A home loan is an ideal financial instrument which makes a home purchase or construction simpler. As times are changing, people are becoming more dynamic than ever before. More and more youngsters (read students and professionals) are applying for home loans and fulfilling their dreams.
This article contains the ultimate tips you need to start your journey towards financial freedom by constructing a house.
What are the Benefits of Buying a House With a Home Loan Early in Life?
Purchasing or constructing a house has several advantages. A house loan calculator helps you figure out the loan costs. The following are a few advantages of availing home loan with a low interest rate to purchase or construct your dream house:
- Having a house means that you will not have to pay rent for the rest of your life. Hence, you can spend a part of that saving on EMIs and the rest for fulfilling other financial goals.
- A home is an investment which appreciates with age. Under all circumstances, you can expect the home value to increase. Hence, it will not take long to arrive at the break-even point, and you can start realising the full potential of your investment.
- Renting out your house can help you get the funds needed to pay the loan EMIs on time and increase your credit score.
- Lenders generally offer the best home loan interest rates to young borrowers, as they have plenty of years to repay the home loan.
- Irrespective of your income and credit score, you can apply for a home loan. You may also use a house loan calculator to calculate your eligibility and loan costs.
Tips You Need to Get The Most From a Home Loan
A home loan is a major financial decision. You may find yourself deep in debt if you do not plan properly. The following are a few things you should keep an eye for if you want to get a home loan with the best terms.
Save For The Down Payment
Generally, lenders need a minimum 10% down payment from the borrower as an upfront payment. The rest 90% they approve as the loan. If you want to pay lower EMIs, consider increasing the down payment amount. You can make up to 25% of the loan amount as the down payment. Use a house loan calculator to calculate the actual savings and select the right amount.
Frame a Budget and Stick to It
Despite low home loan interest rates, your EMIs may consume a major part of your monthly income. To deal with the sudden spike in outflow, you need to create a budget and stick to it. Analyse all your expenses and spot the areas where you spend the most. You can also download a free app and track your expenses.
Choose the Property
After figuring out your loan eligibility on a house loan calculator, the next step is to select the property that fits your budget. If you are looking at a property only for investment purpose, consider choosing a prime location with excellent resale value. While calculating the home loan interest rate, lenders evaluate the location of the property, along with parameters like credit score, income status, etc.
Purchasing or constructing a house early in your life can set you free from the hassle of finding a room on rent. Additionally, you can use the property to make a quick buck by selling it after a few years. A house loan calculator needs to be your starting point in the journey towards financial freedom.