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Buying a new house is the biggest dream and investment in every person’s life. But before the home loan is approved, the customer always remains under a lot of mental stress. Many questions constantly arise in the mind – like, what will happen if the bank rejects the loan? Or if the bank approves a loan that is much less than the value of the property, then how will the down payment be arranged?
This concern becomes more serious when a person wants to pay a large part of the total cost of the house solely on the basis of home loan. Banking and financial experts believe that the decision about the loan amount should never be left to the bank, rather the customers should decide for themselves based on their financial capacity.
Home loan is a big liability for 20 years, take the decision carefully.
Home loan is not a short-term credit, rather it is a long-term financial responsibility. Generally people take home loans for a tenure of 15 to 20 years. This simply means that on a fixed date every month for the next two decades, a large portion of your hard-earned money will go to the bank in the form of EMI.
Therefore, before taking a loan, calculate well how much EMI you can pay every month without any mental and financial pressure. Many times, after seeing your eligibility, banks offer you a loan which is more than your requirement, but if you feel that repaying it may strain your budget in future, then it is wise to say ‘no’ to the huge loan offer.
You can never compromise with these important monthly expenses.
Every middle class family has some fixed and necessary monthly expenses, which cannot be reduced or compromised even if desired. These expenses include:
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Children’s school-college monthly fees
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Life and health insurance premiums
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Car EMI (Car/Bike EMI)
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Expenses for commuting to office and petrol and diesel
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Necessary savings and mutual fund/SIP investments for the future
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Sudden medical emergency bills and ration expenses
After deducting the home loan installment, there should be enough money left in your bank account every month, so that all the important tasks given above can be easily completed without borrowing from anyone.
Thumb rule: Home loan EMI should not exceed 30 percent of salary
According to financial planners, a very important thumb rule of personal finance is that the monthly EMI of your home loan should not exceed your More than 30% of total in-hand salary (Net Monthly Salary) Shouldn’t happen.
For example: If your total take-home salary per month is Rs 1,00,000, then your house installment should not exceed Rs 30,000 per month under any circumstances.
If you exceed this 30 percent budget, you will have to compromise with other priorities of the family. It has often been seen that out of enthusiasm, people spend 50-60% of their salary on home loan EMI, due to which later they have to face severe financial crunch during the higher education of their children or during any medical crisis.
Quality education of children is more important than buying a house.
In today’s era, the biggest and safest investment is considered to be children’s higher education. Considering the rapid increase in the cost of education (Education Inflation) in the country and abroad, it is no longer easy to provide children with an excellent career and quality education.
Many parents keep their children’s education on the top priority of their life and this is completely right. The biggest reason for this is that you can buy a big luxurious house or flat later in your life after waiting for a few years and your income increases. But, if you do not focus on your children’s education and their future at the right age and right time, then this golden opportunity of education will not come back in life.