Buying a home is one of the biggest decision of one’s life. Like every major decision, you should also get ready in advance. Before deciding to buy a house, make sure you have enough money to make down payment on a house. The steps taken in haste can cause a hole in your finances.
Mistakes To Avoid While Making Down Payment on a House
1. Do not touch retirement savings
Firstly, it is common for savings to be associated with retirement, but experts say that it will be better if you do not hand over these savings. Once you start withdrawing money then it is difficult to stop.
2. EPF or PPF?
If the employees are thinking of withdrawing money from employee provident fund (EPF) or public provident fund, avoid doing so. It would be better to not take your long-term investments to make down payment on a house.
3. Do not ever Surrender your Insurance Plans
People take life insurance because they can meet their family needs. The surrender of the insurance policy can be solved by the down payment. But this will lead to your family future in danger. It is a good option to take loan from banks or insurance companies on the insurance policy.
4. Do not withdraw money from the children’s fund
Maybe you are thinking about taking out money from a kind of funds kept for children’s education. Experts believe that this should not be done. If you use education corpus for any other work, then decide that you will not be able to achieve your goal. Later education loan can be taken and it can worsen the Mali condition.
5. Avoid taking a personal loan
By paying a personal loan for repaying debt, the pressure on the financial position increases because these loans are very expensive. Abhinav, CEO of Apple Investments Advisors, said, “If the rates are low, then you may have to pay 15-18% interest on the personal loan.”
Suppose for a house of 50 lacs, you have taken loan of 10 lakh for 20 years at 10% interest rate. The EMI will be of 35,989. In order to repay the initial 20 lakhs, if you have a personal loan of 18% interest rate for five years, then an EMI of Rs. 30,866 will be made. With the payment of two EMIs, you will get a lot of pressure and your second goal may be slipped for many years.