Home buying formula…
New Delhi:
Buying a house, that too own house, is every man’s dream. People living in metros can also consider it flat. As soon as every young man starts earning from a job, one of his many wishes becomes to buy a house or a flat. One of its objectives is to collect money to buy a house and then it also starts pricing the houses. Houses and flats are sometimes so expensive that salaries fall short. Many people succeed in buying the palace of their dreams, while some people realize their dreams late. Some people fail to do so for some reason.
One thing to keep in mind is that not everything should be spent on buying a home. What should be considered while buying a house? What should be done in such a way that the house is also bought and there is no deficiency in the general needs of the family. Lack of financial planning can get you into trouble at times. Lack of financial knowledge often leads to not knowing what to do. Is there any formula that should be kept in mind while buying a house?
yes it is. People with financial knowledge should use this formula, otherwise, from house brokers to banks, people who are in a hurry to give loans will trap you. Then managing EMI as well as household expenses becomes a hassle. That means the salary starts decreasing. Some explain it as an opportunity. They argue that when wages are low, man tries to earn more. For some people this formula also fits well but for most people it is not accurate in real life.
After all, what to do and how to get a house and the cost of common needs should not be a problem. For this, financial planners or financial experts have also explained a formula for people to buy a house. By understanding this formula, at least the common citizen can reduce his suffering in some respects by applying it in life.
It is certain that the basis of all formulas is your earnings. Whether the house or flat is small or big, it depends on the current earning of any person.
This formula is 3/20/30/40. Under this formula 3 i.e. the total cost of the house. It should not exceed three times the annual income of any person. That is, for a person earning 8 lakh rupees per annum, the cost of the house should not be more than 24 lakh rupees.
The second digit is 20. Keep your loan tenure to 20 years or less. The shorter the loan tenure the better. Efforts should also be made that the loan amount should be small. The less it is, the better. If the loan is for a shorter period, less interest has to be paid. However the EMI will be slightly higher. If the loan is of lesser amount, less interest has to be paid.
The next digit after this is 30. It is up to you to decide that the EMI you pay in a month should not exceed 30% of your total monthly income. You should keep in mind that the EMI of all loans like home loan, car loan etc. should come into it. You have to take care of this. You can understand that if a person’s gross income is 8 lakh rupees per annum, he can afford an annual installment of 240000 per annum. That means he can give a maximum installment of 20000 thousand in a month.
The last number in the formula is 40 , while buying a house we have to make a downpayment. How much should be the downpayment? This determines the number. According to this formula, you should make a down payment of around 40 percent of the total cost of your home when buying a home. It is also clear here that you should have enough money to make a down payment before buying a home. After doing this you will be able to fulfill your other needs on time without any problem.
The thing to note here is that be it a bank or any other loan giving agency, all of them will tell you that you have to make only 10% down payment. But it is up to you to decide how you implement your financial plan.