Time For Some Financial Planning

The year end is a time for prospective home buyers to gear up and get their financial planning in place. If buying a home is one of your New Year resolutions, it's time to begin the process of acquisition now. Some basic financial planning will ensure you keep the loan cost to the minimum and acquire the property at the best price. Here are a few tips: 

Evaluate Your Investments portfolio:
Invariably, an equity investment portfolio goes through cyclical ups and downs. In the current market conditions, frequent evaluations to analyse the performance of individual stocks is a must.  A prospective home loan borrower needs to go through one to weed out nonperforming and under-performing stocks. The funds generated from exiting such stocks can be reinvested in short-term deposit schemes that yield relatively higher returns and then used to make the down payment on the property.

 Mutual fund units too can be redeemed both when the fund is not performing up to expectations and even when the trigger for exit has been reached. This strategy needs to begin now. Times when the markets rise can be opportune moments to exit from stocks and mutual funds.

Evaluate tax Benefits Claimed:
Many rush into tax-saving options in the last couple of weeks of the financial year end to make the upper limit. It is never wise to put off your tax-saving investments till the end of March. You may well end up investing in options that don't suit you just to save some income tax.

 Now, you have all the time to evaluate options before you and pick the ones that suit you the most. It will also serve you well if you plan these investments in tandem with your home purchase in terms of lock-in period etc. These investments can help you raise the funds needed to furnish your new apartment later too.

Plan for Prepayments:
With the waiving of the prepayment penalty, borrowers can bring down the interest cost with regular part prepayments. This is the right time to plan investments that generate lumpsums that can be used to make annual part prepayments. This will ensure your loan cost will be the minimum and also you will be debt-free sooner.