Purchasing a new home is a big step in everybody’s life, in fact it is one of the most defining ones. The first step towards this would be to not only ensure that your loan is approved but also to be sure that your finances can handle it well. Because, although we may be eligible for a home loan worth 30 or 40 lakhs, there may be times when we are unable to repay it. For instance, during an unexpected lay-off or a job change or some other major expense where you are not able repay your loan. You can’t really expect life to be the same every time, can you? This is precisely why, you need to be doubly careful while choosing a loan to fund your dream home.
Now, if you think you have thought through this entire plan of paying for your emis every month, think again. If you have more than one person dependent on you, then think about the possible expenses involved, and out of this how much you manage to save every month. Here are some questions you should ask yourself:
1) Are you able to save at least 10 – 15% of your monthly income regularly?
2) Although you may be able to pay your emi from your salary, is the remaining money enough to meet the family’s expenses for the rest of the month?
3) Is there any additional source of income other than yours? (so that, you are able to part-pay your loan)
4) Do you have any other form of savings or investment other than from your income?
5) Do you have an emergency or a contingency fund to meet any unexpected expenses while at the same time paying your emi on time?
By being able to answer the above questions, you should be in a position to determine whether taking up the home loan will not harm your personal finances. Another point to keep in mind is that if you enough surplus to spare, then do not hesitate to part-pay or prepay your loan, so that you can get to reduce your tenure and ultimately save up on the total interest you will have to repay. With a little bit of wise financial planning, you can very well go ahead with turning your dream home a reality.