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Buying a House? 7 Things to Check Before You Seal the Deal
Buying that perfect home is not the easiest task. Some wait for the perfect deal to come up while some may even spend a lifetime waiting to build or buy the right home, but it may just never arrive. Undoubtedly, it is one of your biggest financial purchases in your lifetime, so you would want it to go perfectly, be it the first time or the last. When you find yourself unable to save enough for a new house purchase, is when ‘planning’ comes in. Planning your financial aspects is as important as saving. Also, what should you consider before buying a house? Is it the location or the budget? Or is it going to be a choice to be made between a spacious house and a holiday home?
Here are seven things that you should check before you seal the deal.I) Budget
One of the most important home buying tips is to decide on a budget. This helps you decide what kind of house you will end up buying. To avoid a wrong financial decision that will turn the experience nightmarish, do a careful study of your finances before you start scouting for a house. Adding up all your income, determine what kind of expenses, investments and additional financial commitments you have. In the case of your spouse, parents or children contributing to the purchase, doing a joint calculation will make the task easy.
A thorough calculation will give you a rough idea about how much money you can set aside per month for the house purchase. After deciding the full budget, the main objective is to break it up into down-payment and the monthly EMI that you can afford to let go from your income without getting hard-pinched. Once you determine the affordable amount, you can decide on the type and location of the house.
The first payment that you have to make is the down-payment. Banks will finance a maximum of 80-85% of the property cost and you will have to shell out the other 15-20%. But don’t spend every last penny in the down-payment or borrow from other sources. Beware of taking loans from sources like family members, colleagues or your office. Banks don’t include stamp duty and registration charges in the property cost, so the entire amount has to be borne by the buyer alone. Next comes monthly EMIs which may run for over 20 years, in many cases. Plan it keeping in mind your financial commitments (children’s education, medical needs and emergencies, family vacations, etc).
While deciding the final budget, plan out in such a way that you have some money left (for other uses) after the down-payment is made. Also, make sure your monthly loan payments do not exceed 40-45% of your net income.
II) Home Loan
With increasing property prices, when you don’t have much choice but to opt for home loans, look for a bank that’ll give you an easy home loan with the minimum rate of interest. There are many websites (mostly of home loan companies), which have online EMI calculators. You can calculate your monthly EMIs using these easy tools. Use Housing.com’s EMI calculators to get the best customised offers too. Most banks and home loan financial companies have information on their websites stating eligibility and the rate for home loans. The most popular ones are SBI, HDFC, ICICI Bank and Axis Bank among others.
After you collect information about the lenders, you can do a comparison about which lender offers the most convenient loan. Home loans are determined based on the location of the property, history of the developer and can be obtained for both new and resale property.
When it’s a resale flat, most lenders choose to value the property independently before providing the house loan. This loan is based on their value instead of the cost mentioned in the purchase agreement. Next comes the choice between ‘fixed rate of interest’ or ‘floating’ or a mix of both. Most people tend to get confused regarding this part and end up taking advice from anyone, including the broker. Take help from the bank’s relationship manager, instead, or consult a property expert, as your entire financial burden will depend on it. Also, consider flexibility on the bank’s part to adjust the EMI amount or tenure in the case of an interest rate revision.
III) Location
After your financial calculations are done, decide on the location of your property. Where exactly do you want your dream home to be? Would you prefer a suburban location or an urban area? Do you want to live in a peaceful isolated community or close to the main hustle-bustle of the city? Can you compromise on a little more time on travelling instead of living in a crowded area?
Before going ahead with the purchase, you should check out its distance from public amenities, hospitals, marketplaces, malls, corporate offices, schools/colleges, police station, etc. Also, ask around about security of the place, especially if you’re a single woman. Is it a crime-prone area or is law and order well-maintained? Home Buying Tips Also, enquire if the place gets affected in the monsoon and if the area comes under the municipal corporation.
Check if a regular water supply is available and if there is a power shortage in the area. Only after checking out these crucial criteria, go ahead with the location. Also, remember that the price of the property depends on the locality and the area. Some banks do not offer loans, in particular to black-listed areas, so beware of them in order not to be cheated.
IV) Type of Home
Right after you have decided the budget, the amount of the loan required and the location where you want your residential property to be in, the task becomes easier. Next, you have to decide the type of home you want to own.
This could range from an apartment, villa, flat, duplex, penthouse, row house to a big bungalow. There are many factors which you need to consider before deciding the type of house. Right from the size of your family to your professional needs, the size and type of home depends on many factors. Will your family become bigger any time while you’re in this house? Do you have plans to get a pet? Would you rather have a big kitchen instead of a luxurious bedroom?
V) Insurance
Insurance is the most forgotten factor through the excitement of buying a property. The overwhelming experience of buying a house may make you forget that everything needs to be protected, including your hard-earned house. “India is one of the most under-insured countries in the world as non-life insurance sector has a penetration of only 0.7 percent in the country,” P. Chidambaram, former Finance Minister, said. Among 200 general insurance products available in the market today, around eight of them offer home insurance products – ICICI Lombard, TATA AIG,
HDFC Ergo, United Insurance, IFFCO TOKIO Home Insurance, The New India Assurance, Bajaj Allianz and The National Insurance Company. Don’t forget to buy any of these after carefully reading the document as you can protect your home from damages caused by calamities, burglary or a fire accident. This will not only insure your home but also keep you protected from losing all your investments during the house purchase.
VI) The Devil is in the Details
Many get tempted to ignore small details while buying a house, which may not seem to be so crucial initially. Some builders bundle up amenities as a preferred option. They offer security, various facilities such a swimming pool, gym, library, park, coffee house, etc., which constitute society charges! Make sure you also inquire about the annual maintenance charges before you buy a property. In most cases, you have to pay a share of the overall building maintenance.
Home Buying Tips
Enquire if there is electricity backup in the community or the building as frequent power-cuts are more or less common. You should also check if the lifts in the building work properly and the lighting within the house and in key common areas such as hallways and stairwells have 24/7 power backup.
