“Owning a home is a keystone of wealth.. both financial affluence and emotional security” – Suze Orman

Being amidst Covid19 pandemic, are you one amongst the many who are contemplating whether this is the right time to buy a house? If so, then do read on.

Although housing market outlook does not seem to be very conducive now, I still feel market will see a revival sooner than what general market is expecting as of now (Read my article- 3 Reason Why Housing Market May Revive)

Having said that, real estate should always be bought with a long-term perspective. Having a long-term investment horizon makes ‘timing the market’ little less important. But there is one very important factor to be considered and evaluated before you decide to purchase a property- Your Financial Health.

Your Financial Health

Take out time to reflect on the following questions. Although it is good to have a positive approach, I would urge you to be a little conservative in your analysis, esp. in the current times as we are amidst a pandemic.

1. Assess your current finances

• How much savings you already have?

Any property purchase would require minimum 20% self-funding (down payment). Further, you would also need to ensure you have some contingency reserve or emergency fund to manage any unforeseen circumstances. Depending upon your nature of income you may like to maintain anywhere between 6-8 months expenses as a reserve. Do not forget to consider your home loan EMI as a regular expense going ahead.

• How much money you are able to save annually?

This is very important. Knowing the usual surplus left in your hand annually after meeting your expenditures will help you arrive at your loan servicing capacity. Do consider any additional expenses and additional savings arising from the changed scenarios. Eg. If you have started working from home, then you would be saving on travel costs or office rent, etc.

2. Estimate the stability of your future income stream

• How secure is your income (salary / profits)?

• What is the growth prospect of your income in the near future?

In the current scenario of weakening economic sentiments, bleak business prospects and downsizing, it is very important to re-assess your financial stability. Be conservative in assessing your future growth prospects.

3. Gauge how much loan you can get

• Check your Credit Score

You can goto the website of CIBIL to check your Credit Score and report for free. It reflects your credit worthiness and shows your loan servicing and repayment behaviour and track record. This score ranges from 300-900, the higher the better. Generally, a score above 750 is considered to be very good. All banks and NBFCs will look at it before deciding your loan sanction amount.

Refer to this link to check your score now - https://www.cibil.com/freecibilscore

If your CIBIL score is low and you want to avail handsome amount of home loan, then you may want to wait for a while and try to improve your score by paying off some debt, servicing loan EMIs timely, not availing too much credit, paying credit card bills on time, etc. With responsible credit behaviour, the score will improve overtime.

• Check your loan eligibility

Approach a bank to check your loan eligibility. This is a very important step as it will help you to estimate your house purchase budget as well.

If your answers to the above questions indicate that you can afford to buy a home now, then, in my view, the current macro-economic and market factors makes it a compelling case to buy a property without any hesitation.

To understand what macro-economic and market factors I am referring to read my article- Should One Buy A Home In Pandemic.

However, given the sheer quantum of money that goes into buying a house, it calls for a lot of research and understanding before you put your hard earned money on the table. We will be happy to guide you in taking the right decision.

Trust us. Allow us to guide you to your home :)

We can help you without physically connecting. We can help you with-

• Expert opinion
• Evaluating various projects that may match your needs through 
• Telephonic conversations
• Power Point presentations stating factual details and pros and cons
• Virtual Tours of the properties
• Online meeting with the concerned parties for a better understanding

Neha Agrawal - Co-Founder, OPENMINDS

nehaagrawal@openminds.co.in | +91 9820402693 | www.openminds.co.in

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