For a millennial, the decision to buy a home can be a
life-altering one. For young individuals or couples, getting into a long-term
debt commitment such as a home loan can be a daunting task. However, as
financial advisors would agree, buying your first home in your 20’s or early
30’s can be one of the smartest moves you can make financially, as it gives you
a great head start in more ways than one.
1Getting over the initial fear
Those who have just about completed hefty student loans may
develop cold feet at the thought of skimping once again and preparing to take a
home loan. At this stage in your lives, it is important to see the bigger
picture. In a few years from now, a roof over your head that you can call your
own before you reach your middle years will feel like a great achievement.
2 Invest with a specific goal
If you have firmed up your mind to purchase your first
property, the first thing you must do is begin investing with this specific
goal in mind. Set a budget and pick an investment option that will help you
meet your goal in a specific number of years. While setting a budget, do not be
too hard on yourself and try to stretch limits. Your first home need not be
your only home and you can always graduate to a bigger place when you can
afford one. While saving for your first home, equities may be your best bet as
they offer you the best inflation adjusted returns as compared to other
instruments despite the risk factor.
If you do not have the expertise or the time to invest in
equities yourself, you can choose the systematic investment plan (SIP) route of
mutual funds. By investing in equities through the SIP option of mutual funds
you also get the advantage of compounding, which means your returns are
reinvested over the term you choose to remain invested in the fund, thus
helping you achieve your financial goal of saving up enough for the down
payment of the property.
3 Home loan options
Does enough research before you decide on a lender? Many
lenders want young and dynamic home owners as customers and have specific loan
products that make it easier for you to make repayments in your initial years
and increase the quantum with the rise in your career. Checkout such options
and read in between the lines to understand each nuance carefully as well as through
calculate home loan emi.
4 Begin with clean credit records
One of the most important factors that will decide whether or
not you are creditworthy is your Credit Information Bureau (India) Limited
(CIBIL) score. Your CIBIL score is a three digit numeric between 300-900 that
is assigned to you by India’s premier credit bureau. This score is based on
your credit behavior or how you have serviced your credit lines you have
availed of thus far. In order to maintain a good CIBIL score (750 and above) it
is necessary for you to have serviced debt regularly and well before applying
for a fresh loan.
One of the best ways to ensure that your CIBIL score remains
intact is by making a habit of not building up credit card debt. Spending small
amount and ensuring that you make a habit of repaying your credit card bills
before the end of each billing cycle is a good way to ensure that you do not
get into a debt trap and also maintain a good CIBIL score.
5 The quest for your first home
In this world dominated by the internet, the search for your
first home must necessarily begin online. It is a good idea to go through all
of these portals and shortlist properties that you would like to see
personally. Besides using such websites, make the best use of the internet and
social media to reach out to actual buyers and check the reputation of the
builder, the living experiences and the problem areas if any. A thorough
virtual search gives you firms footing before you start visiting the properties
personally and finally zero in on a choice that is best suited to your needs
and budget.
6 Be aware of your rights
The real estate market can turn out to be a head spinner when
you are out there on a house hunt. It is important to be mindful of what your
requirements are and be aware of your rights when seeking out a home.
7 The final step
Once you have taken possession of your new house, the first
thing to do is store all your property documents. Make a few photocopies and
keep them in at least three different locations. It is a good idea to get all
your property documents digitized and locked in an e-safe. Next, update all
your official documents with your new address and finally transfer all property
related paperwork such as water and electricity meters, society membership and
property tax records in the local municipal body in your name.
[Source: http://www.thehindu.com/features/homes-and-gardens/a-property-buying-guide-for-millennials/article9197544.ece]
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