There is nothing to point out wrong if you are giving a good amount as your down payment and you have back funds to support this investment in your future. As per the experts advice one should make at least 10 or 20 percent of the price as down payment. However in general we assume, we should pay as much as possible towards down payment so there won’t be any extra burden during paying the successive amounts as EMI.
Since you spent a huge part of your saving and now you are compromising with the quality of life style you are maintaining and off course on your savings as well. In addition to this, you don’t even know either your dream home is going to complete or not within the stipulated time frame and since you spent a huge which actually stopping you to withdraw from your decision.
|Why Massive Down Payments are Big No for Home Buyers|
Here are top 3 reasons why you shouldn’t spend more on down payment while buying home also check out how to go about residential plots.
“Draining your Emergency Fund”
You should never buy property in hurry, spending your future savings as a down payment of large investment is completely a wrong idea to adopt. Suppose you lost your job or ended with a loose in business than it may create a terrible financial deficit for you. So it is always recommended to save at least 3 to 6 months expenditure as your emergency fund to avoid uninvited situations.
Note: Making Emergency Saving comes prior to buying or investing on real estate or even planning for retirements. If your future investment plans or home buying plans are affecting your safety then you need to step back first and concentrate on saving.
"Finale payment may scare you"
Don’t stand blind folded without calculating the expenditures of closing the deal or registering the property to your name. Taxes and other expenses can be 3 to 6 percent of the total cost of the property. If you spent all your money in a single huge down payment then you might be surprised by knowing the huge expenses that you are going to pay in the finale settlement.
If 20 percent down payment puts you on strain then there are good numbers of chances that the finale cost of your home will put you in deep strain. You may be ended up as a buyer who has a bigger home than he can afford.
"Ended with living in an empty home"
This is for sure that an empty home never looks like a home. What if you have spent all your funds on a massive down payment and living in a house with no sufficient appliance? This could be the perfect scenario of you, if you are moving from a small apartment to a bigger home with endless empty spaces. So what is the purpose of buying a bigger home if you are not able to afford a matched sized sofa for it?
So you handed all your money in making down payment, and now scratching your head to figure out how to pay EMIs. Potentially you have no money left for other things. Just imagine, how it looks like if you can’t afford a bed for your guest room?
Well congratulations you are a home owner now, but without any retirement savings. Taking burdens more than you can afford is a destruction of your own happiness.
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