How much of your home loan EMI can you afford? This is an important question that you need to keep in mind. Yes, because the budget you decided is not necessarily correct as per your current financials. Hence, you definitely need to plan accordingly and find out how much of the loan EMI can you finalize without hampering your other financial goals in life.
Be Disciplined:
The first most important thing while going for a property hunt is to be disciplined. Yes, by disciplined I mean you must be sure of your budget and not splurge more. A home should be an investment and hence it should not be a burden on you. If you like a certain property which goes way above your budget, you tend to lose that discipline. This affects you when you pay higher EMI’s. Hence to be better prepared, do calculate a bit above your budget too just in case you decide to loosen the purse.
How much to invest?
Your first decision would be to decide how much of your income per month can be dedicated to re-paying the loan with the interest amount. This sounds easy but excluding the expenses at home, general expenses, financial investments etc. will leave you with a very little percentage. It is hence safe to allot a safe bracket between 20-35% for re paying the loan. Usually a Bank/NBFC will not allow you to choose a bracket of above 40-45% of your income every month.
Keep a Buffer amount:
While making the calculation, always keep a small buffer amount for those unplanned expenses. Yes, these can come at any time and hence you must be ready for them. Hence keep a small percentage of your income always handy. It’s better to be safe than sorry.
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