Moving to a new city can be thrilling as well as nerve-wracking. While you do get to enjoy the freedom of exploring around & meeting new people, adapting to a different culture & bearing the cost of living can be quite taxing, to begin with. Buying a property in a metropolitan city like Mumbai or Delhi amongst others may have been on your bucket list but are you really prepared to take on this huge change?
Well, purchasing a home in a tier 1 city is a great investment option but a huge financial commitment. There are multiple costs to be considered given that the standard of living is going to be vastly different from a tier 2 or tier 3 city. This includes your daily expenses, utility charges, transportation costs, food & entertainment costs, and so on. It is easy to get thrown off by these changes but relocating to a new place is a combination of learning & unlearning all over again. The best thing that you can do is start your research early on & be well-prepared in order to manage wealth wisely.
As we know, investing in the right property can give you a good return on investment in the long run. But it is also important to avoid any financial errors in order to make your investment worth it.
When it comes to purchasing property, having a strong plan of action is necessary, especially in terms of finances. If you have narrowed down on a house of your choice & your financial plan is to rely on a home loan that your bank suggests, it’s probably time to reconsider.
Since you will be investing a considerable amount of money in this home, it is only fair that you do in-depth research across various banks, consider all the different home loan options you are eligible for & choose the one that suits your needs the best.
Are you all set with your new budget for once you have relocated? Does it account for all the expenses that you have to bear once you have moved to this tier 1 city? Well, it is easy to miss out on certain hidden costs that we tend to realize only once we have made the big move.
This includes expenses like registration fees, transportation charges, monthly maintenance, moving charges, fuel costs, utility deposits, etc. Not considering these expenses when creating your budget can lead to confusion & perhaps even drain your savings once you have moved.
When you are buying a new house in a big city, it is easy to get tempted to buy modern amenities for your home. While it is alright to pick & choose among a few, going overboard on amenities like splurging on fancy outdoor furniture, buying luxury home decor, installing fancy light fixtures, etc. can put a huge load on your budget.
When it comes to spending on home decor & amenities, it is always best to see what you actually need & stick to what aligns with your budget.
Let us say you are eligible for a loan amount that is higher than you anticipated. While this may help you cover the cost of your new home, it also means paying a higher EMI amount that will probably exhaust your savings & credit limit both in the long run. This will definitely strain your home finances and may keep you from getting your funds in order for important things like your child's education or your post-retirement funds.
Before choosing the home of your dreams, it is wise to do a quick check on if buying this house is really a good long-term investment or will it simply turn into a major liability in the future that will keep you and your family from living a financially secure life.
The lack of a budget will keep you from tracking your daily expenses. While you might be able to manage your finances without tracking them in the short term, a fixed budget will help you limit & prioritize your expenses in the long run.
Once you are aware of all the costs you need to cover in a month, it is best to create a budget so that you can keep a track of your expenses as well as not go overboard with your finances.
Buying a house in a tier 1 city is a great investment option that you can reap benefits from in the long run. However, small financial mistakes can cost you a fortune if you are not wary from the beginning. It is best to take charge of money matters & create a financial plan that can help you live the best life in your dream home.