Buying a home without debt is the dream of all Brazilians. However, to achieve this dream requires a lot of planning, discipline and involvement of all those committed to the project.
To help you achieve this goal, we have prepared a post with 7 easy-to-use tips. Just follow them so you have more peace of mind in the whole process of home ownership and enjoy this moment without worrying about debt. Check-out!
1. Make a financial plan
Buying a home is a great investment and for that very reason is a decision that deserves a lot of planning and attention.
Check how much you can save each month without compromising your and your family’s quality of life.
Set up a spreadsheet and work with it as your cash flow. This way you will be able to understand your monthly expenses and receipts. Include everything from everyday expenses like lunch at the restaurant to seasonal expenses like IPVA and school supplies.
Planning will provide you with information that will help you avoid tightening up your home payments.
2. Involve the whole family in the project.
Get the family together and talk about the importance of this new project and how it can impact everyone’s routine.
Make it clear to your children , for example, that buying a new home may involve some sacrifices, such as postponing that dreamed trip or buying the latest generation of a cell phone.
Talk and come to a conclusion about what can be sacrificed to achieve such a goal.
It is also important to make clear that no one is willing to give up. This will prevent future discussions and misunderstandings that may compromise family harmony.
3. Choose a property that meets the family’s needs but does not exceed the initial budget set.
Base the purchase of the new home on the real needs of the family. Do you really need a four bedroom property when only three can comfortably accommodate everyone?
Will the pool really make a difference or is it just a sensation at first that will soon be forgotten?
Pool, property size, location … All these are factors that help make the value of the house more expensive. That is why it is important to be careful and check if the price is appropriate to the family’s standard of living.
Even if everyone is willing to make financial sacrifices to buy their new home, over a longer period of time it is becoming increasingly difficult to live on less money than they need, which can lead to stress and anxiety.
To avoid problems, when choosing the property take into consideration:
- family size: think about the present moment and future plans (prediction of a baby’s arrival in the coming years, for example);
- Frequency of visits: Evaluate whether you are visited by many people throughout the month and see if this makes extra room in the house a necessity
- Location: will the house be close to the job of the husband or wife? Or the children’s school?
- Financial conditions: This is the most important point to consider. The goal is to buy a house without getting into debt, remember? So even if the need for a particular property is urgent, first assess your financial condition.
4. Consider the additional expenses that the property will bring
When you decide to buy a home without debt, it is important to consider that the new property will bring additional expenses.
Depending on the location and land area of the house, the property tax can be quite significant and will compromise the budget throughout the year.
In addition, if the house is in a condominium or if the new property is an apartment, for example, you will have to pay condo fees each month, which can be very costly and weigh at the end of the month.
5. Set aside money for documentation expenses
Many people when buying a new property forget to count the money spent on deed and documentation.
In addition to all the paperwork of the bank, it is also necessary to pay the Real Estate Transfer Tax (ITBI), a municipal tax that must be paid when purchasing the property.
The rate of this tax is calculated on the property value of the property and the rate may vary from municipality to municipality. Typically, in large Brazilian cities, this rate is about 2%.
Also calculate other expenses with documentation such as notary costs and, if you choose this type of option, financing, which involves property valuation, legal analysis of documents, among others.
6. Have an emergency reserve fund
Family illness, unemployment, bad economic cycle affecting business, among others, are factors that unfortunately are almost impossible to predict and can affect anyone.
Having an emergency reserve will help meet financial commitments such as the home purchase portion. Save this book on liquidity and low volatility investments. Good options are: savings, Treasury Direct, some CBD and DI funds.
7. Opt for a real estate consortium
Our last tip for buying a home without debt is an interesting way to avoid the high interest rates on mortgages and hence the abusive installments that can compromise the monthly budget: opt for a real estate pool.
By charging only one administration fee, the final cost of the property tends to be lower, which makes the consortium a more economical option for home ownership.
Not to mention that there is no requirement to pay a percentage in advance, ie, it is not necessary to give an input amount. This way, you can use this amount for other purposes, such as the documentation costs we mentioned.
For those in a hurry, it is possible to accelerate consortium contemplation through bidding. If you bid other than the winning bid, you will not have to pay the bid amount, which will give you another chance to use it the following month.
Other advantages of this type of modality are the variety of terms and plans, little bureaucracy, and greater security, since the Fly High Bank is the supervisory body of the consortium administrators.
So now that you have checked the information in this post, do you feel more confident about buying a home without debt? Take the opportunity to learn more about it and check out our 10 tips for buying your first property!