Know this rule of personal finance before buying a house, the health of the pocket will remain

What is the 50:30:20 Rule: It is everyone’s dream to buy their own house. Buying your own home is an emotional issue for people as it provides mental security to the people. However, the way in which the prices of houses are increasing, it is not easy to accomplish this. It is also a huge financial decision for everyone. Many times people regret because they bought the house ahead of time and many times they regret the delay. You also do not have to face all this, for this it is necessary to imbibe the basic rules of personal finance.

So that many dreams don’t have to be sacrificed

Buying a house requires a hefty amount and most people take a home loan for this. Home loan is a long term loan and its EMI is also reasonable. If you are ready to pay a major part of your income in loan installments for many years, then it is fine, but if your preparation goes wrong, then this decision can be heavy. It is possible that this one dream of yours may sacrifice many dreams of your family. Let us know how to check your pocket before taking this important decision.

What does the 50:30:20 rule say

This is the thumb rule of personal finance. 50:30:20 means that you should spend 50% of your in-hand salary on essentials. These include expenses like utility bills, rent, EMI, grocery purchases. After this, 20 percent of the salary should be invested somewhere. Now the 30 percent that remains, keep them for other unnecessary expenses. While taking any loan, keep in mind that your total EMI should not exceed 30% of your salary, otherwise you may get trapped in debt trap.

Understand all math like this

Let us assume that your monthly income is Rs.1 lakh. Out of this, you will have to keep 50 thousand rupees for necessary expenses. With this 50 thousand rupees, you will also have to pay the EMI of the house. If your salary is Rs 01 lakh, then according to the 50:30:20 rule, your total EMI should not exceed Rs 30,000. Will invest 20 thousand rupees somewhere, while the remaining 30 thousand rupees will be kept for other expenses. Now if you can pay EMI around Rs 30 thousand, then your home loan should not be more than Rs 35 lakh for 20 years, Rs 38 lakh for 25 years and Rs 40 lakh for 30 years.

Understand it from the below chart:

Home Loan (Rs) Interest Rate (%) Tenure (Years) EMI (Per Month)
35 lakh 8.65 20 30,707
38 Lakh 8.65 25 30,984
40 lakh 8.65 30 31,183

(Credit- HDFC Home Loan Calculator)

Manage these expenses as well

Usually people take the help of loans to buy a house. Banks give home loans equal to 80 to 90 percent of the cost of the house. The rest of the amount has to be arranged by oneself. If you buy a house worth Rs 50 lakh, then you should have Rs 10 lakh for the down payment. According to the income of one lakh rupees, it will be fine to take a loan of up to 40 lakh rupees. Taking a loan higher than this will increase your EMI and reduce other expenses. The higher the down payment you make, the lower will be the EMI of your loan. It is important to take care of one more thing. There are other expenses involved in buying a house like stamp duty and registration charges. Avoid taking personal loans for these. Doing this work by taking a personal loan will put the burden of double EMI on you.

tie these knots

Lastly the most important thing. While taking any loan, do keep in mind that you have to pay EMI every month. Taking a loan without properly calculating the EMI burden can be high, due to which you may have to cut down on other necessary expenses, which can later cause mental problems for you and you may end up in debt trap. I can get stuck badly.

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