House Buying Essentials

Buying a home is a one-time affair. It is one of the most wonderful moments in one’s life because it is indeed a great feeling to have a property that one can call it as their sweet home. People mostly buy homes as it is their dream and passion to do so and not just for the sake of investing in some real estate or to cash-in on booming prices. Given the importance of this event, it is highly recommended that buyers must ensure that all prerequisites are taken care of before they proceed to implement their big decision.

While buying a house, some of the most important points that the buyer has to check are whether there are ample basic necessities nearby like schools, hospitals, supermarkets, transport facilities etc. In most of the cases, advertisements about the property make tall promises about the features, therefore, it is highly recommended that the buyer must visit the site in person to actually check if the advertisements are genuine. Some additional features like furnished accommodation, easy and free township admissions etc. are huge bonuses as they help the buyers to get better value for their money. If the property belongs to a society, then all ‘no objection certificates’ (NOC) and society rules and regulations must be satisfied.

Some of the important documents that must be cross-checked by the buyers at the time of buying their home are the authorisation and go-ahead certificates from respective Municipal corporations, title report of solicitor, plan copy of the property, title certificate, sale agreement in accordance with the Municipal Corporation’s rules etc. Buyers must be shrewd to look out for any hidden costs charged by the seller. The actual cost of the property will include cost of registration, stamp duty etc.

A buyer must ensure that in order to get possession of his house on time and for the house to be of great quality of construction, he must approach a seller who has a long standing in the real estate market and has carved a name for his own. However, the buyer must anticipate a few months delay from the time when possession was promised to them. It would help if the buyer was staying in a rented accommodation, especially when his new home is taking time to be delivered to him.

The next important factor for the buyer to consider is where to take the home loan from. Considerable time and effort should be invested in this analysis. A financial institution that offers low rates of interest, higher loan amount and less foreclosure charges should be chosen. The loan amount should be decided on the basis of one’s affordability, income and savings capacity.

Buyers should operate with clear financial slate. A home loan would be quite a big burden to take, hence it only makes sense to clear off all pending debts and commitments before choosing for a home loan. One should try to save a major part of one’s income. At the time of going in for home loan when the buyer is able to pay a huge sum as down payment from his savings, then the loan can be taken only for the remaining amount, resulting in low interest rates. Until the tenure of home loan is complete, buyers should refrain from getting into any other commitments like buying a vehicle.

Glossary used in Home Loan

EMI – EMI stands for Equated Monthly Instalment. This is the amount that the buyer pays his home loan provider every month until the tenure of the loan is complete. This equal monthly instalment depends on the loan amount, rate of interest and the term for which the loan is taken. When the loan amount is 1 lakh INR, tenure of loan is 20 years, rate of interest is 10.25% and the loan provider says at the following conditions, EMI is 982 INR per lakh, it means that the monthly instalment that the buyer needs to pay the loan provider for the next 20 years is 982 INR.

LTV – This refers to Loan to Value Ratio. This refers to the percentage of loan that the buyer is eligible for applying on the value of property. Suppose LTV is 85%, it means that the buyer is eligible to apply for 85% of the property’s value.

FIOR – This stands for Fixed Income Obligation Ratio. This is the percentage that is calculated by loan providers to check how much EMI the buyer can pay for the loan taken by him. This EMI is calculated after considering all the other financial obligations that the buyer has, in terms of loans already taken before the home loan, EMIs paid for them etc.