Owning a house is everyone dream. The emotions are difficult to describe when you buy your first home. You are relieved because you have given your family a security and you rise high in confidence to achieve your other goals. For a middle class family buying a house is a life time decisions since they are not able to afford another. Most of us rely on home loans to purchase our dream house. When you have owned a house you not only bring a financial security but a confidence in you and your family that you will achieve your well-being comfortably. But buying a house on loan means you have also added a financial liability. Your ownership of house is then not completed till you have repaid this liability fully and so you aim for a healthy life. However, there are many life instances such as sudden death, job loss, health issues etc. when this ownership can be in danger especially when you have availed a housing loan. Unless you have covered this risk of your life, your financial planning is not complete.
Here are few aspects which you should consider when you are planning to make your home ownership secure from any kind of risk-
Analyze Cost To Stay On Rent Or Buy New
This is the most common question which arises when you go for buying a house. You are living on rent and there is an aspiration to own a house. But the cost of your dream home is stretching your finances to a great extent. You are then not able to decide whether to take this lifetime decision or continue to stay on rent. The answer lies in your financial situation. You need to analyze on basis of the additional cost which you will have to incur in both the options. While on rent you do not have much cost associated apart from a security fees you have to pay when living in a society.But when you are buying a house there are cost like maintenance, insurance, parking, etc.. which makes your living cost higher than you would have expected. If you are buying a house on loan and you are the sole earner in the family then these additional expenses will severely hit your household budget. You need to plan then whether your finances are ready to take these additional expenses or you need more time. A fairly calculated result will show you whether renting is still a good option or its time to purchase your dream home.
Cover Your Housing Loan
You have bought your dream house but you have availed a housing loan . It may give you additional tax benefits but it’s a huge liability. If you analyze you will realize that your house ownership is actually with your lender. Equity in your house keeps on increasing as you repay your loan. Any default in between can jeopardize your dream of owning a house. The most difficult life situation is when sudden death happens. Your family security gets in danger if they are not able to repay the loan. It’s necessary then that your housing loan is hedged.A term life insurance is the most viable option for meeting this objective. Ensure you buy an adequate life insurance coverage which very well covers the amount of housing loan.
Cover Life Risks Adequately
There are many personal risk which impact your life situation and can hurt your home ownership. Risk like health emergencies, accidental disabilities, job loss etc.. impact your earnings ability. If your earnings get hurt then your loan liabilities and ability to manage higher expenses is severely impacted. All such risk need to be adequately covered. While you are staying in your dream home you purchase many items which are electrical, electronics or from other categories. All these items carry their own risk. Instances of a fire in house due to short circuit in any electrical appliance is common these days. Ensure you keep notice of such risks and take appropriate measures. Replace items which are too old and have a higher probability of becoming a reason for such situation. Largely, any risk which poses a life risk can jeopardize your home ownership if not addressed at right time.
Reduce Cost Of Maintaining Your Home Appliances
Not only bigger risk but any risk which impact you financially can put your home ownership in danger. You have so many appliances in your house for daily use. Frequent issues with them can create financial troubles for you. If the cost of items is higher such as fridge, TV,laptops, mobiles etc..then you end up incurring a higher expenses on replacing them. Few years back in one of my neighbor’s house all electrical appliances were destroyed due to high voltage fluctuations. He had no choice but to replace them all for which his cost ran into lakhs. Such situations can be cause of higher expenses. You can work on reducing them. There are features like extended warranties which covers some of the maintenance in appliances even after the warranty period. Apart from this there are many companies which provides annual maintenance for a cost which can help in reducing the risk of your financial outgo if problem arises. Analyse which can be beneficial for you and avail such features. This will help you in curtailing your expenses considering you have so many items to use in your dream home.
Insure Your House And Contents
Lastly your home and your property need to be insured well. With home insurance this can be covered easily. You can either buy separate policies for your house structure and your contents or look at a packaged policy which cover both. The benefit of these insurance is that they helps in reducing your financial loss arising from various risk such as fire, theft, burglary etc. A property insurance will generally cover the reinstatement of your house if it gets damaged while the contents are covered for their depreciated value. But for claiming these insurance bills are important and so make sure you keep them for the period you avail the insurance.
Your ownership in the house has many facets. A liability like housing loan or contingencies in life has a higher probability of impacting your home ownership. To protect it manage your finances well and have adequate provisions for all the risk which can arise. A well crafted plan can ensure you enjoy your ownership in your lifetime.
Are you aware of the various risk which can impact your home ownership? Have you taken any measures?
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