When you start working in the direction of owning your dream home, you will be advised by a number of people about how to manage your finances. Easy availability of home loan has made it possible for a middle class individual to buy his own home. Recently, the government has also set the LTV ratio at 90% for properties below 30 lakh to support affordability. Although a major part of your home’s value can be funded through loan, you still have to arrange the down payment on your own. It takes a calculated planning in advance to avoid any regrets related to your property purchase later on.
First of all, you must decide on the percentage of your property’s value that needs to be funded through loan. Though the banks are ready to fund as much as is allowed by the RBI, it is important on your part to know how much EMI you can afford in a month and how long do you wish to keep the tenure. This largely depends on your take home salary. For example, if your monthly salary is 1,25,000 and your expenses are 55,000, your surplus income will be 70,000. So now if you wish to buy a home worth 85 Lakh, you can easily pay 45% of your take home salary as EMI. So, you can get a loan of 52 lakhs for 15 years at 10% interest rate. [Read more…]