Wednesday, January 22, 2014

Things to be remembered while buying house

All these points are from my personal experience during buying my home.

First things first, plan your finances and then set out to buy home loan. Analyse how much you can make a down payment. Banks give loan only when you pay minimum of 20% down payment of flat registration cost. Add stamp duty and registration costs. Add house insurance cost. Add franking charges during home loan (not a small amount. It cost me 10k). If the flat is bought from builder, add parking, society charges and other charges. For all these charges, bank wont give loan. So this has to come from your pocket. Do these calculations to avoid nasty surprises.

Financial experts suggests that 50% of the total cost should be from your pocket. This would avoid EMI constraint (sounds good but not possible with the current rates and savings). I could not do this, may be you should give it a try.

Now, calculate approximate EMI value (generally, it is the same as the loan amount in thousands. Example: if my loan is of 50 lakhs, EMI would be around 50 thousand for 20 years). Check if this EMI is sustainable and everybody in your family is ok with this cash flow going out. While doing this exercise, remember that we all have to pay premiums for insurance policy, motor insurance policy, monthly maintenance apart from the obvious payments of grocery, travel to office, electricity, telephone bills, internet charges, (if you have children or planning in near future) consider school fees and tuition fees. Also, assume some decent percentage of inflation and hike in salary that you would be getting.

Once done with above data, go to bank and get pre-approved loan. This has below benefits:

  • We exactly know how much loan we are entitled and how much we can stretch (although this should be known much prior from the above exercise)
  • Some builders may push you to pay money in 1 month or so. Pre-approved loans are generally disbursed sooner
Now, with house hunting task. All of the below things would be little difficult to get but try to get as many as possible:
The house should be near to all the people who are working and going to offices. It should not be near to 1 person and very far off to another. If there are more than 1 person venturing out, the house should be near to railway station as much as possible. Avoid shady and creepy neighborhoods. Avoid places where there are transport issues. If there are children, look for schools in nearby locality. Children should not take 1 hour to reach school, that is ridiculous. Vegetable and fruit market is another thing to look for. This could be at distance of max 30 minutes walk.
Building should have proper compound and approach road. Parking can be an issue in many societies. Daily grocery shops should not be more far than 15 minutes walk.
Above is general checklist. Please customize as per your need and prioritize.
Happy hunting.


2 comments:

  1. Very nice again You have covered almost all points related to new Home from builder another easiest way is to get unused ( first owner has just invested in and didnt had stay in flat more then few months) resale flat with all above considerations.

    Its having less hurdles and pressure of having minimum 20% cash initially ( offcourse that lot depends on how your counter part wanted to have money if he is okey with all in cheque mode then thats very well, but we can manage here with nigiotiations)

    ReplyDelete
  2. Yes, Kaustubh... if it is workable to the buyer, then he should think of this as well....

    ReplyDelete