Checklist Before Buying A Flat in Newtown

Purchasing your first home is an exciting milestone that also comes with several big financial decisions.

Setting the appropriate budget lays the foundation to making sure you buy a home you can comfortably afford over the long term. When determining budget limit, ask yourself – how much house can I realistically pay for based on my income, savings, debt obligations and lifestyle?

The 30% Gross Income Rule

As per experts, your total housing expenses – mortgage payments, insurance, taxes and other related costs should not exceed 30% of your gross monthly household income. If they exceed this threshold, then you likely are over-stretching your finances. This rule allows budgeting for other major expenses like car loans, student loans, credit card bills etc.

Factors that Impact Your Budget For Buying a Flat in Newtown

Down Payment Amount

Lenders typically need 10-20% down payment for approving a mortgage loan.

This down payment percentage has a direct impact on your budget. Coming up with a 20% down payment requires greater savings but leads to better interest rates and lower EMIs.

On a ₹50 lakh home, you’d need to budget at least ₹10 lakh cash in hand for the down payment.

Interest Rates

Current fixed home loan interest rates hover around 6.5-7% for a 15-year tenure. Floating-rate loans could be slightly cheaper but carry interest rate risks.

Your credit score also impacts the rate offered to you. Use online EMI calculators to approximate your monthly payment for different loan amounts, tenures and interest rates while setting your budget.

Location, Location, Location

Location typically has the most influence on determining a house budget. In a metro like Kolkata, the budget for a 2000 sq.ft. apartment can range from ₹60 lakhs in the suburbs to ₹3 crores in posh neighborhoods. Research actual selling prices in your preferred neighborhoods before setting a location-specific budget.

Additional Costs

While fixation on purchase price is expected, don’t underestimate other ownership costs – property tax, home insurance premiums, maintenance fees for apartment complexes, society charges, utility bills etc. Keep at least 10% over your principal budget for stamp duties, legal paperwork, minor renovations, appliances and furniture.

Set Your Maximum Budget Limit

As a first time home buyer, identify needs over wants, follow the 30% gross income rule and build in key cost factors above to determine what is the maximum you can afford to spend. This will give you clarity on homes to evaluate further within your budget versus those that break the bank.

Pro tip: Consider buying your new home from Best Real Estate Developer in Newtown, Kolkata