How to Plan for a Budget while Buying a House in 2021

When it comes to buying a house, one golden rule applies to all homebuyers – never spend more than you can afford. Buying a house in 2021, “affordability” can be a pretty tricky thing to ascertain. After all, it is something that differs from one homebuyer to the other.

Regardless of where you find yourself in the affordability spectrum, one thing is certain – a home is an investment unlike any other; it’s personal, it’s significant, and it holds a lot of sentimental value.

So, here are a few handy tips to support your budget-planning for buying a house in 2021.

Tip#1 Apply the 28% rule

Lenders will take into consideration your debt-to-income ratio before they sanction your loan. What the 28% rule means is that at least 28% of your gross monthly income, barring taxes, other personal loans and credit dues besides your monthly obligations, must be reserved towards home loan repayment. This will help you determine your affordability beforehand so that you can budget accordingly.

Tip#2 Don’t just save money, instead invest!

Savings will generally not multiply much over time. Since a home is a big-ticket purchase, your budget for new house must be planned, both carefully and cleverly. This includes investing in substantial profit-earning instruments such as mutual funds, Fixed Deposits (FDs), Public Provident Funds (PPFs), etc. You can even try your hands with SIPs or Systematic Investment Plans. These will later act as a concrete support pillar; however, you must begin early if you wish to gather a significant amount.

Tip#3 Be consistent and disciplined

Denying yourself unnecessary expenditure on a daily basis can seem uncomfortable, even torturous at times, but you need to always have the big picture in mind – owning your dream home! Time will pass and the day will come speedily, if only you’re consistent. These little sacrifices you make will go a long way in helping you pay a high downpayment amount so that you enjoy low EMIs.

Tip#4 Don’t forget to include other associated costs

Saving up for your new home is not merely limited to the home loan amount. You will have to consider other related costs that follow, such as legal fees, broker fees, property taxes, moving expenses, and more. If you plan ahead, you will keep yourself from dipping into your emergency funds to meet such expenses.

If homeownership is on your radar for the near future, make sure you make it a point to start at the earliest with a proper plan and budget. Big purchases can only be made when one starts planning and implementing those plans early on, preferably, with the start of your career.

Do thorough research on different lenders, check your eligibility, secure the proper documents, maintain a good credit score, and determine your affordability using an online tool such as the home loan EMI calculator.

Homeownership is exciting, rewarding, and not all that challenging. Yes! With a clear budget in hand and well-defined planing for buying a house in 2021, you will be able to secure your dream home in 2021!