How to Plan a Budget for Buying a New House in 2024?

when planning to Buy a new house, We need to consider the rising costs of real estate across the country, it is simple to classify the acquisition of a residential property as one of the major purchases. Of course, there are a variety of Housing Loan options to help with this substantial investment. Nevertheless, you must still put down at least 10% of the property's market value. Additionally, you have to pay other costs like registration, stamp duty, property tax, legal fees, etc.

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You should organize your finances to maintain the crucial balance between your savings and living expenditures if you want to save enough money for the down payment on your new home. You can establish a solid credit history, and easily qualify for a respectable home loan at a competitive interest rate by effectively managing your money. This will make it simple to purchase the home of your dreams without breaking the bank.

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Most people require a means of tracking their monthly financial activities. A budget can give you a sense of financial control and make it simpler for you to save money for your objectives. Finding a financial tracking system that works for you is the trick. You can make a budget with the help of the next stages.

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Here are some quick ideas to make saving for a home purchase more convenient:

1. Begin saving in your 20s

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The earlier you begin saving money for investments, the better it is for you. You may maximize the power of compounding by starting to invest when you are still in your 20s, ensuring that you will have enough money when you are ready to buy a home in the next 5/10 years. This will enable you to pay a sizable down payment, thus lightening the load of your mortgage.

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The bank will be more confident in you and quickly grant your request for a home loan due to your sound financial standing.

2. Put money into mutual fund SIPs

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Using a Systematic Investment Plan is an incredibly simple step that can help allocate a portion of your income to mutual fund investments. You can start saving now to use the money for your down payment on a home loan.

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For instance, if you start with a monthly investment of Rs. 15,000 and get a modest return of 12%, you can amass a sizable sum of Rs. 12.40 lakhs in five years. This is one of the easiest and most efficient ways to save for a down payment is through investing in SIPs.

3. Invest in offsetting upcoming EMIs

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Putting down money is just the beginning of the home-buying process. You must constantly make EMI payments between 20 and 30 years after obtaining a home loan. You must therefore be financially ready for such a lengthy commitment.

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Consider investing in a mutual fund that permits you to get a return greater than 1% to 2% of the interest your lender charges on loans to support you on this front. Divide your money between investments and EMIs rather than making higher EMI payments to help you prepare for the future.

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You can now slowly start saving for your EMIs. Let's say your home loan's annual interest expense is 9%, and a SIP fund helps you earn a return of 11%. You can then utilize this extra money to pay off your loan before the term ends, saving you money overall on interest expenses.

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Before selecting an investment instrument, you should exercise caution and, if necessary, seek the advice of a financial counselor who is an expert in the field.

4. Take advantage of the Pradhan Mantri Awas Yojna (PMAY-CLSS) benefit

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You qualify for the PMAY if you, your spouse, or your unmarried children do not own a home anywhere in India. The PMAY, essentially a credit-linked subsidy program, entitles you to a rebate on the interest you pay on your home loan.

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The scheme's most tempting feature is that the subsidy is deposited to your account beforehand and so effectively lowers the amount of your home loan. As a result, the EMI is decreased, making it simpler to handle your monthly payments while keeping a decent quality of living.

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For those whose yearly household income does not exceed Rs. 6 lakh, this program offers a 6.5% discount on home loans up to Rs. 6 lakh. For borrowers whose annual household income does not exceed Rs. 12 lakh, a 4% subsidy is offered on loans up to Rs. 9 lakh. Similar to that, applicants with family incomes under Rs. 18 lakh per year are eligible for a 3% subsidy on loans up to Rs. 12 lakh.

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You should be aware that the program does not provide any financial assistance for loans that exceed the subsidized amounts. Additionally, the programme only applies to loans with a maximum 20-year repayment term.

Additional actions you can take are

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Finding out where your money is going comes after determining how much you have coming in. You will find out what you are spending the most on, and where it is easiest to cut costs by keeping track of, and classifying your expenses.

5. List your fixed expenses first

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Next, list your variable expenses, which include groceries, gas, and entertainment, which could differ from month to month. These are typical monthly expenses like utility and car payments, rent or mortgage payments, and so forth. You might find opportunities to make savings in this region. Since credit card and bank statements frequently itemize or group your monthly expenses, they are good places to start.

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Use whatever is available to keep track of your daily spends, be it pen and paper, a smartphone app, or even online budgeting spreadsheets or templates.

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Once your budget is established, it's crucial to regularly check it to ensure you remain on track. There aren't many things in your budget that are certain. For example, your costs might vary, you might get a raise, or you might attain a goal and wish to set new goals. If you establish the practice of routinely reviewing your budget, then you’ll be able to inculcate an effective savings habit, and once you do that, there’s nothing stopping you from buying the house of your dreams!