Whatever you contribute alone in purchasing a home before seeking the assistance of a housing finance company is termed as ‘down payment’ by the industry. Gone are the days when homes were built brick-by-brick for several years. In this fast-paced age, homes are bought without waiting much through EMIs (Equated Monthly Instalments).
With the normal price of homes ranging between 50 lakhs and 1 crore rupees in the Metro cities, the buyer is required to arrange a down payment between 10 and 20 lakh rupees that is quite daunting a task for many of them.
The present urban generation has developed a habit of swiping credit cards for every little or big purchase to be followed by payment in monthly instalments. But the same is not possible when you are buying a home since it demands money first before you can approach a home loan.Thus, if you are about to purchase your own home any time in the future then start focussing on the arrangement of a down payment so that things work out smoothly for you.
Be Specific with Calculation
Are you aiming the purchase of a1 BHK (bedroom hall kitchen) flat after a couple of years? If the present price of such a property is 50 lakh rupees then you should calculate the down payment amount considering the price change in the course of time. For instance, a 5 per cent price inflation during the year of buying (after 2 years) will amount to 55.12 lakh rupees and a 20 per cent down payment would work out to 11.02 lakh rupees. Do not forget to estimate the registration charges and stamp duty rates as both of them keep changing.
Borrow a Lesser Amount
Suppose the property you are about to purchase is priced at 50 lakh rupees for which, you have taken a loan of 40 lakh rupees at an interest of 9.25 per cent and the tenure is 20 years resulting into an EMI of 36,635 rupees. Paying such a hefty amount each month without trying to make ends meet is possible with a minimum monthly salary of nearly 90,000 rupees. Lesser the amount of loan, more easily you can repay it.
Would it be too difficult to sacrifice any of your smaller desires for the sake of the bigger one if buying a home tops your priority list?
Make Appropriate Investment
The amount of time you have in hand for buying your home determines the mode of investment required to arrange the down payment. Expert says that competitive hybrid funds or equity mutual funds are appropriate investment options if you plan to wait for more than 5 years whereas opting for bond funds, fixed deposits or recurring deposits if you have relatively lesser time in hand.
You should be aware of the fact that small-cap funds unlike the multi-cap equity funds, offer comparatively superior returns but are subject to high risks due to unpredictable market during the shorter terms.
Thus, plan your home purchase early so that you have over 5 years in hand to initially invest in the equity funds and then switch to any of the fixed income options. Say, a monthly investment of 78,250 rupees in a bond fund is required to arrange a down payment of 20 lakhs in 2 years with an assumed return of 6 per cent. This task is a burden on you unless you have double earning source in the family and are without kids.
If there are two earning members in the family including you, skilful planning will facilitate the smooth investment of 24,659 rupees per month for a span of 5 years with the rate of return assumed at 12 per cent.
Avoid Personal Loans
Opt for personal loans only if you haven’t been able to arrange the targeted money required for the down payment and sufficient time isn’t left to do so. But make sure to maintain a disciplined credit record.
Instead of skipping the down payment hurdle, try to cover a major portion of it through your own contribution so that repaying the borrowed amount does not become a taxing task.
For any other query or advice, get in touch with transventor.in. From the site visit of ready flats for sale in North Kolkata to selecting your home from them and completing the transaction process, our genuine property purchase solutions are indispensable.