A. Funding
Your House Budget will depend upon 2 things
- Own Equity
Foremost identify how much money do you have of your own or how much savings you have that you are willing to put in to buy your house. This includes your cash in hand, FDs, proceeds of sale of another flat, gold, shares etc.
Usually some own equity is always required to make the initial down payment of your house purchase. Generally 75% to 80% of the Total Cost of the new purchase gets funded by the Bank/NBFC/ Financing institution, which means, 20%-25% contribution has to come from the purchaser/s. If the homeloan eligibility does not cover the balance, then owner’s contribution should be increased accordingly. - Borrowed Money
Next check how much loan eligibility do you have which is usually 4 to 5 times ur annual salary provided there are no other obligations.You can also add the home loan eligibility amount of your spouse to enhance the eligibility criteria / create a bigger pool of money as well as enjoy tax benefits of home loan EMIs.
For eg :- If one wishes to buy a house worth 2crs- he needs minimum 50 Lacs of own equity and 1.5 Crs of home eligibility( single or combined with spouse)
You may not want to use your entire eligibility amount and take loan only to the extent you feel you can comfortably service wrt to interest. Keep your monthly expenses and one of expenses in mind and accordingly identify acceptable EMI and restrict the home loan accordingly.
The point that I am making here is, The Bankers may stretch and enhance your “LOAN ELIGIBILITY” but you are the one who would decide “LOAN ACCEPTABILITY” (if required take help of a Real Estate Advisor whom you trust).
A house purchase decision / journey thereafter has to be pleasant and should not result in stress/anxiety to cope up with EMIs.
B. Location
Once you decide to buy a house in the budget that you have defined for yourself, next thing to do is to zero down on the location.
Your choice of preferred location would usually depend upon factors like – location of your and your spouse’s workspace, your child’s school, your parent’s house, your social fabric, public transport availability and others.
If it is not possible to narrow down on one single location then choose a belt of stations that you would prefer for your house.
Once you are sorted mentally at the level of location, then shortlisting of the house becomes very easy and quick.
C. Other Requirements
Make a priority list of all the other necessities that you would want in your house and its surroundings. These could include things like
Need of temple (Jain Derasar, Gurudwara, Haveli etc)
Vaastu compliance
Any specific must amenity (swimming pool , gymnasium, Squash, Tennis etc)
Preference in terms of floor or view from the apt
Everyone has their preferences but making the list does the a job of windshield which keeps the glass clear of any fog and facilitates smooth driving .
D. Reputation of Builder Developer
With implementation of RERA in good force, developers will dare not delay the projects. However its not only about timely delivery of projects its also about the construction quality, the quality of amenities, the technology of construction, planning of sewage, emergency exits, aesthetics of building and so on.
E. Waiting period
If you are a first time buyer and your purchase of house is independent of sale of any apartment then it makes a lot of sense in buying a house that has a waiting period of 2/3 years. An under construction project has the following benefits
- Lower price
- Choice of inventory
- Staggered Payment
- Can participate in Subvention schemes ( if developer has offered)
Projects with longer waiting period of say 3 years or more be opted with a great caution and after required due diligence (on approvals, titles etc) is carried out. Having said so, there must exist a good precedence/track record of the developer with such a long waiting period based projects.
Please note that GST of 12% is also applied in under construction projects.( However developer generally absorbs the partial impact through the reduced price offerings and input tax credit )
The case gets little tricky when your purchase is dependent on sale of existing flat. In such cases of chain transactions it is first important to identify a potential buyer for the existing flat ( or you are reasonably sure of its sale say it is most sought after society / apt) and thereafter scout for purchase of new house.
In such cases one may look out for properties that are nearing possession or ready possession OR choose the U.C. project and move on rental apt for couple of years and close the chain transaction.
Second option as above, to sell the flat and purchase an under construction property and move on rent in the interim period can be opted / advised if attractive subvention scheme is being offered by the developer for an U.C. project.
Many of the times its difficult to meet all our desired requirements, in such cases it becomes important to prioritise our needs/aspirations. This prioritisation should always be done mutually with your family members and keeping their needs and aspirations in mind.
F. Hire A Consultant
Remember – “When you buy a house, its not only one of your BIGGEST INVESTMENT but also BIGGEST DEBT. “
Surely you will weigh all the pros and cons, would thousand times mull over your decision, cross check with friends and relatives – however not involving a person who is expert into a it as a catastrophe. A professional and learned consultant ( not any broker or middlemen) may come at a professional fee, but that would certainly be worth it.
My two cents on the subject- Refrain from entering into the Hall of Fame who falls under “Penny Wise But Pound Foolish”
Its very crucial to involve and engage a qualified, learned & Trustworthy property consultant in all your property dealings buying decisions as he/she. would be know better aware of than you the local price trends, available inventory, market news amongst other things. Since he is day in and day out involved in property dealings, he can has critically evaluate projects, has far better negotiation skills and is aware of all the technical, legal and tax related processes involved in house buying.
Though you may have your location and other priorities jotted down and are very clear about them, remember to be always open to new ideas and possibilities. You never know something bigger and better may fall into your bag.
