years to come. Good luck and happy hunting.



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