Do you know which is the best feeling in the world? It’s that feeling when you finally unlock the door of your dream home. The ‘Home Sweet Home’ is a sentimental object with thousands of feeling attached to it. However, buying a house is one of the biggest financial commitments that one makes during their lifetime. People spend most of their life savings to buy a home that makes their future happy and comfortable.
The question is that after buying a house, are they living the life they imagined? The prime cause of facing inconveniences after buying a house is improper financial planning.
No one should face financial struggles after they have bought their dream home. Let’s discuss a few things that can make you financially prepared to buy a dream home without going in debt and breaking the bank.
If you want to keep yourself from the burden of loans away when the time comes to buy a home, the best bet is to start saving as early as possible. Remember, saving begins with your mindset. Though money-saving techniques can make you feel restrictive – avoid feeling that way. Also, saving money for a future goal doesn’t mean that you stop spending altogether. It means that you need to set priorities and then work towards accomplishing them. The trick is to consider the money you will put into savings as a regular monthly expense like electricity bill, groceries and more.
Invest and Let Your Money Grow
If you are putting your savings in one of those rarely used bank accounts, the interest you are gaining is hardly anything. However, if you put your money in other investment instruments that offer higher returns, you will be in a better financial position when you are finally buying your dream home.
One of the best modes of investment to accumulate funds for your dream home is ULIP investment plan – Unit Linked Insurance Plan. It is a unique combination of investment and insurance that builds wealth over the long term. By investing in ULIP, you will shed the financial load off your shoulders, and after the lock-in period, you will get a lumpsum that can be used to make the down payment.
Don’t Overlook Down Payment
When planning to buy a dream home, you shouldn’t overlook down payment. The minimum down payment requirement is 20% of the property value. However, to reduce the loan amount, you can pay as much down payment as you want. The higher the loan amount, the more extended the repayment period and even the interest will be more. However, avoid pledging your jewellery or taking a loan from relatives and friends to keep yourself away from falling in the pit of the monetary trap.
Plan Your EMI Tenure
You must have seen those ‘low EMI’ offers that keep flashing over the internet and television screens, haven’t you? While less EMI may sound attractive, it increases the interest as well as the repayment period. The EMI should always be set according to the current financial status. As a rule of thumb, it should always be less than 30% of the take-home salary. With proper EMI planning, the interest rate hike won’t affect you in the coming years.
Plan for the Post Purchase Cash Flow
When planning the cash flow for property purchase, keep a small chunk away for all the cash flow you would require post the purchase. You sure want to set up the home as per your taste and lifestyle,and any cash crunch must not come between you and your décor dreams. Taking a loan might seem appropriate for getting the interiors sorted, buying furniture and other things, but you already have a loan to pay, another might consume all your income.
A wise thing here is to plan all the pre and post-purchase expenses. Only a planned move will let you have a delightful experience.
Amidstall the excitement most of us forget to cover ourselves with an adequate life cover. What we forget is that in case of any unfortunate mishap with the one responsible for repaying the loan, the family will have to bear all the pending payments. With an adequate insurance cover, retaining the property will be of no difficulty as the insurance claim amount will help in repayment of the housing loan. However, not just in this scenario, keeping yourself covered in all the stages of life is a wise step to keep your dependents protected.
Having a pragmatic approach will make the path of home buying free of hurdles. No matter what your budget is, saving for the down payment in a systematic manner will help you take things in the direction you want. As advised above, invest in ULIP with any of the top insurers. Give your long-term future dreams wings to fly with insurers like Future Generali who offer higher returns, systematic partial withdrawal, tax benefits and much more. In short, with ULIP you have the flexibility to create wealth while enjoying the benefits of an insurance plan.