Before you set your heart on your dream house, you should have your funds ready and in order. Hence once you decide either to buy a house or to construct a house, you must decide your budget based on your financial capacity. The search for property will also be made based on your budget.
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If you are buying a house/flat the construction of which has just started or if you are constructing the house on your own, it will need 12-24 months time, for carrying out the construction. In both cases you need to arrange funds within 9-21 months depending upon the period of construction. This is very important as the lack of funds and that too on time will result in delay of the project resulting in price increases, interest liabilities and disputes with the builders/contractor on account of non-payment or delay in payments leading to other disputes. This will be a nightmare and must be avoided, as you will land into problems, which will be difficult to solve.
Also Read: Difference Between Cost, Price and Value
Again while you provide budget, you have also to think that you will also need money for furnitures, fixtures and other household equipments once the building is completed and ready for occupy.
However the funds required for buying the house has to be kept ready with oneself as normally you will not get more than 2-3 month time for a property which is ready.
One generally has recourse to following sources of funds
Source of Funds:
This may be either in your name or in name of your spouse.
- Your balance in saving, current, fixed deposit account.
02. Disposal of investment:
- Investment that you might have i.e.
- Mutual funds
- Shares, PF, PPF, Bonds, Debentures etc…
03. Disposal of property:
- The amount which you may get by sale of your existing old house
- Sale of other immovable properties like agricultural land, other plot of land or any other property.
04. Loan from Banks / Financial institutions:
- Loan against other property
- Loan available on equity shares
- Loan available on gold ornaments
- Amount which you may withdraw/borrow from Provident Fund/ PPF.
- Amount which you may withdraw/borrow on LIC policy
05. Loan from friends & relatives:
- Gift/loan from friends and relatives
- Gift/loan from NRI relatives
06. Current income:
- If you have very good current income, you may use it straight away.
07. Housing finance from bank or housing finance company:
- This will be a long term loan ranging from 10 to 25 years depending on your age, amount of loan, your repaying capacity etc.
The good financial planning will keep you free from stress and hence you and your family will be able to enjoy the house.