Your home purchase is going to be one of the biggest financial commitments in life. Hence, knowing your financial standing and preparing for the expenditures involved would stand in good stead.

Managing the down payment

If you are planning to buy a home priced at Rs 20 lakh, you have to arrange for at least 20 percent of the cost of the property as down payment. You should either save for at least 4-5 years before buying a home or delve into your existing assets. For instance, you may liquidate some investments including your fixed deposits, ULIPs, mutual funds, and life insurance policies, among others.

Try and avoid withdrawing from your retirement funds such as PPF and EPF. However, you can consider taking a loan against your PPF or life insurance policy. Besides, you can arrange for a monetary gift from your parents or relatives for the down payment. It is recommended that you avoid taking a personal loan to aid the down payment as it comes with a heavy interest burden.

Availing the right home loan

As opposed to the common notion, there are various types of home loans available in the market. The type of home loan you opt for should depend on your financial standing but not limited to your incomes and expenditures.
It is best to have an in-depth know-how of the lending policies, facts, terms and conditions clarified well in advance before finalising a home loan deal with any lender. Thus, the choice of home loan provider (bank or other financial institutions) also becomes a vital one. Moreover, you must decide if you want a fixed or floating rate of interest.

Take note of the additional expenses

While planning and managing your finances, do not forget the overheads that you may encounter in the process of owning a property. These may involve stamp duty and registration charges, transportation cost, brokerage fees, and furnishing of the new property, among others. It is recommended that you calculate these before arriving at the total cost of ownership.

Have a contingency fund

Do not exhaust all your funds for buying a home. You must have a contingency fund in case of any unprecedented event. Under any circumstances, you must at least be able to pay off your monthly instalments along with taking care of your lifestyle expenses.

Safeguard your home loan

Getting your home loan insured is a smart move. In case of an unforeseen incident or calamity, this would ensure financial protection. Under such circumstances, the insurance would take care of the outstanding payments.

These tips come in handy while buying a property. Leveraging the information mentioned above will allow you to avoid the burden that comes with a real estate transaction.