I’m a 34-year-old millennial working in an MNC. I want to purchase a house, but the prices are too high. How should I plan for it? I am postponing my marriage because I am not able to buy a house. I earn Rs 1 lakh a month. I have no liability at present.
While I can bear an EMI of up to Rs 50,000, I don’t have enough money to make 20% downpayment.
I want to buy a house in the NCR region. The reason why I don’t want to live on rent is because it is for a short duration and I don’t want to shift here and there after marriage. Please guide.
By Raj Khosla Founder and MD MyMoneyMantra.com
It is difficult to purchase a home, especially in a competitive market like the National Capital Region (NCR) in India. You need to plan and apply certain strategies to accomplish your financial goal. looking at the current scenario, you may consider some of the strategies mentioned below to buy your dream home on time.
Property price range: While observing your salary and Equated Monthly Income (EMI) affordability, you must look for flats within the range of Rs 60 lakh. This approach significantly reduces the required down payment and increases your likelihood of loan approval. If the property you finalize falls within 60 lakh then you can get up to 90% of financing options from banks and other financial institutions.
When you go for a property priced at Rs 60 lakh, the 10% down payment would be Rs 6.0 lakh. This way, you would have to pay a lesser amount, which can be easily attainable than going for a property with a higher price.
Look for loan options: Normally, all banks provide home loan options. You can search online, compare interest rates, and choose the bank that offers the best interest rates. Some might offer higher (Loan to Value) LTV ratios for specific properties and flats. If you have excellent credit profiles, you can get cheaper interest rates. Once you select the bank, you can also negotiate terms and conditions with the bank.
Expand location search: Do not stick to one area, as not all locations are expensive. You must expand your search within the NCR to find more affordable options. The options are huge, you need to identify the areas which often offer better prices and may appreciate in value over time.
Be flexible in choosing property: You must open yourself to different types of properties available in the vicinity. For instance, under-construction projects are cheaper than going for developed projects basically, ready-to-move-in options.
It is important to approach your goals with a clear financial plan that doesn’t compromise your other life goals. It is not that you must consider only homeownership, you should also look at all aspects, including your financial health, emergency savings and retirement planning, etc. What you can do more is to consult a financial advisor, take his opinion, and disclose all the information with him; then he can provide you with personalized advice tailored to your specific situation.
(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)