bu bhandari

BUYER'S FAQS

Buying a home is the most important and often the most difficult decision to make. Purchasing your first house is as much a financial as an emotional choice. So let's us help you in your search for that perfect home with some start up tips to fulfill your dream of being the proud owner of a brand new abode! After all "ghar toh ek hi bar banta hai!"

Where should I buy?

This is not as straight forward a choice as it seems. Many young upwardly mobile, financially sound professionals often decide upon a house that is close to their work place. Now this may not always be the most prudent option, as jobs are not permanent, well at least not in these times. Your father may have stuck around in a single job for 35 years; you may find it difficult to stay put for 35 months.

You may move on to another place, another job. You should buy a house where you want to live, in your home town or your favored city. Ask yourself 'Which city do I prefer to live in? Is this the place where I can spend the better part of say 20 years? Do not buy a home until you want to live in it. After all why spend so much - and not just money but also your energy and time - if you decide to move to another place because of your job. Renting out can be a hassle. And if you are just looking to make an investment, surely there are more better options, why not opt for your hometown, who knows you may decide to settle there after all.

What is within my budget?

So, the decision to buy has been made. Great, now let's sit down and find out exactly how much can you spend or realistically how deep the pockets can stretch. For a young professional who is just starting out maybe that dream bungalow is a bit out of reach? Pitch your dreams to match reality.

Work out your finances - income v/s outflow. Projected expenses as well as projected income raise in future and after all this have been done what can be saved aside for a rainy day. Ideally look at a property in the range of Rs 11-15 lakh with a loan component of about Rs 10 lakh. For those in their mid-career phase obviously the options are wider. You have had more time to save and plan your finances. Also the monthly income is a tad on the higher side as well. These are what are termed as the upwardly mobile professionals with the capacity to spend anywhere between 45 lakh -1.5 crore plus on homes.

Should I spend more just for the location?

Well that will depend on your priorities. Some of you may be alright with a slightly smaller home which is closer to the workplace, anything to avoid that dastardly daily commute. Also the close proximity to schools, airports, entertainment avenues, shopping malls can also play a big role in your decision. But don't make a hasty decision, after all a home is a long term purchase and it should fulfill your requirement for the next 10-15 years at least. Take into account your family requirements and weigh them against your budget. Maybe in the long run that bigger house might start to look more feasible. And being young means you can stretch a bit, can travel that extra distance, can put in more effort. Go for that larger home.

Should I buy or should I rent?

This is like comparing apples and oranges. Both have their own advantages and faults. Renting gives you the freedom to move when you want; no expenses on furniture and stamp duty. On the other hand you pay rent which is a bit of a waste. Why not pay EMIs instead? At least the expense will be towards creating an asset for your future. Of course, once you decide to buy a property you choose a specific location which may not be as easy to change as renting a place affords you. And putting down or even acquiring a loan for a large amount for a house purchase may be difficult. Still, property purchase may well work out a s the more wiser option if you have made long term plans. Make you choice carefully after fully weighing h the pros and cons of both.

How much should I borrow?

nt market conditions prepare yourself thoroughly but still always get expert advice - Money matters are no child's play. Just as no one can become a doctor by reading medical terminology on Google, just browsing about finance does not make you a financial whiz kid. Follow expert advice but also apply your common sense.

Pre-Planning: Chalk out your monthly household budget. Get a clear picture about how much you spend monthly, areas where you can cut down on expenses - maybe a few trips less to that Italian restaurant you love so much? How much you save after monthly loan EMIs and how this home purchase will affect you future expenditures. Also factor in other payments such as your own contribution, the fees charged by all the financial institutions, the amount required to be paid upfront, broker's fees, new furniture etc.

How much loan can I get?

Well, most financial institutions lend up to 85% of the property value. That still leaves a good 15% to be raised on your own. Conduct a survey on which bank or financial institution is willing to lend you the highest loan amount and at what rate. Ideally for a single income household your monthly EMI should not exceed 60-65% of your net income and for a double income households EMIs should not exceed 35-40% of your joint income. Also take into account the yearly salary rise.

Should I opt for a joint loan with my spouse?

Ideally yes, it only enhances your eligibility in the eyes of the lender. Club together both the incomes to determine a gross repayment capacity . Generally, an HFC will permit up to 35-55% of the gross monthly income to form the monthly repayment amount. And it also give you more choice to choose you home loan form.

Can I distribute my loan payments to ease the burden?

Yes you can. One way to lessen your monthly outflow amount is to opt for longer repayment tenure so that the EMI amount gets reduced. Another way is to opt for a step up loan. It is exactly as the name suggests. In the initial years you make lower EMI repayments and as your income increases you can opt for higher ones to settle you loan. But these loans are available only for professionally qualified people.

What are the unknown expenses that I should be prepared for?

Well we have already covered the obvious expense - EMIs. But in addition to these there are also extra expenses that you will have to bear while buying a property such as stamp duties, parking charges, club membership fees, interior changes etc. Some banks and financial institutions cover some of these, find out if your loan providers can finance these extra costs.

How do I choose the loan that best suits my budget?

Now this is the crux of the matter really. Be very vigilant while choosing a home loan. Getting advice from your friend is all very well but do your own research. Conduct a survey of various banks and institutions and then compare all of them. Get quotes from their executives, ask questions about bank charges, repayment facilitates, if they charge for repayment etc. Also be clear about any additional administrative charges they might levy. Finally, pick from the one that best suits your budget and importantly fits in with your monthly expenditure plan.

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