Things I Wish I Knew Before Purchasing My First House: Home Loan

Are you thinking of buying your first house? The idea of owning a house is a goal for many people, but transforming it into reality takes perseverance, hard work, and financial investment. For a first-time homeowner, you have to be extra cautious and be aware of the steps that are involved. Buying and moving into a new residence can be both exciting and stress-inducing at the same time.

Buying your first dream house necessitates a great deal of thought and preparation. Check off the factors on this list to prevent frequent problems that a first-time homebuyer may encounter:

  1. Consider Your Maximum Budget

You’re pretty well informed of your monthly costs and budget. You have a good understanding of your monthly spending and budget. You know how much money you make each month and how much money you have left over after paying your bills. Whether it’s your first, second house or a property with a budget in mind, you have a spending limit that you can’t exceed. As a result, make sure you’re receiving the finest price and property within your budget without jeopardizing your monthly budget or savings.

  1. Location Is Imperative

You should choose a house in the right neighbourhood based on your daily schedule, employment location, and your children’s requirement for decent schools. Try to find a property in a prime or near-prime location. When it comes to property sales, location can be extremely important. Don’t put your money in an area that isn’t completely developed or isolated. Spend some time looking for the correct kind of property in a good location, because the price of a property in a good location will rise faster than a property on the outskirts of town.

  1. Resale Value

While you’re buying a house, you probably don’t think about this. You’re more concerned with the price or the amount you’ll pay right now and not the resale value point of view. Is it likely that when you resell the house, you’ll get a higher price? If you choose the incorrect property or one in the wrong location, selling it will be tough.

  1. Loan Eligibility

After you’ve obtained property price bids, the following thing you need to do is assess your financial situation. What is your financial situation? How much money do you have, and how much money do you need? Are you planning to take out a loan? What are your lending options? What is the maximum amount you can borrow from the bank? You can check your loan eligibility here at Ruloans. The maximum amount of money you can borrow from a bank. However, the maximum eligibility conditions may differ from bank to bank. As a result, start by determining your maximum loan eligibility.

  1. Consider Loan-To-Value (LTV) Ratio:

In a home loan, the loan-to-value (LTV) ratio represents how much a bank or financial institution can lend to the property buyer. It may differ between banks and financial entities. It is normally 75% to 90% of the property’s cost. It also depends on the borrower’s relationship with the lending institution and track record. You cannot borrow 100% of your property’s price as a loan, as lenders cannot lend/finance the full value of the property. There are regulatory restrictions on the LTV ratio which are defined as

  • If the property value is below 30 lakhs, Banks fund up to 90% of the total cost.
  • If the value is above 30 but below 75 lakhs, you get 80% of the loan
  • And if the property costs are above 75 lakhs, you can get a maximum of 75% as a loan against the total cost of the property.

Banks assess property valuations as per the market rates and we should also do a similar survey by checking on various online portals or visiting nearby real estate agents just to assess the price of the property that you’re planning to purchase. If it is worth the price that you’re paying then only make a final decision.

  1. Own Contribution Payment

While buying a house, you should have your equity to buy a house. The LTV is an important factor in determining the equity in your asset. A greater LTV ratio means you have to invest lesser own funds; however, if you’re buying a house which is above 30 lakhs you’ll have to shell out at least 20% of the total value as own funds and if the property cost exceeds 75 lakhs you will have to pay minimum 25% out of your savings.

Hence before even starting to look for a home loan or property, we need to check out our savings and investment and do a reverse calculation. If we have enough money to fund the own contribution that is required, we can take a final call. If we don’t have that much money then better look for a home which fits in our budget or wait until you have arranged of own contribution payment via savings or investments.

Do not take a Loan like Personal Loan or a Gold Loan or even A Loan Against Shares Or A Loan Against Your Used Car to fund your contribution payment. It is strictly not advisable as it will add to your monthly liabilities. Most banks will not accept that kind of payment as your contribution payment. Your Home Loan application might get rejected at the last moment when you’re supposed to make a payment.

  1. Pradhan Mantri Awas Yojana (PMAY)

The Pradhan Mantri Awas Yojana (PMAY) is a Government of India initiative that aims to provide affordable homes to the urban poor. The PMAY intends to provide housing for individuals by 2022 by providing interest subsidies for home purchases and the construction of affordable housing.

Under PMAY, four key aspects are addressed:

  • To give a subsidy for the purchase of a new home
  • To provide a subsidy for home improvements/additions
  • To accomplish optimum slum rehabilitation
  • Collaboration with private and public developers to provide affordable housing to the economically disadvantaged segments of society.

With PMAY, the government intends to build 2 crore affordable homes in prestigious urban areas for those eligible. PMAY is not only limited to urban areas. In rural areas, low and middle-income groups are also given priority. In rural areas, the Pradhan Mantri Awas Yojana also aims to boost the development of rural real estate and other related industries.

PMAY requires a woman to be a homeowner and states that the house shall be registered in her name even if she is not purchasing the property. Under PMAY, there are preferential arrangements for salaried women, widows, transgender individuals, the disabled, minorities, and elders to become homeowners. Senior folks who purchase a home under this scheme are guaranteed ground-floor housing.

Home Loans Are Also Eligible Under The Tax Savings Instrument

  1. Funding Your Dream House

You will require finances to acquire your dream property. While you may have saved some of the money, you may need to consider taking out a home loan to make up the difference. Consider obtaining a home loan from a reputable consulting firm like Ruloans that helps you borrow right by advising you rightly. It provides prompt approvals and disbursements, long-term home loans, and fair fees, among other things.

  1. Tax Savings

A home loan not only assists you in purchasing your dream home but also provides tax savings on interest and principal repayments.

About Ruloans

Ruloans is India’s leading financial products distribution company that helps manage your financial needs be it Home Loans, Personal Loans, Loans against Property, Business Loans, Auto Loans, Credit Cards, Balance Transfers, and many more. Our vision is to be recognized for value creation, transparency, and the largest distribution capabilities in the financial industry. We also have an exclusive DSA Partner Program for several professionals to leverage their skills and make the most benefits. Ruloans is present across 1200+ locations with over 7000 employees, consultants, and referral partners. Ruloans association with ~150 financial institutions including banks, NBFCs, and Fin-tech gives a wide choice for customers to choose from. We help you borrow right.

Pin It on Pinterest