Home buying tips for ‘Singles’

Usually, financial planners highlight the budget planning for those who have purchased house in their 30s or 40s, but the reference to those who buy it before is often missed out.

Mar 08, 2015 04:03 IST India Infoline News Service

Home Buying is one goal of paramount importance in everyone's life. However, the timing of attaining this goal is different, where some buy home in late stages of their lives while others buy it early enough. Usually, financial planners highlight the budget planning for those who have purchased house in their 30s or 40s, but the reference to those who buy it before is often missed out. The corporate hierarchy has given a chance to many young individuals to buy a home, which is setting trend of home buying by 'singles'. However, a person when 'single' should carefully budget such hefty expenditure as they bear full responsibility and challenge of doing so.
 
Bigger down payment: When single try to allocate more money for down payment, it will eventually decrease the interest burden. Also, savings while being single is easier than being with a family. Hence, a little extra down payment now will save mortgage burden for the rest of the lengthy tenure. Ideally, experts recommend individuals to pay 20% of the home purchase amount through down payment, where other additional costs should also be taken care of instead of including it in the mortgage.
 
One income; more challenge: Buying a home when not married means more responsibility on an individual. There is no security for the home loan borrower, which otherwise is available to a married individual. Banks too prefer to lend to a married couple who have two incomes as the chances of default is less under such scenario. Hence, an individual has to have a robust banking profile, credit score and financial soundness to convince lenders of being a good borrower. Banks may even charge a little extra interest, which is paltry when compared to purchasing a home late.
 
Emergency Corpus: Despite a bigger down payment and less EMI burden, one should keep three-six months of expenses saved in an emergency fund. Career during early stages is volatile and hence, one must always save for the rainy day.

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