Financial planning is important for any individual in the league of planning better future. However, if planning to buy a home, via funding through the home loans, then good financial planning becomes all the more crucial. Whether it is an individual or a working couple, a few financial planning tips will ease the process of availing home loans and building the home of your dreams.
For a working couple
Two working people make it all the more better when it comes to the financial planning. However, before the working couple decided to avail a loan, they should consider the following parameters.
Current investment: Before one begins financial planning, it’s important to evaluate the current value of a couple’s assets. This will also include current investment, other than cash in account. This is important as it will help in analyzing the amount of money to be parked for the down payment of a home purchase deal or for the amount to be availed for loan. Current investments would include investments and marketable securities which are bound to generate cash in the operational cycle of one year for e.g. mutual funds, shares, investments getting mature in the said operating cycle etc.
Current expenses: It is always important to assess the current expenses, the fixed ones to analyze the amount left with. These should include the basic household expenses, any existing loan repayments, insurance premiums, debt repayments via credit cards etc.
Tax planning: After the assessment of your current ratio, it’s time to plan for the tax liability. As a couple, one is entitled to avail numerous benefits. For instance, if the male partner is paying rent from his account, he should rope in his wife as well. This will help in availing the HRA benefits in a better way.
Invest: It is important to save money as a couple and hence, avail every kind of benefit that is applicable. This means a couple should invest in tax saving instruments or certain endowment plans that promise to pay a larger chunk of funds in future, beneficial for increase your cash balance.
Life cover: Using a basic income replacement plan at the current bank interest rate, will help in calculating and simultaneously getting suitable life covers for the male and the female counterparts respectively. This is important before one gets home loans or raises funds for homes.
Budget: There’s no such thing as easy money and because of this, the couple needs to figure out how much they should park, in case they are planning to avail a part of finance through a home loan. A proper budget will help in tracking their expenses and help them stay financially stable all the times.
For individual
The above parameters are also applicable on an individual, who is planning to avail home loan. The parameters work in the same way, as they work for a couple.
However, the only difference is that an individual will have to struggle more as he is all alone in the battle of financial planning. He will have to accumulate more through savings. He can then use it to make investments that will generate more income for him. Other than that, the parameters like tax saving plans will require him to save and invest more in plans or schemes that call in for tax deductions on a standalone basis, under certain specified section of the Income Tax Act.
Planning for the dream home is often a tedious task, but a little bit of financial planning and alertness about investment plans will save and generate more and can make any individual or couple to see greener pastures.
Urgently need money and without a financial plan is like shooting in the dark. At some point, you’ll be overwhelmed by all the costs you exclude from the equation and the payment of your EMI mortgage. A good financial plan will not only help you manage your costs better, but it will also help you realize your dream of buying a home.
