THE CHECKLIST TO FINANCE YOUR HOME

The decision to buy a house is a highly emotional one, involving factors such as aspirations, practical needs, budget and the prevailing economic cycle

- Narayan Krishnamurthy

Buying your first home is an exciting experience, but it can also be overwhelming. The average homebuyer visits at least a dozen properties before settling on one. The final choice isn’t driven by price alone. Several factors, such as peace of mind, emotional satisfaction, status symbol and peer pressure, play a significant role. Yet, one should consider factors such as affordability, the builder's reputation, the loan tenure and any other financial benefits that can be gained from owning a house, rather than living on rent. In recent years, the appeal of home purchase and repayment as a means to save on income tax has diminished with the introduction of the new tax regime. Therefore, taking a home loan now depends solely on individual needs.

Depending on the type of home you are looking for, lenders offer loan products structured to cater to your needs (see Know Your Home Loan). There are many types of costs associated with obtaining a home loan, and it would be helpful to familiarise yourself with some of these before considering a loan. Many borrowers focus only on the interest rate offered by a lender—a common but costly mistake. While a lower rate may reduce the EMI (equated monthly instalment), the method used to calculate that interest can significantly affect the actual amount you end up paying.