The process of home buying has undergone a sea of change for the better. Today, you will find the real estate sector is more organised, transparent and regulated. The experience of buying a home is vastly different compared to probably what our parents must have experienced. So if you are looking to buy your first home, you have less things to worry about. Here we have a quick checklist of things to consider when looking to buy a house.
1. Know what you want: First decide on what you want from your property- is it for investment purposes or self- consumption. If it’s for investment purposes, check the rentals and the rate of appreciation in an area and decide accordingly. If it’s for personal consumption, list your priorities whether it is location, configuration or amenities.
When buying a home, its good idea to take into consideration your future needs and then opt for the configuration accordingly. Ensure that the location you choose, enjoys a good connectivity and has a sound infrastructure with schools, banks, hospitals, shopping markets and commercial spaces present. After you have taken into account these factors, you can then proceed with cost estimation for the house in the location of your choice.
2. Familiarise with the costs: Once you have decided upon the configuration, couple of locations then the next step is to find out the approximate cost of the houses. The cost will vary depending on the locality, developer, amenities offered among other things. Understanding the costs will help you with the next crucial step – that is planning your budget.
3. Plan your budget: After you know the costs of the house that you would like to purchase, you need to then start planning your budget. Speak to a financial lender to check your loan eligibility, which will usually be 80-90% cost of the home. You will have to make provision for the rest of the amount for down payment. Additionally, also factor in the costs like registration charges, maintenance costs, future costs for interiors, which you will need to factor in as well. Ideally, the EMI on home loans should be less than 35% of your total income. Stretching beyond this will impact your savings. Also, don’t forget to set aside an emergency fund, which will help you deal with any unforeseen emergencies.
4. Deciding on under-construction or ready-to-move in projects: Depending on your budget and your priorities you could either opt for a under construction project or choose a ready-to-move-in house. If you are comfortable to wait for couple of months or year to get the possession of the house then you opt for under-construction property. The perk is that you will have wider choice in terms of the unit selection as well as it will have some cost benefit associated. However, there are possibilities of project getting delayed. On the other hand if you wish to move in immediately then opt for a ready-to-move-in property. If you are staying on rent, then it will save you the hassle of paying rent as well as EMI. Though, a ready-to-move-in project may cost you slightly higher, the advantage is that you can see the unit you want to purchase, be assured of the quality and ensure whatever was promised is being delivered. Whatever you opt for, be sure to check the RERA registration of the project as well as opt for a reputed developer.
5. Focus on amenities that interest you: Realty projects today offer a plethora of amenities that are targeted towards user of every age group from toddlers to senior citizens. While a project with all facilities offer wholesome living, there is a price attached to it while buying and then maintaining it. This is a cost you should consider and make decisions accordingly.
6. Opt for a reputed developer’s project: As buying a house is a huge financial commitment, ensure that you opt for a reputed developer. Check the background of the developer and track their delivery record. While lesser known developers may offer higher discounts, there are risk of project getting stalled, poor construction quality etc. Go with a developer with a good track record of delivery and quality construction. With a reputed developer, you will also find it easier to get financing for your house and additionally have benefits of services pre and post-purchase which provide a superior customer experience.
7. Do some ground level research: Once you have identified the location and project, do frequent visits and get information about that area and project from the locals and property consultants who have an exposure there. Efforts to go a few times will help you understand the connectivity the place enjoys and the availability of basic facilities like water and electricity.
8. Rolling out payment: Decide carefully on how you will be rolling out the payment for your property purchase. The payment options differ as to if you are investing in an under-construction or ready-to-move property. While in the former, the payments are spread out as after paying the down payment, one has to disburse payments in instalments as communicated by the developer. In case of the later, full payment has to be done before transfer of property in your name.
9. Maintain a good credit score: Financial institutions follow stringent lending norms and it is imperative for one to maintain a credit score above 750, which is in the range of 300 and 900. It is advisable that you maintain a good credit score throughout and not only at the time of borrowing as going forward if the score deteriorates, the banks may foist higher interest.
10. Check that property is supported by all required documents: If you are investing in an under-construction project, ensure that the project is RERA certified. One should also cross check on RERA website on whether details mentioned about the project like configuration, status of the project and date of delivery matches with what has been promised by the developer. If you are investing in a ready-to-move property, pointers to check include if the layout of the property and the amenities promised is similar to what the blue print is and grant of the imperative no-objection certificate (NOC).
11. Subsidies and tax benefits: Do a thorough research on the tax benefits and the government subsidies that are available while investing in a house. You can claim tax benefit up to a certain amount on the principal amount paid as well as the interest paid. In terms of subsidies, if the property you intend to purchase falls under the affordable housing as defined by government, then you can claim benefit under PMAY scheme. On the other hand many Indian states have reduced the stamp duty by 1-2% if registered in a women’s name.
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