It goes without saying that the decision to buy a house should be backed by sound financial planning rather than a decision driven by emotions. It is crucial to have a thorough financial planning before taking the plunge, especially if you are availing a CA loan. The following are some of the fundamentally essential steps that not only chartered accountants, but every home-buyer needs to keep in mind-
- Monthly household expenses: for most middle-income group families, buying a house is a huge financial step, primarily due to the high property prices. As suggested by many studies, it is advisable to curtail household expenses by a minimum of 25-40% after buying a house through home loan.
- Loan amount: usually banks provide up to 80% of the total property value. Thus, you have to be prepared to shell out the remaining amount, which, by no means, should be raised by debt or loan. Ideally, one should contribute at least 40% down payment from savings to reduce the loan burden. Also, remember to take into account other costs like Stamp Duty and Registration.
- Next six months’ liabilities: make a list of these, be it the kids’ tuition fees or insurance premiums. The reserve amount should be able to cater to these liabilities on time.
- Existing loans/debts: Clear all your existing loans or debts like car loan, personal loan, etc. before buying your dream home. It is quite an impractical idea to serve 2 loans simultaneously, more so since a home loan is a major burden. Secondly, by clearing these unsecured loans your CIBIL score will be improved before availing home loan.
- Three months EMI for reserve: this reserve, though relatively small, will turn out to be a savior of sorts, in case of any unforeseen circumstance if you are unable to pay EMI on time. Any default on EMI can mar your creditworthiness in the future.
- Budget for interiors/house furnishing: most people tend to splurge to home following property purchase. However, it is critical to set a budget for the interiors well ahead in time and stick to it, to prevent any financial shock. During the stage of financial planning, do remember to take this into account.
- Regular income source: for example, if you are employed in a sector which can be severely impacted by recession, then it is a prudent decision to postpone the property purchase till you reach a stage of ob stability.
- Emergency fund: last but not the least, do take into consideration unforeseen expenditures like health-related expenses, family function, job loss, etc. Before investing in your dream home, remember that your financial planning is incomplete till you have 6 months’ household expenditure in your emergency fund. You can invest this amount in short-term financial instruments which can be easily liquidated like bank FDs, mutual funds, etc.
Bajaj Finserv offers a loan for chartered accountants, which is customized to meet the needs of a practicing or consultant CA. It encompasses four loans and promises easy eligibility criteria. Once sanctioned, this loan can be put to use as per the borrower’s discretion. He/she can also enjoy a line of credit facility and online account access. What’s more, the interest rates of the CA loan are nominal, thus making EMIs affordable. The gamut of four loans covered by the CA loan includes- home loan, business loan, loan against property, and personal loan. The home loan can give the customer access to Rs. 3 crore. It can also be availed for various purposes; for example, a CA seeking to purchase a second home loan can opt for a home loan for chartered accountants to finance this decision. You can also enjoy a number of other benefits like, line of credit facility, flexible tenor, pre-approved offers, online as well offline application procedure, easy online access to account, etc.