Buying your dream home seems exciting, especially when it is your first. When on a house hunt, we can often get confused due to the many aspects involved such as the locality of the project, costs involved, quality of work, loan process etc. We also have a lot of questions such as Should I purchase a smaller flat within budget or to stretch my budget and get a bigger flat? Should I purchase my flat in this locality or that? Should I purchase a flat in a Building with less amenities and low maintenance or should I purchase a flat with plenty of amenities? It is a big decision and it is better to be prepared. Here are some basic Q&As to get you started on your dream home hunt. Good Luck!!
1) Where do I begin?
Once you’ve set your mind on buying a home, there is a lot more to consider thereafter. Prioritize your requirements, budget, locality and everything that affects your buying decision. Every detail needs your attention!
The first step towards buying a property starts from being able to identify the one that suits your needs and fits your budget. With best rates and best quality homes, we offer you a perfect home. However, it is important to select the property depending on following criteria.
i) While choosing the location, you need to keep the following parameters in mind like proximity to the main roads, bus stops, railway lines, transportation services, civic amenities like educational institutions, park, police station, temples, community hall, hospitals.
ii) Does the property fit your budget? Is the property similar to what you had envisioned?
iii) How far is the office from the desired location?
iv) Where is the nearest market?
v) Where is the nearest school?
vi) Are buses/trains easily available from the location?
vii) Does the builder have a good reputation in the market? Does he consistently completes his projects on time and delivers as promised?
viii) Is there a steady availability of electricity & water supply of both?
ix) Commercial/Residential areas face traffic jams during working hours and level of noise is rather high
x) Are Hospitals/Medical services available easily?
xi) If you own a vehicle, you will need space to park it.
xii) Does the project have any litigations or is struck in any legal matters?
xiii) Based on the current status of the project, how much time will the completion of the project take?
xiv) Future scope of the locality, will it develop or not?
2) Are there additional costs while buying a home?
Apart from the basic cost, there are additional costs levied which differ from Developer to Developer.Some developers charge Infrastructure Development Charges (IDC), Society formation charges, Club membership charges etc.over and above the basic cost. Apart from these, there may be Water connection charges, Electricity Connection Charges, Legal Charges levied. Everything must be taken in writing from the Developer while purchasing a flat. Also taxes such as Stamp duty, Registration, GST are levied on the purchase of flats.
3) Should I be worried about any legal issues?
While purchasing a property, you have to look at the approved layout and building plan, ownership documents, and research on the same. It is advisable to contact an advocate before you purchase a property so that he can advise you. Certain areas have specific commercial or residential reservations and hence it’s advisable to have all the details before you commit to a purchase.Most of the details are also available online on the Raeal Estate (Regulation and Development) Act, simply called RERA website.You can simply check the details about the project.
4) How do I finance my dream home and save on tax?
Finance plays a critical role in the purchase of your home. The important issues that are to be considered include modes of arranging finance and its implications on taxation.Make sure you calculate all the costs involved and arrangement of funds and repayment, if applicable.
i) Use your own funds: If the house is being acquired out of the sales proceeds of an earlier house, the exemption from the long-term capital gain tax on the sale of the earlier house can be claimed under u/s. 54. To claim this benefit, the new property should be acquired one year prior to selling or two years after the date on which the transfer of the earlier house takes place. If not then the sales proceeds should be deposited in a bank or institution, which runs Capital Gain Accounts Scheme approved for this purpose. Further, in the case of individual or HUF (Hindu Undivided Family), exemption is provided from long term capital gain tax u/s. 54F on sale of any long term capital asset, if sale proceeds are invested in acquiring a house within prescribed period.
ii) Take a bank loan: Interest paid on housing loan can be claimed as deduction under u/s. 24(b) to the maximum extent of Rs.1,50,000 per year. Such limit is per person and not for one property. Hence, a loan can be taken in two joint names for one house to claim deduction of Rs.1.5 lakhs each for both the persons repaying the loan. Repayment of the principal amount of housing loan is also eligible for the rebate u/s. 88 subject to a maximum sum of Rs.20,000 per year.
5) What issues should be considered when applying for a home loan?
At times, getting a home loan to buy a new property can be a difficult task. This is just a small guide to make aware about home loan process Cycle. It is generally safe to take a loan from one of the leading financial institutions but staying updated with the financial schemes and tax rates is always advisable.
i) Fixed/Floating Interest: You can either opt for a fixed or floating rate of interest. The fixed rate is generally 50-75 basis points higher than the floating rate. The floating rate is linked to the PLR (Prime Lending Rate) of the lending institution.
ii) Processing Fees: Processing fees are charged by financial institutions for verifying the title report, financial performance, valuation of flat and so on. This fee can be up to 1% of the loan amount.
iii) Tenure of the loan: The tenure of the loan should be decided by the buyer after considering various things like repayment capacity per month, earning potential over the next few years, other financial commitments like weddings, children's education etc. The expected outflow on property maintenance should also be considered.
iv) Other aspects: Considering the percentage of the cost of house that is available as loan is equally vital. Another important factor is financing for the interior work, furniture etc. Some institutions have started providing a composite loan that extends over the cost of interiors and design.
Generally, housing loans are available ranging from 5 years to 25 years. Some banks also offer step-up housing loans which charge a lower EMI for the initial years which gets increased for the later period.
What are the documents I have to submit to the bank?
Different banks require different sets of documents for processing a housing loan. Following are some documents generally required by majority of the banks:
i) Proof of Income: Salary certificates and form No. 16 for last three years, TDS certificate for last 3 years, bank statements showing credit entries for salary/ professional fees received for past 12 months, professional qualification certificates etc.
ii) Title of the property: Copy of the property sale deed, title report by a solicitor, valuation report, NOC from the builder/condominium/society, amenities agreement, if any are all required for property title.
Other common documents like proof of age, copy of passport, driving license, proof of residence, copy of ration card, passport, society letter, photographs with signature also come in handy.
Simple Knowledge about Home Loan Process
From applying for a home loan to getting it approved, involves various stages:
Step 1: Filling the application form
Step 2: Personal discussion
Step 3: Bank's Field Investigation
Step 4: Credit appraisal by the bank and loan sanction
Step 5: Offer letter
Step 6: Submission of legal documents & legal check
Step 7: Technical / Valuation check
Step 8: Valuation
Step 9: Registration of property documents
Step 10: Signing of agreements and submitting post-dated cheques
Step 11: Disbursement.