Buying a house is everyone's dream where he can dwell in peace and it is one of the biggest financial decisions most people will make. However, sometimes the decision of taking the plunge into the homebuyer pool can lead them to a problem if people stretch their budget for that dream home. In case, if their dream home hits the market then it will make them miserable.
If you’re in this position, you can buy an affordable “starter home,”. Buying a starter home is worth investing for first-time home buyers seeking to enter into the residential market. With this purchase, you can build up equity that you can further cash in to purchase your “forever dream home”.
A Starter Home
A starter home is a term that many uses for their first home. This starter home may not have all of the bells and whistles, especially since those buying the homes are fresh in their careers and haven’t had the chance to save much money.
A starter home often comes with a low price and smaller in size than the average house. Of course, it may not have all of the bells and whistles, but if you have a tighter budget, these starter homes will allow you to make more comfortable by not paying rent each month. What makes it even better is the initiatives taken by the government. homebuyers can now avail of interest subsidy on home loans. Also, the government has reduced taxation on under-construction flats. With these initiatives, it will provide a significant boost in the mid-range housing segment.
Buy or Rent?
Well, have you done the math? After seven years, a net worth of the starter home would be around Rs 85.4 lakh, whereas the person living on rent would have a value of Rs 71.1 lakh by investing the savings on (EMI-Rent).
Don't Get Carried Away: Stick to Your Budget
Before taking the plunge on your first home purchase, you should know your budget. Make sure you won't end up spending more than you can afford and you will buy a home based on logic and common sense. You can determine this by looking at all the costs of purchasing a home, not just the down payment. Purchasing a home consists of numerous additional costs apart from paying for the home itself. While paying for a parking space or monthly maintenance charges are just one kind of charge, the other is mandatory stamp duty and registration fee that can add five to six percent to the acquisition cost.
Credit Linked Subsidy Scheme
Credit Linked Subsidy Scheme will reduce the EMI burden on both Economically Weaker Sections (EWS) and Low Income Group (LIG). “This is the right time if you are a first-time home buyer to purchase a starter home which will not only fulfill your wish to own a house but also it won’t break your budget,” says Hari Mohan Sharma, Director -Strategy, Clicbrics.