Finance down payment for Buying Home: Avoid These Steps

1. Finance down payment for Buying Home: Avoid These Steps Buying Home is one of the big decision of life. You must need to be well aware and prepared before taking actual action before going to buy. For example, the enough fund arrangement to make the down payment of the Home. Here any wrong decision can caught you into financial circumstances. Here we are discussing the things to avoid when going to finance down the payments of the Home. Avoid these steps: Never use your retirement savings Using the retirement savings to pay off the down payment appears as an easy option but it is the right choice, says Banknomics. It is seen that once you start using your retirement funds, there will be no stopping. You will start falling more into all kind of needs. As time passes, you will need to retirement funds to live your life and if you use it elsewhere, you will definitely face challenges after retirement. Therefore if you are using to use EPF (Employee Provident Fund) or PPF (Public Provident Fund) to make the down payment on your house, it’s time to think again. The option to withdraw your funds from PPF account is available but it should be used in emergencies only. Copyright 2017 http://www.banknomics.com/

2. You can get the real benefits of making money with PPF only when it is invested for the long term; therefore it’s not the one thing to choose when planning for down payment for your home. Never Surrender Insurance Plans Life insurance is a very useful tool to protect you and your family. It helps when you are not around to take care of their needs. Surrendering your insurance policy before time may solve your down payment issue for now but you are taking the risk of your family’s future security. Copyright 2017 http://www.banknomics.com/

3. But you have a better option; you can choose the loan against insurance policy from either bank or insurance company. Choosing the Loan against insurance policy from Insurance Company is better as the bank’s charges higher than insurance companies. Don’t use your Kid’s Education Funds Some people think that they can use the funds that they kept for their child’s education now and they will arrange it later on but it does not work always. As per the research, if you use part of the education amount for another purpose then it’s almost certain you won’t attain your goal. When you fail to save the required amount for your child’s education, you stand at a place where you have two choices, first is discontinue your child’s education and second is to arrange the funds from other sources. The most chosen source in such situation is Education Loan. Here too you are going to pay a good interest amount. It will give you an additional burden on your finances as you have now both home loan and education loan to repay. Don’t take Personal Loans for Down payment Choosing personal loan to use it as down payment for your home can be the worst decision as it can put you into tough debt obligations. It’s because personal loans are relatively quite expensive and even if the rates have been decreased, the average interest rates are from 15% to 18%. If you choose a property of Rs. 1 Crore, you can get up to Rs. 80 Lac at a rate of 9% for 20 years that comes with the EMI of Rs. 71,978. Going for the personal loan at 18% APR for the duration of 5 years for the down payment of Rs. 20 Lac will become EMI of Rs. 30,866. These 2 EMI payments can be a heavy financial stress and this will push your other goals by several years. Banknomics suggests you keep above-mentioned points in your mind and follow it to keep your future, you family and financial status maintained without any trouble Copyright 2017 http://www.banknomics.com/