Homeownership Remains India's Third Most Important Aspiration. Here's A 4-Step Plan To Fulfilment
Owning a home is often seen as a mark of success. It's also a source of security. However, the path to homeownership can feel overwhelming for first-time buyers
The 2024 BankBazaar Aspiration Index shows that homeownership is still one of India's top three life goals. It ranks just behind a stable career and financial independence. Owning a home is often seen as a mark of success. It's also a source of security. However, the path to homeownership can feel overwhelming for first-time buyers. Fortunately, breaking it down into smaller, manageable steps makes it achievable. Here's how you can make it happen.
BEING MENTALLY READY FOR HOMEOWNERSHIP
Homeownership is a long-term commitment. Are you prepared to settle in one place for the next few years? Have you chosen a home that suits your lifestyle? Also, are you comfortable with the locality? If you're considering starting a family soon, does the house have enough space for that? Think about how the property fits with your career and life goals over the next few years. A well-considered choice now means you're less likely to regret it later. If you’ve achieved this clarity, move to Step 2. Till then, rent.
BEING FINANCIALLY READY
Financial preparation is key. We suggest saving up 30-50 per cent of the total cost of the property. This isn't just for the down payment. You'll also need to cover registration and stamp duty, and there will also be the assorted costs like loan prossing, brokerage, furnishing, and moving. Let's say your dream home costs Rs 1 crore. You'll need Rs 30-50 lakh saved up to cover all the additional costs. You can borrow the next. If you save Rs 50,000 a month, it would take you 5-7 years to build up this amount. Planning ahead means you won’t be caught off guard by these expenses. If you've completed this plan, move to Step 3. Till then, continue renting.
BEING CREDIT-READY
Most people need a home loan to buy their first house. Your credit score plays a big part in securing that loan. A score above 750 can get you better terms and lower interest rates. Don't wait until you’re applying for the loan — check your score early. This gives you time to fix any issues. For instance, if your score is low due to high credit card usage, you can reduce your outstanding debt. The higher your score, the better your chances of getting a good deal on your loan, saving you a lot in interest over time. A low-cost loan is necessary from the point of view of getting out of debt. The lesser your interest burden, the faster you can pay it off.
BEING DEBT-FREE
Many home buyers opt for long loan tenures of 25-30 years. This helps keep the EMIs manageable. But if you want to be debt-free sooner, you’ll need a smart repayment strategy. Each homeowner has their own financial priorities. But let's say your goal is to get out of debt in 10 years. To achieve this, all you need to do is prepay 10 per cent of your loan each year with a combination of pre-payments and EMIs. For example, if you borrow Rs 50 lakh, ensure you repay Rs 5 lakh every year. This could help you clear your debt in 10 years instead of 25, saving you a lot of money in interest payments.
Owning a home may feel like a huge goal, but it’s achievable if you break it down into smaller steps. By being mentally prepared, financially sound, and having a plan for repaying your loan, you can make your dream of homeownership a reality. The right preparation sets you up for a more secure and stable future.
The writer is Head of Communications, BankBazaar.com. This article has been published as part of a special arrangement with BankBazaar.
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