Points to Consider When Buying A House With A Limited Budget

Buying a home is something on everyone’s wish list. Everyone across the world requires a house, as it provides them with a sense of fulfilment and security.

This article will give you an understanding of the factors involved in buying a house and how you can use a home loan to compensate for a limited budget.

 

Property Prices

Property prices are quite high in most of the cities. Also, investing in real estate can turn out to be an expensive affair. However, when you decide to buy a house, you might not have the required equity to pay directly.

 

As buying a house by paying the entire cost from one’s pocket is mostly unrealistic; people look for home loans that offer the best interest rates.

 

Efficient Planning

When planning to buy a new house, the first step you should take is to consolidate your funds. It would be best if you considered how much of your money can you use and how much you will have to arrange from external sources.

 

Points You Should Consider Before Buying a House in Your Budget

·        Location of the Property

Location plays a significant role in determining the cost of a house. Hence, you must consider your budget before selecting a property.

Also Read: Cumulative Fixed Deposits and Non-Cumulative Fixed Deposits Which One Is Good for Senior Citizen

 

·        Debt to Income Ratio

 

Determining the debt to income ratio is the next important thing. Lenders calculate your existing debt and compare it with your existing income and its stability. Hence, before applying for a home loan, it is prudent to understand your financial capability.

 

·        The Real Estate Market

 

It is important to factor in the property rates at different points of time before making a purchase decision.

 

·         Purpose of Buying a House

Decide the purpose of your buying a house. Some borrowers want to buy a house for their personal use, while some others buy it for rental purposes.

 

Buying a House When You Are Short on Budget

If your financial health is good, you can buy a house by paying the entire amount from your pocket. If, however, you are short on cash, a home loan can be your best bet.

 

Home Loans

A home loan is an amount you borrow from any financial institution to purchase or construct a house. Such loans are subject to a home loan interest rate.

 

Factors Driving Home Loans

 

1.  Monthly Payments  

Anyone applying for a home loan requires making monthly payments to the lender. The monthly payment also includes the interest applicable on loan. 

 

2. Loan Eligibility

Your loan amount eligibility will be directly dependent on your repayment capacity. 

Repayment capacity refers to the financial surplus that can be used to make payments towards your home loan. You can borrow up to 90% of the price of the house.

3.                 Downpayment 

Most lenders require you to pay 10% of the property’s value as a downpayment. Home loan interest rates often depend on your downpayment. The more you pay, the lower the interest rate you may be offered.

4.                 Interest Rates 

A home loan comes with a floating interest rate of around 9%, which is lower than many other types of loans.

 

Conclusion

Buying a home is no longer a dream. Home loans can easily convert your hefty home buying payment to small regular, affordable payments. A home loan helps you to buy your dream house without burning a hole in your pocket.

Read More: Do lenders offer Loan Against Property schemes for Non-resident Indians?

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