Buying the first home is a dream as well as for cracking the right deal, from deciding the positioning to doing the paperwork, numerous aspects must be considered to ensure a hassle-free home purchase. In India, many first-time homebuyers rely on home loans to buy their dream home. As home loans span over 20-30 years, they are counted as a long-term liability which involves investing a tremendous share of individual’s income.
With the majority of first-home buyers in India participate in an age bracket of 30-40 years, which is one of the very most crucial years in conditions of both personal and professional growth, it becomes even more important to make an informed decision.
Before you take the plunge, it is very important to put together a pragmatic and achievable plan. Make sure you understand how the real estate market works and conduct a comprehensive research to find answers to what to buy, best places to buy and how to buy.
What to Buy: A New Home or a Resale Unit?
Taking a call between buying a new house and a resale unit is tough. Generally, the choice between the two is generally based on the buyer’s lifestyle, preferences, and affordability. Since the majority of the new residential projects across the major cities in India are established in the peripheral locations, the price tag on acquisition may be lower.
Advantages of buying a fresh house:
Greater versatility vis-à-vis home loan and finance.
Better resale prospects.
Improved amenities (as these homes are newly constructed, they incorporate latest interior designs and sustainable developments offering various benefits, such as lower bills).
Factors to watch out for:
Goods and Services Tax (GST): If you are buying an under-construction property, you are liable to pay a GST. However, this may vary as per the unit cost. A housing unit pegged within INR 45 lakh attracts 1% GST and a unit priced above INR 45 lakh draws 5% percent GST.
Real Estate Regulatory Authority (RERA) details: It really is essential to lay practical the RERA details of the builder and the project. Go to the RERA website of the State in which you plan to buy a property, and discover if the builder and the job involved are registered with RERA.
Investing in a RERA-registered project would safeguard you regarding inordinate job delays or any other builder defaults. You may filter out RERA-registered properties on property sites to ensure you are selecting the right projects.
If you plan to buy a resale unit, you must consider if the property has been used before or is it a new unit. Also, the older the property, the lower are the likelihood of availing mortgage loans. For instance, housing boat loan companies do not offer loans to properties more than 50-years-old. Just in case, you buy a 35-year-old property; then the home loan tenure can only be for 15 years.
Advantages of resale of an home:
The biggest plus of resale properties in India is that they don’t attract GST. Thus, you can save a substantial sum of money here.
Factors to watch out for:
Buying a resale unit comes with a lot of legal compliance requirements. For instance, you must check the title deed of owner in the case of a resale unit. Precisely, the title deed is a legal document that establishes an individual’s rightful ownership over a house.
You must obtain a no objection certificate (NOC) from banks to ensure that the house is mortgage-free.
The process of obtaining NOCs and cross-checking other documents, such as title clearance, allotment letter, occupancy certificate and encumbrance certificate may take a little longer and could be a taxing job.
Resale properties likewise incorporate transfer of memorandum (TM) charges in places where land is leasehold.
Where to Buy: Location
Once you have made up your mind in what to buy, it is time to decide where to buy, i.e. the positioning. You can change almost everything at home once purchased, but cannot alter its location. Thus, thoroughly examine the house and its site. From the surroundings to the neighbourhood, to the connectivity options and other social elements of daily importance, everything matters and really should be easily accessible from the property.
One of the important things to figure out is whether the land is freehold or leasecarry. The former provides complete ownership rights of the house. Leasehold land, on the other hand, could be competitively priced nevertheless, you would only get partial ownership of the land, in most cases for 99 years.
Get an idea about the amenities and facilities in a particular project and area, you may use the ratings and review services offered at leading property sites.
The ratings and reviews are posted by the people who have an connection with moving into a project or an area. Overall, from connectivity to construction quality, society management facilities, property type, amenities available, greenery and other advantages and disadvantages, you can gather the entire information about a particular locale and the project.
How to Buy
Being a possible homebuyer, undertaking thorough market research and analyzing the purchase price trends of an property are crucial steps. Keeping a close tab provides you insights about how precisely this market moves and is it worth paying an amount that your seller quotes or in the event you strike a negotiation.
The ‘property rates’ not only help you get the per square feet (psf.) unit rate in the precise area but also provides information related to investment prospects in a locale. You could study the historical capital appreciation or depreciation quarter-on-quarter, and make inferences about future potential predicated on more inputs from market sources.
‘Price trends’ on the other hand; furnish the graphic representation of the property values over the years and help in deciding the potential investment returns expected from a property.
Ascertain the paying capability
Identifying your ‘affordability’ is also an essential criterion when buying a home. Home loan companies allow you to gain access to the home loan deals of some of the reputed financial institutions across India. From the current rate of interest to a processing cost and the loan tenure, you can view complete details or request for more information over the mail.
It is recommended to check your loan eligibility and gauge the approximate loan amount that you could borrow with the current income and the total amount that you have to repay to the bank over the selected tenure.
The ‘EMI calculator’ is another excellent feature that determines the monthly outgo with an explicit categorization of the key and the interest amount.
Real estate investment is a huge undertaking, hence verifying all the documents is vital to ensure that the house does not have any legal adversities attached. Included in these are:
Systematic registered agreement (on the market between previous parties)
Interest and penalties levied over a buyer
Approvals and sanctions obtained by the builder
Approved project layout
Title deed (especially required in the case of a resale purchase)
Loans or mortgages (if any)
No objection certificate (NOC)
Funding source (joint venture, partnership or equity funding)
Refund clauses in the event the project does not get completed
7/12 Extraction and Village Form No. 6
Architect certificate Clearance Certificate
Building or structure plan
Proof of payment of stamp duty and registration
Draft conveyance deed
Once you have narrowed down a couple of choices, you can actually use the below provided checklist, which can help you compare different properties and choose the best among all options. The prime factors that you must compare while analyzing properties are their location, price, rooms, size, amenities, RERA certifications, gross annual cost, facilities around, connectivity options and exteriors of the society.