Buying a home for the first time? If you want to avoid the debt trap then follow these 5 smart money tips.

Having your own home is everyone’s biggest dream. But often, in this excitement, people commit some financial mistakes due to which their beloved home becomes a big web of debt in the future. If you are also going to step into the property market for the first time, then instead of rushing towards a home loan without thinking, it would be wise to understand some very important and ‘smart money tips’.

Let us know how you can fulfill your dream of owning a house without any mental and financial stress.

1. Must adopt the golden rule of 20/30/50

The first mistake people make while taking a home loan is that they invest their entire savings in down payment or take a loan more than their capacity. According to experts, you should always remember the ’20/30/50′ rule. This simply means that the total cost of the house should be at least 20% down payment As one must give oneself. Additionally, the total EMI of your home will be 30% of monthly income Your total loan amount (home loan + other loans) should not exceed Rs. 50% of salary Should not be crossed.

2. Keep your credit score in top gear

Before applying for loan, check your CIBIL or credit score. If your credit score 750 or more If so, then banks offer you loans at the lowest interest rates. Even just 0.5% interest rate reduction can save you lakhs of rupees. Therefore, start paying all your old bills and credit card dues on time at least 6 months before applying for the loan.

3. Keep track of not only EMI but also ‘hidden costs’

First-time home buyers often budget only for the price of the property and bank EMI. But the real game starts after this. When buying a house you should Stamp duty, registration charges, property tax, maintenance cost and brokerage Like many hidden costs have to be faced. Keep a separate fund of at least 10% to 15% in your budget for these additional expenses, so that you do not have to ask for a loan from anyone at the last moment.

4. Correct assessment of resale value and location

While buying a house, do not just look at the present needs. Do thorough research on how that area or society will be in the coming 5 to 10 years, what is the condition of connectivity (metro, highway), schools and hospitals there. In terms of local area optimization, it is very important that you understand the future development plan of that area. Even a cheap house bought in a bad location can cause you losses in future, because its resale value does not increase.

5. Never compromise with emergency fund

Never exhaust your entire life savings or emergency fund while buying a new house and decorating its interiors. the future is unwritten; In case of job change or medical emergency, you have at least 6 months EMI and household expenses Backup fund equal to Rs. 10,000 should always be in liquid form (cash or savings account).