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 follow 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 at least 20% of the total price of the house should be paid as down payment. Additionally, your total home EMI should not exceed 30% of your monthly income, and your total debt (home loan + other loans) should not exceed 50% of your salary. 2. Keep your credit score in top gear: Before applying for a loan, check your CIBIL or credit score. If your credit score is 750 or more, 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. Not just EMI, keep track of ‘hidden costs’ as well: First time home buyers often budget only for the price of the property and the bank EMI. But the real game starts after this. While buying a home, you have to face many hidden costs like stamp duty, registration charges, property tax, maintenance cost and brokerage. 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 current 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 the emergency fund. Never exhaust your entire life savings or emergency fund while buying a new house and decorating its interior. the future is unwritten; In case of change in job or medical emergency, you should always have a backup fund of at least 6 months EMI and equal to the household expenses in liquid form (cash or savings account).