Find out how much is the carpet area. The more the carpet area, the better. However, if carpet area is too high, it would compromise on the common area infrastructure. A legal due diligence is vital – the risk is higher for land purchases.Go for a home loan even if you do not need one – the bank does its own legal due diligence. However, do your own diligence as well since you still need to repay the loan even if the title of the property is bad
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A few Tips for a home buyer
Real Estate for Self Occupation (Buying/Constructing a house)
Real Estate as an Investment
Rent Vs Buy – When is Renting Better?
Housing Loans:- Fixed and floating interest
Documents required for loans
A few Tips for a home buyer
Find out how much is the carpet area. The more the carpet area, the better. However, if carpet area is too high, it would compromise on the common area infrastructure.
A legal due diligence is vital – the risk is higher for land purchases.
Go for a home loan even if you do not need one – the bank does its own legal due diligence. However, do your own diligence as well since you still need to repay the loan even if the title of the property is bad.
The buying decision for a house for self occupation is different from a house to be rented out. Buying a house for own use has emotional considerations like interiors, location, etc while buying a house for renting out would be more of a financial decision. (what is the rent to Purchase Price of House).
While purchasing apartments, find out the all inclusive cost – including car park, deposits for water & electricity, Registration fee, maintenance fee, etc.
While constructing a house always keep a reasonable buffer for over runs and also for estimate cost for furniture and interiors.
Real Estate prices are not a one way street. The prices could go down if the there is more supply of real estate Vs demand. However, in the long term, Real Estate normally keeps pace with inflation and is hence a good hedge against inflation.
Real Estate is not a liquid investment and has high transaction costs. Hence, it is not wise to have all your investments in real estate. Look at diversification across other assets as well.
If a deal sounds too good to be true – watch out.
A floating rate loan is better if the interest rates are expected to go down, while a fixed rate is better if interest rates are expected to go up. However, fixed interest rates are likely to have a slightly higher rate since the interest rate risk is with the bank
Real Estate for Self Occupation (Buying/Constructing a house)
A “Heart” Decision– goes beyond financial aspects
Primary Decision Drivers - Children, Parents, Wife & Myself
Linked to the Past/Present
Location, Size, Budget
How much can I afford?
Its an “emotional” transaction
Is a rented house better?
Tax benefits of purchase of house
Real Estate as an Investment
Can give good high regular income (rent) and as also capital appreciation
In the long term, Real Estate normally keeps pace with inflation and is hence a good hedge against inflation
Has low Volatility and does not require continuous price monitoring
Is Tangible and if need be can be put to own use
As most residential property buyers today are end-customers backed by home loans, real estate will tend to show resistance to any downward revision in prices
Is relatively “illiquid” - For the same reason shows resistance to downward price pressure
Has relatively high maintenance costs - but is inflationary & tax breaks on maintenance, regular income offset the cost. Moreover is a Tangible asset
Transaction costs are high making real estate less volatile and more long term investment
Every property is unique and more difficult to sell, but real estate Need is also one of the basic human need and will not go out of fashion
Requires Legal Due-diligence – but is better than leaving “financial destiny” in someone else hand
Rent Vs Buy – When is Renting Better?
When Short Term is more important than Long/Medium term Eg. Instability in Location & Career
Compromising “Need” for “Adorability”
Present Convenience should not drive “Home” buying Eg. Nearness to the “Present” place of work
Don’t buy a “home” for tax sops only. Tax Sops can be one of the decision drivers not the only
Driver to buy a “Home”
How much can I afford?
Its an “emotional” transaction
Is a rented house better?
Tax benefits of purchase of house
Housing Loans: Fixed and floating interest
Fixed interest rate: In fixed rate plans, the rate of interest remains the same through the tenure of the plan.
Flexible interest Rate: In the flexible or floating rate plan, the interest rate is pegged to the banks prime lending rate (PLR), and varies with fluctuations in the PLR. If you have a floating rate loan then the interest rate would be mentioned as PLR+0.5%, which means that if the PLR is 7%, then the interest rate for the loan would be 7.5%. As and when the PLR changes, the interest rate would automatically change for the loan. Since the risk of such fluctuations is borne by the borrower, flexible rate plans quote lower interest rates as compared with fixed rate plans
Documents required for loans
There are certain sets of documents that need to be submitted at the time of application. Please note that these are illustrative and banks may ask for additional documents based on their policies
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