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Constructing a dream home is one of the largest investments one can make. It is the responsibility of the homeowners to carefully evaluate each and every detail such as land documentation’s authenticity, government policies, loan provisions etc. In order to make the effort a little bit easier, we are listing the important things that you need to consider before financing your dream home.
Fiscal evaluation and availability of funds
The initial factor rests with the cross-evaluation of your budget while purchasing the land. It is vital to cross-check the agreements, tax provisions, stamp duties and related registration charges before shaking hands.
If you have your own land, then applying for a home loan or accumulation of funds is the next step in financing. If you are opting for a home loan, it has to be done after the analysis of the interest rates that are available in the market right now. Also, you have to make sure that you have enough financial backup, at least a 6-month cash reserves if anything goes out of hand in the future.
You will also have to provision to go for insurance schemes that can help you in difficult times and any unexpected encounters in life.
Eligibility of availing a home loan
Checking your eligibility for a home loan is important. The majority of the banks offer home loans on the basis of some factors such as your CIBIL score, monthly income, fixed monthly obligation, current age, retirement age etc.
Normally 21 to 65 years is the age limit for both salaried and self-employed individuals for applying a home loan. If you are a salaried individual, you should have a minimum annual salary of Rs. 10000 p.m and Rs.2 lakhs p.a for self-employed individuals. If you satisfy these criterias, then you can be eligible for a home loan up to 30 years.
Lenders will cross verity your take-home monthly salary after deducting PF, ESI, tax cuttings etc (if you have any). The take-home remuneration will decide the EMI that you can afford and finally the total loan amount you can borrow is estimated.
How to boost your eligibility?
- Adding an earning family member as a co-applicant
- Ensuring a balanced revenue flow, regular savings and investments
- Presenting details of your regular supplementary income sources
- Taking measures to resolve errors in your credit score
- Pay back current loans and other short terms debts
Purpose of investment
Constructing a new home is an attractive investment proposition. You have to make yourself understand about the purpose of building a home.
What are the necessities and priorities that are needed?
Your purpose should be driven by your financial stability, family structure, your profession, personal satisfaction, pride of ownership etc. You must safeguard yourself from the financial consequences that could wash out all your reserves and throw you into a huge lumber of liability.
Assess lifestyle needs
You lifestyle needs will have a considerable impact on the financing decision of your dream home. Therefore before making the investment you have to do a thorough review on some of the factors such as housing location, scope of interior designing, surroundings, nearness to commercial and recreational centers, transportation facilities, quality of the products to be used for the construction etc.
Risk acceptance
As we all know, the bigger the risk involved, the higher will be the return. So if you are about to invest a huge amount on your home, then you have to be ready with the risk that is involved. Not everyone will be comfortable with the ups and downs in life. So you have to be well aware when choosing an aggressive investment option.
If you’ve any points to add, please mention it in the comments section.