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The Subvention Scheme: What Home Buyers Need To Know

Every respected family man is looking for the perfect home loan. As potential home buyers, we must be aware of the advantages and disadvantages of the various options available in the market. At the time of purchasing a new home, the developer suggests different schemes to the home buyer as well. One of these in the past few years has been the subvention scheme.

What does the subvention scheme entail?

The home buyer pays a margin of the amount to the developer. This is around 10-20% of the price of the property purchased. After that, he does not have to pay anything until the property is complete and he has full possession of his new home.

During the time from purchase of the home up until its completion, the balance amount is paid by the bank to the builder. This is a loan with a three-way agreement including the developer, the home buyer and the bank.

During the period of construction, it is the developer who pays the interest on the home loan to the bank, which provides the developer with the necessary money as the project progresses.

Does the subvention scheme work?

To a new home buyer, this scheme sounds like a dream come true. You need not worry about EMI payment until you’ve received the developed property.

But do not builders already have various schemes to help them in their projects? As a business, a developer already has the option of loans at lower interest rates. As a real estate business, the developer also has access to assets to be mortgaged. This will help unlock credit, all at a lower interest rate.

The sad truth that remains is that as a builder there is already a large debt that must still be repaid. While banks will opt to charge higher interest on new loans taken by the builder they approve when an individual with a good credit score opts for a home loan.

So while banks are under the impression that the real estate industry may be a bad investment the new home buyer still needs a good place to live.

What home buyers need to know about the subvention scheme

Though the scheme seems like a perfect plan for property investors, we need to be made aware of the shortcomings that it possesses.
In the subvention scheme, builders receive the instalments from the bank in a specific period. They also opt to pay interest on the loan for the same amount of time. Once that period is complete regardless of whether the home buyer has received possession of the home, the builder has the option to stop payments. He can also divert funds to other projects. It may take years for the project to be completed and the home buyer is left to fend for themselves until then.

As payments are halted on the home loan, it is the home buyer that suffers. This delay harms the CIBIL score and lowers the buyer’s ability to acquire good future loans. Waiting until the project is complete proves harmful to the buyer’s financial health.

The recent developments in the Subvention scheme

In the past few months, after numerous frauds committed by developers, the National Housing Bank has requested lending institutions to refrain from the subvention scheme. This will definitely harm the two main bodies of the real estate industry i.e the home buyer and the developer. With an increase in interest rates for home buyers, developers will be forced to face a liquidity crunch in cash flow. Many developers believe that the government should be in support of such schemes to help the growth of the real estate industry but there are those who want what is best for the home buyer.

Are there other schemes like this?

There are other schemes available in the industry to help home buyers like construction linked payment plans. These plans ensure that the developer receives fixed sums of cash flow when certain milestones are completed. These milestones or slabs make sure of completion of the home and work in favour of the home buyer. It keeps builders in check. 25% of the total amount is given only after possession is acquired by the home buyer.

Key Takeaways

The government, in order to boost the economy of the real estate industry, is constantly working on such schemes. But however many have loopholes and in the end prove harmful to the home buyer. Find out about past incidents with the developers before you step into these options. We all love a good bargain, but be sure to research well before you take the plunge.

Check Out Our Down Payment Program To Help You With Your Home Buying Process!

homebuying for millenials

A Millennial’s Guide To Buying A House Despite Soaring property Rates

Working in a different city from your hometown is catching up to millennials and their way of life. They want to be free, explore the options that life has in store and also find a way to acquire some form of stability to both one’s professional and personal life. Many look towards buying a home, a place where they can call their own. But with increasing property rates, buying a new home is a lot of effort and time.

Here are a few ideas on why we think home buying is a notch higher than renting, despite the soaring property rates.

  • Home Ownership comes along with a sense of security and pride.
  • Increasing rentals are a thing of the past.
  • Though you will still be paying off your EMIs on your home loan, you are more stable as you have the ability to calculate expenses in advance.
  • You will be living alone and could also rent out some of your extra space for some extra cash.

With a push in the right direction, you will soon have your own home to just sit back and watch your favorite show on Netflix (or Hotstar). This quick set of frequently asked questions could help you make your next big decision.

FAQ for home buying

But Why Can’t We Just Rent?

Numerous youth today rent homes. This idea makes their lives flexible. Living out of suitcase makes for great Instagram stories. But many fail to realize that as rent prices increase due to an increase in property rates, buying a home looks so much better.  Most of us feel that owning property will be a time-consuming, frustrating and expensive endeavor.

How Old Should I Be When I Buy A House?

Age doesn’t matter when it comes to buying a home. If you have the pieces of your puzzle set in places like your down payment, CIBIL score and a monthly salary, take the plunge into investing in property. We see property rates going up across all major cities in the country, so there isn’t a right time to buy a home, as long as you calculate your payments perfectly.

Where Do I Start?

Start with your down payment. Make a rough account of your savings, and how you will manage to pay off your home loan. Keep a keen eye on the property rates on the locality you wish to invest in. You can start small, set up a period for how much you need to save up and also start looking for homes that fit within your budget.

So why is a down payment so important?

Well, this is the link between your home and you. You reduce your EMIs on home loans when you put in as much as you can on your down payment. The normal amount that developers expect is anywhere between 5% to 20%. If you have any inquiries on how to manage your down payment, you can always ask us.

What About Home Loans?

Home loans are not as tricky as they may seem. You have multiple options but always find one that fits you. Firstly, check with your employer if they have the option of offering you a loan. Then look at your local bank. Check for interest rates, long and short term loans and the other charges when it comes to home loans. Always read the fine print before you sign for your loan. A better credit score will help you get better loan options. So pay off any pending personal or car loans and start afresh with your home loan.

Is That Really It?

There is a whole lot more to figure as you move ahead with buying your home. But once you’ve got these steps on board, you’re on the right track. Other things to think about when investing in property, especially for the first time, is picking a locality and the home you want. Though this may be influenced by the property rates, keep looking. We may want to invest in a luxurious apartment at first, but keep in mind your budget. Take the help of the right professionals. There is no harm in asking for a little help.

Let’s get started!

We suggest making a list of things that need to be done for a smooth ride. We’ve started it off for you. Add your own as you journey through the world of real estate.

  • Ensure the development is approved and entirely legal and whether it is based under the RERA act, the property rates in the area.
  • Ensure that building bye-laws are in place and there are not any outstanding violations on the part of the developer or seller.
  • Get all the no-objection certificates (NOCs) from the water department, electricity department, etc.
  • Know your payment processes. These differ when buying a ready to move in home, an under-construction home or resold apartment.
  • Collect all the paper required for your home loan. For example, the property and income tax-related documents, to help you apply as soon as possible.
  • As soon as you’ve booked your home, make sure to ask for an allotment letter. This includes all details regarding your home, flat number, amenities and outstanding payments.
  • Sign your sale agreement which ensures that the property now belongs to the buyer.
  • Register the sale deed in your local municipal.

So are you still waiting for the day to put in your own home address into Uber? Start now and make that dream come true.

Saving for Home Down Payment

7 Smart Income Tax Benefits To Take Advantage Of With Your Home Loan

The word taxes has always been associated with what benefits you can gain from them. So when it comes to buying your dream home, the Indian government has especially with the last budget is encouraging citizens to invest more into buying their first home.

Did you know that your Home Loan is eligible for tax deduction under section 80C? So while you may be paying interest on the money you’ve borrowed from your bank or NBFC, you also have the option of multiple tax benefits to reduce your outgo on your taxes. Schemes like Pradhan Mantri Jan Dhan Yojana are helping develop the housing sector in India. These schemes strive to reduce the problems of affordability and accessibility. Let’s map out the different sections that you can apply for a deductions.

Interest Deductions

These yearly deductions are related to interest paid on a property loan. If the property under question self-occupied, an individual is allowed to claim a maximum deduction of Rs.2 lakh under Section 24. This Rs.2 lakh deduction is applicable only when the property is completed for construction within 5 years from the Financial year in which it was started.

If the construction on the property is not finished within the mentioned 5 years, your claim is reduced to only Rs.30,000. So, if your loan was taken on 30th April 2016, the construction of the property should be completed by 31st March 2022. If the property is being let out on rent, the buyer has the ability to claim a limitless amount that was paid to the bank as interest.

An individual can claim the amount spent as interest if the property is given out on rent. However, This doesn’t take into consideration a completed project or an under-construction one. But, the overall loss that is claimed is restricted to Rs 2 lakh under the head of House Property. This Deduction can be claimed from the year in which the construction of the house is completed.

Interest Paid Towards Home Loans During Pre-Construction Period

If you have invested in an under-construction property and have not resided in the home as yet, you continue to pay the EMIs. Your ability to claim deductions start only when the property is fully constructed or you invest in a recently constructed home.

You can still enjoy deductions before the completion of your home. Pre-construction interest helps out in situations like these. The income tax law states that interest paid during the pre-construction time can be claimed as a tax deduction in five equal instalments. This is from the year in which the construction of the property is completed. The maximum amount, however, remains capped at Rs 2 lakh.

Repayment On Principal

Under Section 80C, the principal portion paid as the EMIs for the financial year is deductible. The maximum amount that one can claim goes up to Rs 1.5 lakh. One set back with this structure is that the house should not be sold within 5 years of its possession, otherwise, the amount that was deducted is added back to your income in the financial year that the house was sold.

Repayment On Stamp Duty and Registration Charges

Under section 80C, a deduction on stamp duty and registration charges can be claimed within a limit of Rs 1.5 lakhs. But can be claimed in the year that the expenses happened.

Under section 80EE

Under Section 80EE there are additional deductions that are allowed for home buyers up to a maximum of Rs 50,000. To claim this deduction, the amount of loan should be Rs 35 lakhs or less and the value of the property should not exceed Rs 50 lakhs. The loan should be sanctioned between the period of 1st April 2016 to 31st March 2017. The individual does not own any other house at the time the loan is granted. Section 80EE was reintroduced effectively from the Financial Year 2016-17 and the earlier deduction was allowed under Sec 80EE and was made available for 2 years, namely the financial year 2013-14 and the financial year 2014-15.

Under section 80EEA

The budget 2019, further introduced an additional deduction. Under Section 80EEA, home buyers are allowed a claim upto a maximum of Rs 1,50,000. The stamp value of the property should not exceed Rs 45 lakhs. The loan should be sanctioned between 1 April 2019 to 31 March 2020. The individual should not own any other house at the time of sanction of the loan. The individual must also not be eligible to claim deductions under section 80EE.

Joint Home Loan

A home loan that is taken jointly, the co-holder of the loan can claim a deduction on interest up to Rs 2 lakh each. Principal repayment in this case under section 80C can be claimed up to Rs 1.5 lakh each individually. They must also be co-owners of the home that the loan is taken on. So a loan taken jointly by a family can help claim a bigger tax benefit. Let’s say you are a co-borrower as well as the co-owner of the house, you can each claim up to the maximum deductible amount under this section.

Understanding these tools will make the home buying a much easier tax. So if you are ready to buy a home, we’ve got your down payment covered.

6 tips to manage home down payment in India

Your down payment is the first step towards your new home. On average, a home down payment is anywhere between 5% to 20% of the value of the property to be purchased with the rest of the money based on housing loans. It is important to plan ahead to make your down payment.

We look at 6 ways to manage your down payments and live life at the same time. Don’t let life come to stand still for the sake of property investment.

Set A Budget & Time Period

This is where research comes into play. Look at the locality you want to buy your house in and determine the property rate. Then map out how much you’ll need for your home down payment. Divide that number by the time you’ll need to save up. You will be able to create a realistic budget to help you graduate from a person who rents a home to a homeowner.

Get a Separate Savings Account

Keeping the money aside will prevent you from tapping into it. It is now possible to put a transfer monthly directly from your checking account without missing any month. Forgetting to keep aside money will not be a problem and saving will be a breeze for you. When it comes to Non- Banking Financial Corporations, SIPs and mutual funds are also great options to invest in, in order to save up for your future down payment.

Manage Monthly Expenses Through Further Research

You may have phone bills, health insurance, car loans or EMIs on your list of payments every month. These will continue to dig deep into your pocket. Looking around for better deals, reduced rates and prices will help manage your down payment. As borrowing rates decrease there will be a difference in EMI rates across banking institutions will also fall. Keep a keen eye on the changing nature of banking institutions.

Keep A Tab On Your Spending

Online transactions have made spending so much easier. With wallets, UPI and online banking driving the present towards a cashless society, it is also difficult to keep a check on spending. Use these tools to keep a check on your expenses. Keep checking your account to highlight those areas where most of your money is spent. Set a budget aside. Limit nice meals to a minimum number of times in a month or take fewer vacations. It may seem a task at first, but this mindfulness will turn into a habit and you will be able to continue such habits for the future with your housing loan as well. This is practice before the EMIs roll in.

Home Buying Schemes In India

Different states have different schemes for houses and homes for first-time homebuyers and investors. For example, the affordable housing scheme is a recent proposal that makes buying and investing in property easier for people in lower-income brackets and mid-income brackets. Their goal is to make homes more affordable for the masses and bridge the demand-supply gap in the real estate world in India.

When You Save An Amount Of Money, Reward Yourself

  • Let’s say your down payment is about Rs 1 Lakh. Every time you save an amount of Rs 25,000, treat yourself to a small lunch or dinner to make saving a milestone to accomplish. So every time you save an amount that gets you closer to your down payment, take a small break. Soon saving will not be as bad as it sounds. It will also make you work hard towards promotions and better opportunities in your career.
  • Look at arranging for your down payment as a financial goal. This will be a great milestone towards starting a life based on savings and working toward your new home. Present generations find it hard to buy homes especially in the recent markets and prefer to rent out rooms and adjust in co-living spaces.
  • The high price, however, is not the sole reason for the ignorance in housing. Credit cards and wallets allow present generations to swipe first and then pay later. With the bills mounting up, home buying is not a reality to many of them. Home buying includes the ability to provide a sum of money before all the home loans come into play. This will make the whole home buying process a little less stressful.

With all that being said, buying a home is now more convenient than it was five years. HomeCapital can assist you with an interest-free down payment scheme to make your home buying process a pleasant one!

How to use the RERA to your advantage

New home buyers in India find it hard to keep up with the developers, real estate agents and all the rules and regulations involved in the process. One policy that has tried to make this process less tedious is the Real Estate Regulatory Authority, 2016 (RERA). This came into force from May 2017 onwards and has brought merit to the sector. The Real estate sector before 2017 was considered an unregulated one especially in the metro cities around India, and with a constant flow of black money.

On the 19th of August 2019, at the National real estate development council convention. The housing and urban affairs secretary Durga Shanker stated that the government may soon consider amendments in the real estate law under RERA. Mishra stated, “Based on the inputs (received at the conference), we have felt that there is a need to bring about many changes in the RERA Act.” He added, “We will soon make relevant amendments in the law, to make it more effective.”

Here is a checklist to understand if RERA is applicable to the property you have purchased?

  • The area of the plot under construction is 500 sq mts or more.
  • The number of apartments under construction are more than 8.
  • The Act does not apply to projects that are under repairs, renovation or redevelopment.
  • The Act is only valid on development of property and not rentals.
  • The Act covers all commercial projects like shops, offices, work spaces and buildings as well as residential properties.

Let’s take a look at the benefits the Act offers to buyers, the developers and the real estate sector.

Right To Information About The Property Through The Online Portal

As an online portal, RERA is a great way to work around every issue regarding your under-construction home. You can request for full layouts, plans, the date of completion and even the competition in your area. The Maharashtra Real Estate Regulatory Authority- MahaRERA website is one of the best RERA state platforms. It exhibits the most number of residential projects registered under it across the country. As per the norms in the Act, all real estate registered projects both commercial and residential must submit all of the registered project details on the RERA website.

Standardized Definition Of Carpet Area

Prices correspond with the carpet area of the property that is being purchased. The RERA act has defined a standardized definition of carpet area. This helps to eliminate any form of manipulation or inflation of property values through wrongful measuring of carpet area. These measurements were devised by each individual builder and acted against the interest of real estate investors. The RERA act thus protects the innocent buyers from any form of misguidance by the developer.

The Implications On Builders And Developers

As per the RERA guidelines, under-construction projects is funded firstly by money obtained from downpayments from home buyers and lenders i.e. banks and NBFCs. The RERA Act has given home buyers the ability to question the developers. If any builder is unable to provide satisfactory information regarding the under-construction project, he can get penalized under the act.

Section 7 states that projects, free from litigation, may form their own society and with the approval of 51 per cent or more of its members, can divest the developer from the project.

Section 8 further states that if the builder is pulled out of the project, the first opportunity of completing the project will be accorded to the society formed by the flat purchasers.

These sections of the RERA Act, help ensure that projects are not delayed and that the builders do not misuse funds, as they can be held responsible for any defect or fault in the construction of the project, in turn protecting the interest of the home buyer.

Keep a track of RERA Approved Real estate Agents

RERA-approved Real estate agents do make the sacred passage of home buying easier and more peaceful. They are aware of the projects that have been approved by the Real estate regulatory authority. They already have an understanding of the shortcomings of the developers and provide a clear picture of issues that the buyer could face and ways to tackle the issues.

All these factors make the Act a clear benefit for any new home buyer. It provides information to any home buyer and also makes it easier to settle on down payments, home loans and future home expenses.

All these factors have been giving homebuyers an assurance about their housing investments. Homebuyers are now heading towards a safer position in the property arena, where their investments now have accountability, which in turn makes it a favourable time to invest.

An additional resource that has come into play to help you own your dream house is down payment assistance.

Let HomeCapital help you commence your home-buying journey.

question

Should you buy property with the current market scenario?

Is it a good idea to buy property with the current market situation? The Price of a house is declining, but is it a good investment? We’ve compared the advantages, the disadvantages and the risks for you, to make a smarter decision.

The advantages

Valuing real estate is easy compared to other assets

At first, looking at others such as the stock market, mutual funds, those that generate cash flow, are good investments compared to real estate. To buy property is generally a great investment option and is easier to manage compared to other assets. It can be a good long-term investment. Though that depends on the growth of its value over time.

Attractive and stable income

If you are planning to buy property as an investment and rent it out to tenants, it will generate cash flow over time. Rents go up with inflation and your EMIs for the home loans remain the same. Eventually, you pay off your loan and the cash flow will increase significantly.

The Repo rate

Recent cuts in the repo rate by the Reserve Bank of India by 35 points to 5.45 percent from 5.75 percent will have a great impact on the interest charged by private banks on home loans. With private banks such as the State bank of India already reducing their interest rates on home loans, buying real estate will be more economical.

The disadvantages

Lack of liquidity

To buy property as an investment means a lack of liquidity. Though it may generate cash flow through tenants, it isn’t a liquid asset and won’t be a strong investment if you are in need of capital. We suggest you invest half your fortune into a property and the rest into movable investments.

An unpredictable asset

It is also an unpredictable asset. With home rates falling in the country, one needs to be smart and take into consideration the idea and need for purchasing real estate. Value of the asset depends on location, the type of property, the age of the building, the state of the home, etc. Thus, when you buy property, you are investing in an unpredictable asset whose value may decrease or increase in the near future.

The risks

The present property scene in India

In urban cities, real estate investments are now cheaper compared to a few years ago. The slight dip in the price of homes and offices is the result of a lack of demand, huge inventories, and regulations. These were mapped out by the latest reports by Knight Frank, the real estate research firm.

Chennai faced a decrease in property prices due to the water shortage. There were few new launches while sales in the past one year suffered. This also led to a fall in inventory.

Kolkata looked at low property prices in the past 6-12 months, but it saw no increase in sales or launches.

While cities like Delhi NCR, Bengaluru, Hyderabad and Mumbai have been able to have some balance in price, launches and sales.

Builders are playing it safe because of the RERA act

The RERA Act has definitely changed the property scene in India. The act as a way of protecting buyers from financial and inversely mental trauma, have placed in the hands of the consumer a platform to question the developers regarding issues like date of completion and possession in the past would be left out by the builder.

The Real Estate (Regulation and Development) Act, 2016, passed by the Indian Parliament, seeks to protect the interests of those who buy property. It also looks to boost investments in the real estate sector.

With RERA and the government’s model code, it aims to create a more fair platform between the seller and the buyer, mostly in a primary real estate market. But this has led builders to reduce risks taken on projects and properties.

Before you buy property, you need to answer a few questions

  1. What is your reason for the purchase?
    1. Do I want to live here?
    2. Will I rent this out?
  2. Can I see this as an asset or a liability?
    1. Does this investment put money in my pocket?
    2. Is it worth the risk?
    3. Will I be able to manage maintenance and taxes?

It is crucial that an individual understands all aspects of an investment before. Take time to map out financial requirements like your down payment, housing loans and personal finances. Keep in mind that you are looking for an asset and not a liability.

Your next steps towards buying a property would involve checking your eligibility and arranging for the required funds, for which we have solutions!

We’d be happy to help you with the down payment for your property investment.

5 tips for Home loans

5 Easy Ways To Manage Your Home Loan

If you’ve taken a Home Loan or plan to take one, here are a couple of tricks up your sleeve to manage it better. Stay ahead of your home loan EMI with these 5 simple tips.

Make repayment a priority

Paying EMIs on time boosts your creditworthiness. It may be difficult at first, but you must remember that a good credit history is an essential part of your financial journey. Future lenders judge your credibility based on your Credit Score. Failure to pay your Home Loan EMIs on time take a major blow on your Credit Score. As a result, the chances of your loan and Credit Card applications getting rejected in future increase significantly.

Bonus EMI Tip to make sure you maintain your creditworthiness: Schedule the EMI close to your salary date. This ensures sufficient funds in your account and minimize chances of default due to lack of funds.

Try not to skip any home loan EMI, maintain your credit score to avoid any penalties from your lender.

Use lump sums to prepay

Paying off your Home Loan as soon as you can is the one thing every homeowner dreams of. So, opting for a high monthly payment can help you reduce the loan tenure. As a result, the total interest that you’re supposed to pay to the lender also goes down. By opting to pay more every month, you reduce your own financial burden. This helps an individual invest in other projects of life like retirement planning, a car loan or even a second home.

Pay an extra EMI every year

Paying an extra EMI every year can be tough initially. But it helps put to rest your home loan. There is usually no prepayment charge for floating rate term loans. By paying an extra EMI every year, you can reduce your overall outstanding principal amount. Lenders are unlikely to complain if you repay a little extra every year. Over a 10-12 year period you find your loan paid off soon, erasing the stress of the loan.

Switch to a lower interest rate

Be aware of market fluctuations and updated with reduced loan interest rates available by different banks. Switching to a lower interest rate than your existing one will shave a few years off your loan.

P.S. – But be careful. Don’t jump too many times at low-interest rate differences. If you’re getting a good dip in the rate of interest, you should definitely consider switching. But in case the difference isn’t much, it might be a bad idea to opt for that switch.

Get the math right

There are tools available online by banks and NBFCs that help you determine your financials when you repay a Home loan. For example: The Home Loan EMI calculator gives a clear understanding of monthly EMIs when you enter the details of your loan amount, tenure, interest rate, and processing fee calculation.

Loan amount: You have decided on a property and are aware of its price. After you have acquired your down payment, you will have a better idea of what loan amount you need to apply for. You then have an idea of the amount of your EMI’s.

Tenure Of Home Loan: Decided the loan amount, choose the tenure you would like to opt for, starting from 6 months to 30 years. Keep in mind, the longer the tenure of your loan, the higher the total amount to be paid back will be.

Interest Rate And Processing Fee: The next thing you need to enter is the interest rate offered by your preferred bank. Generally, banks have a 2% processing fee on Home Loans which needs to be accounted for as well when calculating your monthly EMI.

Prepayment Option: Some people prefer to prepay a certain amount of their loan. The Home Loan EMI calculator gives you an option to specify whether you wish to prepay your loan amount. Your monthly Home Loan EMI amount is calculated based on whether you choose a Yes or No on the prepayment option.

The Home Loan EMI calculator is a simple, fast and reliable source of information to calculate your Home Loan EMI’s.

Do A Quick Rain Check Before You Apply For A Loan For A Quicker Procedure

Step 1: You can also use our loan calculators to check your eligibility and you’ll get an assurance of your current capacity.

Step 2: Let HomeCapital take care of your down payment requirements

buying your first home

Simplify your approach to buying your first home

Buying your first home may seem like a tough task. But with a few simple guidelines and a little help, you can breeze through the process without much stress.

Here are a few tips to consider before or during the journey of buying your first house.

Map out your reasons for the home

As much as the excitement of buying a new home can thrill a person, you need to sit down and wrap your head around the basic questions of buying the home.

Are you looking to stay in the home? / is it just an investment?

This makes it easier to figure out your requirements of the home. This can range from ‘the number of rooms in the house’ to amenities provided. It helps you focus on a property that could be a long term investment. This also helps you pick between a second sale house and one that is under construction.

Check your finances

There are three financial points that influence the house you plan on buying.

First, save up for your down payment. This is the minimum amount needed to be paid at the time of purchase of a home. It ranges from at least 5 percent to 20 percent of the price of the property you are looking at. The more you set aside for down payment, the lower the amount needed to be borrowed through loans and mortgages.

Keep a track of your credit score. This score makes it easier to get approved for a housing loan.

Finally, estimate the total cost of the property purchased. This includes parking charges, stamp duty, registration charges, new furniture / furnishings for the future.

It isn’t just about what you can afford now but also about the future.

Ask the experts

Use skilled professionals to help make the journey easier. You may need to spend slightly more but is useful to understand the different parts that come into buying a new home. There could be unpaid property taxes, understanding the usable area in a home; all these factors can be avoided with the help of professionals.

Real estate agents help understand the different prices in a locality and which locality is best suited for your needs. Invest time in meeting with your local banking agents to help pick out loans that are better suited to your needs. Make sure to run the legal paperwork by a lawyer. This will help protect your interests in the process. But don’t forget to do your homework first.

Explore the neighbourhood

It is crucial to survey the neighbourhood. For working professionals, it is important to understand the commute to work. How close is the nearby train station? Can one walk to work? For a family, the need for a good school in the neighbourhood, a nearby hospital, a supermarket and a cinema are top priority when it comes to the location of the house.

It is also important to find out about the future development of the neighbourhood.

If you are planning on investing in a rental property, look for localities with high-rent or highly populated areas. Choose wisely and your home may be your best investment.

Keep your checklist ready and secure your loan

Once you have checked everything off your list, it is now time to secure the best loan for you. Think about the fact that a short term loan often has a lowered interest rate than a long term one, but a larger EMI. It is ultimately your decision. You have to decide how much time you need to repay your debt, within a given span of time.

The best way to start the process for finding a home loan in India, best suited to your needs, is to check for the lowest home loan interest rate. Look at the additional fees and charges such as the processing fees and prepayment charges. Make sure you pass the eligibility criteria. Check the other offers provided by the lender. These include prepayment facility, customized insurance scheme, online account access, etc and different loan repayment options.

Remember that banks, housing finance companies and other lending institutions calculate home loan eligibility on the basis of various factors like age, income, credit score, property value and work experience.

The next step is applying for the right house insurance. This will protect your property and ultimately makes the process of buying easy.

Keep looking for the best

Always remember to keep looking until you find a home better suited to your needs. At times you may get carried away with fancy furnishing and grand views and landscapes. Remember that these may increase the maintenance of the home. It is important to think minimal, not extravagant.

Keep in mind that the first house you like may not always be the answer to your prayers.

For homes that are under construction, visit ready buildings by the builder for a clear understanding of what you can expect.

Resale sale Value is an important aspect to consider before you plan on investing in a property. Most property buyers focus solely on prime locations or the budget of the property. If you choose the wrong estate or location, it is possible that your future sales price will always be less than the other homes around it.

After you have bought your dream home remember to fill rooms with basic furniture and build up from there. This helps protect finances and keeps you stable with your loans and mortgages.

Conclusion

These simple but important points can help make the process simple and as smooth as possible. Now the question that arises next would involve down payment and your current savings account.

You are probably waiting for the right time when your savings account is ripe with the exact down payment budget you had set for your dream house, but here’s the truth – You might take years until you reach that ‘right time’ and probably end up settling for less.

The good news is, you now have an option where your down payment is taken care of. Don’t believe us? Check out the HomeCapital Program.