For the middle class, especially those working, purchasing a home should always be done with thorough planning and calculation. This ensures fulfilling the need for a house without disturbing the household budget. Here’s a special formula that can simplify everything.
Buying a home is a significant achievement for the middle class, particularly for those working professionals who manage their household expenses with a salary ranging from 60,000 to 70,000 rupees per month. Such individuals mostly buy a house or flat by taking a home loan. However, paying the monthly loan EMIs often becomes a substantial part of their salary. Home loans usually have a long tenure, leading to a prolonged financial burden, resulting in frequent budgetary issues and financial stress at home. This scenario is a common tale for many households.
But if you purchase a house with complete planning and calculation, your need for a home will be met, and you’ll comfortably fulfill all your household requirements. Financial expert Deepti Bhargav suggests that everyone, especially working professionals, should adopt the 3/20/30/40 formula while buying a house or flat. Following this formula ensures that even after purchasing the house, there won’t be excessive pressure on the family, and the household budget won’t be disrupted.
Understanding the Formula:
The ‘3’ implies that the cost of the house you intend to buy shouldn’t exceed three times your annual income. For instance, if your annual income is 10 lakh rupees, you can afford a house or flat worth 30 lakh rupees.
The ’20’ refers to the tenure of the loan. A middle-class individual generally requires a loan for such substantial expenses. Although a shorter loan tenure is better, fixing the loan tenure to a maximum of 20 years ensures that the EMIs don’t become burdensome. Don’t extend it beyond that.
The ’30’ indicates the EMI, which shouldn’t exceed 30% of your earnings. Suppose you earn 70,000 rupees per month; your EMI should ideally not surpass 21,000 rupees.
The ’40’ pertains to the down payment. Whenever you buy a flat, aim to pay at least 40%. By doing so, you’ll have to take a smaller loan, which can be repaid in smaller installments over a shorter period. For example, if your annual income is 10 lakh rupees and you’ve purchased a flat worth 30 lakh rupees, you should ideally pay around 12 lakh rupees as a down payment. Consequently, you’ll only need a loan of around 18 lakh rupees. This situation would lead to a manageable EMI that you can easily repay.
Calculating EMI on an 18 Lakh Loan:
If you’re taking a home loan of 18 lakh rupees from SBI, with an interest rate of 9.55%, and considering a tenure of 15 years, the EMI will be around 18,850 rupees. For a tenure of 20 years, the EMI will be around 16,837 rupees. This approach will simplify all your tasks.
If you need further assistance or information about real estate in Mumbai, Navi Mumbai, or surrounding areas like Thane, Karjat, Neral, Vangani, Badlapur, among others, feel free to reach out to MakaanBhai.com. We, MakaanBhai.com, pride ourselves on being the leading property advisors in Mumbai, offering zero brokerage fees and dedicated professionals to assist you throughout the process.
Information Source: Internet
