The macroeconomic conditions are favourable to first-time home buyers. There’s plenty of unsold inventory, home loan interest rates have lowered recently, the government is offering tax incentives on loan repayments and affordable housing, and RERA would also come into play shortly.
Assuming that you have shortlisted your first property, you may be wondering how to go about completing your purchase. Here’s a quick checklist for you to go through.
Establishing A Property’s Credentials
Once you’ve found your perfect home and have decided to purchase it, you must first establish the property’s credentials. Buying a property means going through tonnes of paperwork in order to establish its legality, titles, liens, building plans, occupation permit, etc. It would be ideal to employ a lawyer or a property expert to ascertain that the paperwork is in order, and that it would be safe to invest in this property.
Establishing Cost of Repairs, Refurbishing, Furnishing
You should make a full survey of the property with the aid of experts such as electrician, plumber, and civil engineer. This would help you locate any areas of concern such as structural repairs, or repairs with the wiring and plumbing, which would inflate your cost of acquisition. This would save you from any unpleasant surprises when you move into the house. You may also involve a contractor to understand the costs of repainting and furnishing the house as per your needs.
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Clearing The Property’s Dues
The current owner of the house may have some dues. This could include property taxes, utilities bills, maintenance fees, pending loans, etc. You must ascertain what these dues are and they can be dealt with between you and the current owner.
Signing & Registering The Agreement
You must get into a sale agreement with the property’s current owner or property developer. The agreement would outline the terms of the purchase such as timeline, price, size of down payment, details of the parties involved, etc. This agreement must be registered.
Raising The Down Payment
Banks and lending institutions may fund between 75-90% of the property cost by giving you a home loan. The rest, including costs of registration and stamp duty, repairs, furnishing, etc. will have to be borne by you. The full cost of your property purchase may easily be 110-120% of the original property price. If the bank provides 80%, you’ll still need to raise the other 20-30% from your own pocket. Taking another loan for the down payment may not be a good idea, since having to pay multiple EMIs will stretch your finances thin. You should ideally have this amount ready if you are to buy this property.
Check Your Loan Eligibility
Approach a bank or a home finance company to ascertain your loan eligibility. They will ask for details of your income, employment, income tax returns, your credit history, and any other loans you are repaying. Using some of these details, they will ascertain your EMI paying capacity. This would decide the size of the loan you are eligible for.
If your intention is to live in the house you are purchasing, you may want to ask for vacant possession of the property. The current owner must ask any tenants or occupants to vacate the property. You can include this condition in your sale agreement. Doing this would make it easier for you to move in. If not, you will have to negotiate the terms of vacating with the current occupant of the house.
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Registration of Sale Deed
The sale agreement must be registered with the local municipal office and stamp duty must be paid. The costs of registration and duty varies across states, but you can expect it to be in the region of 4-6% of the property price.
Transfers & NOCs
Once the property has been purchased, you must initiate the transfer of utilities such as electricity, water connection, etc. You must also ascertain if you need any NOC from any party, such as the resident welfare association of the property in which your house is.
(The author is CEO, BankBazaar.com)