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Buying a house for the first time? 5 Steps to help you plan your financial goals effectively
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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
Success
Failure
Everyone dreams of a house of their own. In India, purchasing a house is always considered as one of the most significant achievements in someone’s life. In the early 1970s, only people in their 40s and 50s were financially able to buy properties. But now, time has changed. People in their 30s form a significant proportion of home buyers due to easy access to home loans.
When you are going on a journey to a new place, you do a lot of research and inquiries about the destination. Buying a home for the first time is like a journey, too. While purchasing a house, you need to make certain preparations for the home buying process. Starting with the most critical one-Setting Financial Goals.
Here are the five steps that will help you to plan your financial goals effectively with the assistance of the SMART strategy.
SMART strategy
This is a very effective tactic to achieve your financial goals. This strategy makes your goals, Specific, Measureable, Achievable, Relevant, and Time-Based in short, SMART!
Be Specific
Buying a house is a general goal. So, if you are serious about purchasing a property, you need to be more specific. Ask yourself questions like,
Once you have the answer to all the above questions, you will get a rough idea about what type of financial aid you will need to buy your first home.
Measurable
Whether buying a house on a home loan or with the help of your savings, you are going to make large monetary transactions. Therefore, you should define the amount required in terms of numbers. To make your goal measurable, you need to calculate the amount required to purchase a property by considering the crucial factors like interest rate and down-payment.
Achievable
Aim for attainable goals, not just for those which seem attractive. Buying a house that is way out of your budget may put a lot of financial stress on you in the future. So, rather than buying an expensive house, try affordable housing options that are easily achievable.
To buy your dream house, you may require to make some adjustments in your spending habits. Observe your shopping patterns and try to save on them by not investing in unwanted things.
Relevant
Your financial goals should be relevant and realistic. You should be accurate about the budget and in accordance with the facilities you require in your new home. To be more realistic, you can take the help of home loan eligibility calculators.
Time-Based
Give yourself a timeline for financial preparation. For example, if you want to buy a house in two years, then you must start planning today on various things like preparing for all the expenses involved in the home buying process. Giving yourself a timeline to plan finances makes the process easy to manage.
Before making the purchase decision, it is good to know the special programs/initiatives held by the government/financial institutions to encourage first time home buyers. For example, Pradhan Mantri Awas Yojana (PMAY) is an initiative by the government of India where first time home buyers will be receiving interest subsidy on their home loan amount. This scheme is intended to provide affordable housing for every Indian citizen by 2020.
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