Many of you will think that the title is contradicting. How can you save money when you are spending so much on buying a home? After all, purchasing a property is no small task and requires a huge financial commitment but with proper planning, you can simplify your approach to buy your first home.
The process of home buying is the same as it was last year, the year before and probably many years to come. However, if you closely study the process and take the right approach on your part, then you will find many opportunities for saving your hard-earned income. Buying your first home is surely exciting but it requires careful planning and efforts. Finance is one of the major players in the home buying journey. Let’s take a look at the steps that will help.
The process starts with savings for the home down payment that you will have to make out of your pocket. This saving will be completely your process to follow. Controlling your finances at this time is extremely important. You must decide a budget for buying your new home and stick to it no matter what. Let’s fast forward to the time when you have enough down payment amount for your home. Now the next step is to choose the right home loan which offers multiple tax-saving benefits.
You are eligible for a home loan 6–7 times more than your income. Sounds interesting right? Most banks will allow such amount but wait, you need to hold on to your horses. Do not think about stretching your budget for a better and bigger home or even properties with luxurious amenities. As mentioned above, stick to your budget at all costs. If not, then servicing the repayment of the home loan will become difficult after spending on household expenses. Remember, you need to leave room for the savings as well.
In case both spouses are earning then opting for a joint home loan is a good idea. With a woman co-applicant, you become eligible for a much bigger home loan and at the same time bring down the EMI burden on either one of you. The best part is that both applicants can claim a tax benefit of up to 1.5 lakhs INR each against the home loan principal under section 80C. On the interest paid, each applicant can save up to 2 lakhs INR under section 24b.
Choosing a bank that offers lower interest rates should be as important as choosing the right home loan. Many banks are giving competitive & attractive offers to customers nowadays in terms of interest rates. Female applicants are eligible for lower interest rates and hence it is important to have a woman co-applicant as discussed above. You will reap the benefits of this in the long run during the repayment tenure which is usually 15–25 years.
The government is actively putting efforts into providing affordable housing to all. The PMAY (Pradhan Mantri Awas Yojna) was started in order to help the citizens buy affordable homes. If you meet the criteria laid down by the government then you can get tax benefits under the PMAY initiative of up to 2.67 lakhs which is a great way for the first time home buyers to save money.
Negotiating with the developer is one more way to save money. Remember, never settle on the first offer from the builder. Find more offers and evaluate them and check the best possible rates. However, it is also essential to place a reasonable price otherwise you may lose the property. Similarly when choosing a home go for an under-construction property as ready to move in properties are expensive. Before buying check the developer’s background and the RERA registration of the project.
If properly planned & executed, the process of buying a home can go smoothly and also help you save money.