House Purchase -Points to ponder
For most of the individuals buying a house is more an emotional decision over a financial decision.
People buy house for various emotional reasons like ‘I OWN my dream home’ (Like old Hindi Movie ‘Gharonda’).
In this article I will try to put down a few points pertaining to House purchase.
- Need for house purchase
While evaluating the need one needs to consider various emotional points as well as points like —
- Are we going to stay in this city for another 10 years or will we be mobile within country/Outside country?
- ‘Are we going to stay in this house or this is just for investment purpose ‘
- Simple suggestion is don’t invest in a house unless you stay in it.
- Obviously, this suggestion is for the people who are buying a house by way of loan.
- 2nd House given on rent earns individual only 2-3% PA whereas inflation itself is @ 6% PA which means 2nd House given on rent is earning negative income for the individual.
- Location
Once decision is taken then do research potential options;
- Do compare prices across localities and projects;
- Define area requirement basis current and likely additions in family in near future;
- Review the neighborhood locality for comfort; shopping needs; entertainment needs; other amenities; schools/colleges for kids
- Look at time to commute to your current job location;
- Do you have the capacity to service the loan?
- Normally banks sanction loan up to 75%-80% of loan amount basis income bracket. Balance amount needs to be paid upfront by the buyer.
- Buyer needs to plan for Stamp Duty and registration charges and also has to budget for Interiors / House Furnishing as normally one looks to move in only post doing up the house
- Hence one needs to check the balance post home EMI outgo to understand capability of servicing other household requirements.
- Once decision to buy a house is finalized
- opt for reputed developers with quality construction and ready to move in apartment
- Book properties with competed legal formalities
- Don’t hesitate to ask for freebies like club membership, parking, specified floor
- Before one opts for loans need to enhance credit score by paying all the pending loans.
- Reduce the tenure of loan when interest rates fall?
- Don’t take a loan just to save tax
There are various articles to assist the individual in this ‘once in a life time decision of Home Purchase’.
Even if the decision is an emotional one –do back the decision by reviewing simple points like the ones given in this article or any similar articles on the captioned subject.
