Bought A New House? Here's How To Finance Your Next Big Expense — Interior Designing
The grey area of expenses after the down payment remains if not budgeted for. If not handled with care, this cost could inflate the final cost significantly.
Saving up and making the down payment for a house looks more like a checkered flag than a pitstop for many. The purchase of the house itself is one of the many steps in the home-building journey. As most of saving up, planning and calculations are made towards the purchase itself, the expenses after the purchase are often an afterthought.
The confusing grey area of spending that comes with either home improvement or interior designing, needs to be handled with care. With the varying needs, objectives and budgets for the spend, it is important to approach this area with the best method to finance the expenses.
Cost And Objective
While the price ranges, grade, goals and budget may differ, the method of financing needs to be thought through. In India, the cost of interiors may depend on the space available, the grade of products, location specific necessities along with other elements.
While young professionals might want highly functional designs that are cost effective, there are certain projects where the people want to change everything up. The cost, here, varies according to the objective of the design.
Evolving Requirements
"The space is designed according to the kind of design language they (clients) want. The space can be layered. Rugs, wall coverings, art and more can complete the space," said Rahul Mistri, founder and principal designer of Open Atelier.
The designer noted that clients want spaces that are more interactive as there is a paradigm shift. According to Mistri, Rs 20,000-30,000 a square ft. is the high end, while the more mindful people could be spending about Rs 3,000-6,000 per square ft.
"Everything has become personal and bespoke. Investments and costs are also extremely different, as one category of people might want to finish their 1,000 sq ft home for Rs 40 lakh. While some others could go as high as Rs 20,000 per sq ft," he said.
City-Based Expenses
Apart from the intentional spends, there may be certain additional costs that depend on where the house is located. Weather proofing is one such expense among many others. Certain costs also vary based on the city, spacing and facilities.
“South Bombay will have larger floor plates while suburbs will have smaller plates which can be consolidated. Developers are also understanding this and deliver accordingly when it comes to space and amenities," said Mistri.
In tier-2 cities, the purchase cost of the house may be lower. Essentially, the ratio between buying a house and the cost of setting it up will be different in tier-2 cities and metro cities.
"In Bombay we micro-plan and utilise space. Whereas in tier-1 and 2 cities, space is flaunted," Mistri said. "The activities remain the same, but the cost and objective is significantly different," he said.
Budgeting Ahead
Circling back, the grey area of expenses after the down payment remains if not budgeted for. If not handled with care, this cost could inflate the final cost significantly.
“It takes a lot more expenses to make the house livable and hospitable after buying it. This needs to be budgeted along with the purchase of the house," said Santosh Joseph, founder of Germinate Investment Services.
“In most cases the banks will not cover this. Ideally, one has to shell-down the down payment and factor it there. What one can also do is to finish their home loan and to go back to the same lender and get a mortgage loan to fund the difference,” he said. Essentially, spreading the repayment over a larger time frame allows one more time.
Loans And Top-Ups
If the loans amount has already been decided excluding this expense, there are a couple options as well.
“Some people take personal loans or loans against gold or securities to fund the interiors,” Joseph added. This may be a smaller amount that only covers the cost of interior design and is taken with a collateral in place.
While taking this route one needs to ensure that the interest rates are not hefty, as this can bump up the cost.
“The top-up option comes in when the house is bought and registered. This comes with two conditions; the appreciation in the value of the house and the income is in line with the amount,” said Joseph.
