Buyer’s Guide

Buying a home is both a financial & an emotional transaction. And often, it is a once in a lifetime opportunity for many. You will have made a long term financial commitment as well as have a long term emotional attachment. Besides of course having to factor in the everyday convenience that you will need to make your life easy, hassle-free and of course happy. Given all the factors – which can often be difficult to converge at a single point – home buying can end up being a long drawn process.

Thus, as you begin to look forward to buying a home, there are a few pointers we must carefully evaluate that can make the entire process easy and hassle-free.

Location: Families often look for a home either to place of their occupation; or a school for the children; or vicinity to other family member etc., before you choose your location identify the factor that has the maximum benefit for you and your family. If a location satisfies multiple factors that is even better, although this may be rare. Identify your need and then zero in on a location that meets this need.

Finance: As pointed out earlier, buying a house is a long term financial commitment. One should clearly evaluate the source of funds, the quantum of future expenses, and factor in some emergencies. The source of funds is important both for the one-time down payment as well as for the EMIs. It is advised to buy a house that makes financial viability and does not end-up being too much of a monthly burden.

Amenities around the project: In point #1 we discussed that the location of your home should satisfy your prime requirement – school, office etc., however, that along need not be the clinching factor. There are amenities which may not be individually so important but make your day-to-day life much more comfortable. For example proximity to hospitals, ATM, restaurants, recreational facilities, transport hubs etc.

Amenities within the project: Today’s projects offer us umpteen number of amenities such as swimming pools, club houses, lawns, play grounds, shopping complexes etc., evaluate for yourself if these amenities are really essential or just good-to-have.

Design & Aesthetics: Does the broad layout of the project appeal to your taste? Is the home design consistent with your aesthetics? Given that you will be living here, being able to appreciate the design & aesthetics can make your living more comfortable & happier.

Aside from these five points, there are various other criteria such as the credibility of the builder, legal status of the project (and the land), security that one must pay heed to! The home we buy will remain with us and become a part of our lives from the moment we step in – think though and make your decision!

Without proper planning & approach buying a new home can become tedious and difficult. Not to mention the fact that you may end up paying either too much or buying something that does not quite meet all your requirements. At worst, you may lose the home that you always wanted or delay it infinitely longer.

Given that home buying is a financial, functional and emotional decision it is important to consider a wide range of options. Before you are ready to sign on the dotted line careful thinking and planning is required. Some of the important factors to consider would be:

• What kind of home do you need?
• What kind of home can you afford?
• What are your current & future earnings?
• What are your current & financial commitments?
• Are you prepared to make a long-term financial commitment?
• Would a long-term financial commitment make you vulnerable to emergencies?

If you have satisfactorily waded through the above points, it is then important to look for a small set of properties to choose from – all within your budget & meeting your requirements. Looking at multiple options gives you choice, broadens your awareness and helps you better evaluate your options.

Once you have some properties that you would like to consider buying, at that point you should start looking at the home loan options available. Either you will have a pre-approved option available with your banker; or approach one with an application. The builders can be of help in arrange for the required finance.

As the loan approval process gets underway, look at all the legal approvals and status of the project, builder and the property. Have a clear idea on what you are getting into – and feel free to question and query. Look at the fine print of the property contract and get yourself acquainted with all the important details. Take the help of a friend or independent professional to guide you through the process.

The idea is to ensure you know what you are getting into rather than waking up to unpleasant surprises. Payment schedules, occupancy details, customizations and most importantly your rights as an owner must be carefully perused and understood before the signing off.

The best way to find yourself a credible purchase experience is to approach and stick to a reputed developer. A reputed developer might quote a premium but this could be money well spent in the long run.

Purchasing a home is a big decision but the decision made with right thinking, planning and execution will make your stay that much more peaceful!

Buying & financing your home is a long term commitment – emotionally as well as financially. As you make the decision to purchase a home – you are entering into a financial commitment that should last about 15-20 years. Whether we accept it or not the home loan will have a bearing on our lifestyle and day to day habits.

Financing a home will place curbs on your future spending ability and available disposable incomes, it is therefore important to take a well informed decision in this regard. It is important to be aware of the important terms & factors about Home Loans.

Margin or Down payment: Your home loan covers only up to 80% or 90% or at best 95% of the value of your home. The rest is required to be paid by you from your savings. Note, that the higher the cost of your property the higher is the quantum of your down payment. Likewise, the lower percentage of the cost covered under the loan the higher is the quantum of your down payment.

EMIs: EMIs or equated monthly installments is the amount that you will be repaying the bank each month. This is a combination of both principal & interest.

Interest rate: The rate of interest on your loan can be either fixed or floating. In case of the latter you will be paying the same amount for the entire term of the loan. Floating Interest rates are dependent on the RBI base rate – with EMIs increasing or decreasing marginally based on the changes to RBI rates.

Disbursement: The loan amount being credited into your account is termed as disbursement. Often it is done in tranches instead of being a one-time disbursement.

Mortgaging: Mortgaging to finance a new home is a viable option for those who are purchasing a second home or have ancestral property to fall back on. The risks however include arriving at the right valuation of the existing property and/or assets.

Offer Letter: Once the home loan is sanctioned, the bank provides you with a letter stating the loan amount approved, interest rate, term of the loan, EMI, and other conditions of the loan.

Pre-Approved Loans: Based on your credit history with the bank, it can pre-approve a home loan against your name. In this case, the approval and disbursement time can be substantially lower.