The Top 5 Tips for Buying Your First Home in India
Posted On February 3, 2023
Buying property is a time-honoured investment in India, with high returns and social benefits. However, navigating real estate processes in India can be tricky without market research or experience. Save Max Real Estate, one of the top real estate companies in India, offers you advice on investing in properties confidently.
Here are five tips to keep in mind before buying a home to help you feel secure in your real estate investment:
Table of Contents
1. Calculate Your Budget
Your income, assets, expenses and existing loans will help determine a budget for your new home. Healthcare, insurance, and children’s education costs must be factored in.
There should be a balance between savings and debt when purchasing a home. Buying a house by disposing of other investments is bad since property investment has low liquidity. Ensure you always have adequate liquidity to manage adverse situations.
The selling price does not include additional charges, including Goods and Services Tax (GST), stamp duty, and registration fees. Your budget should include provisions for these extra expenses.
2. Choose A Trustworthy Builder
Trust and a reliable track record are essential in Indian real estate. A project backed by a reputed builder makes getting a loan easier. Research builders and their past projects, paying attention to the quality of work and whether all the promised amenities were delivered per specified specifications and on schedule.
3. Choose a Location
Buying a home in a good neighbourhood with markets, schools, playgrounds, etc., is a wise investment as the property will have a good resale value. However, you will shell out more than usual for a premium location.
On the other hand, it is a good idea to invest in a developing area which fits into your budget. Look for properties in locations where the authorities have plans in place for infrastructure development. You may get bigger properties at lower rates that will rapidly appreciate in the future.
4. Clearances, Approvals and Facilities
Ensure the project has clearance certificates and approvals from statutory bodies such as the Electricity Board, Water and Sewage Board, etc. The construction, materials and fixtures should be per the sanctioned plans, government regulations and safety standards.
Facilities like a clubhouse, gym and swimming pool add operational costs to the purchase price. Some must-have amenities you should be looking for are parking space, backup electricity supply, 24×7 water supply, elevators, etc. You can decide whether the additional options are worth the increased value of your home budget.
Your eligibility for a home loan depends on repayment capacity, income, credit score, other debts and your age. Shop online for home loans with the best interest rates, affordable processing fees, pre-closure charges, etc.
Besides your net earnings, the lender considers the eligibility of the property. Per the Reserve Bank of India (RBI) norms, a loan should be restricted to the property’s market value. A loan as a ratio of market value is called a Loan to Value (LTV). However, considering the risks associated with a transaction, the lender can also reduce the LTV ratio below the RBI norms.
Lenders will reject the loan if your credit score is low, meaning an earlier default is attached to your credit history. Usually, a credit score above 700 is excellent. A very low age, like below 21 or a higher age band, like more than 60, is also a loan deterrent.
In addition to these five steps, there are other costs and processes – such as insurance, legal fees, property taxes, maintenance charges, etc. Experienced real estate agents can help you find an appropriate property. Professionals, such as legal advisors, home inspectors, mortgage brokers and land surveyors, may be needed during the transaction.
Remember that the first home you buy may not be your dream home, and you will only find some of what you wish for in a single property!
Buying a home involves a lot of money, research, time and evaluation. The top real estate companies in India offer property listings online, and you can browse for homes from the comfort of your home. However, you want your money to be invested in the right property, which may be easier said than done.
This article looks at essential steps in the home-buying process to avoid bad investments. Research thoroughly, consult experts, and get your finances in good shape – Soon, you will be in your own “Home Sweet Home”.