Smart Financial Planning Before Property Investment: Experts Share Key Steps

Before diving into a property investment, aspiring homebuyers are being advised to assess their financial health and organise their budget to avoid surprises during the home-buying journey. Financial experts believe that setting a realistic budget and improving credit health are the key first steps toward securing the best home loan deals.

Start with Cash Flow and Credit Score

Experts suggest beginning with a review of one’s income, savings, and expenses to gauge affordability. Checking one’s credit score is equally important, as it directly impacts loan eligibility. Jyoti Prakash Gadia, MD at Resurgent India, pointed out that a credit score below 500 typically disqualifies a borrower, while scores above 750 significantly boost one’s chances of loan approval.

Account for All Expenses Beyond the EMI

Varun Mehta, co-founder at M Space Realty, recommended including not only EMIs but also ancillary costs like stamp duty, insurance, maintenance, legal charges, and even relocation expenses. He advised keeping housing-related expenses within 40-50% of monthly income, with EMIs ideally not crossing 30%.

Plan for the Down Payment Early

Most Indian banks cover 75-90% of the property value, which means buyers should aim to save at least 15-20% for the down payment. Amit Goenka of Nisus Finance noted that buyers can grow these funds using fixed deposits, high-interest savings accounts, or mutual funds.

Pre-Approval and Documentation Simplify the Process

Getting a home loan pre-approved not only speeds up the home search but also sets realistic expectations on the budget. Experts advised approaching multiple banks and NBFCs to compare loan offers, and keeping documents like income proof and KYC handy. Goenka also cautioned buyers to avoid new debt or credit applications in the months leading up to a loan application.

Disclaimer: The information provided in this article is for general guidance and informational purposes only. It does not constitute financial, legal, or investment advice. Readers are advised to consult with certified financial advisors, legal professionals, or banking representatives before making any property-related decisions. The views expressed by quoted individuals are their own and may not reflect the views of this publication.