An exclusive guide for the first time home buyers in India

An exclusive guide for first time home buyers in India

If you are looking to buy your first-ever home, then we would like to congratulate you! It is because you are thinking to reach one of the key milestones in your life.

The construction or the purchasing of the first home is indeed a matter that is close to the heart of Indians.

While the first-ever home is unquestionably a bundle of happiness, it is also a big-ticket investment. Hence, you need to be extra cautious and be double sure of making the right choice to reap long-term rewards.

Hence, before you set your first step to buying your first home, it would be good to go through the home buying guide.

It will help you make the right decisions and approach them smartly without hitting roadblocks.

All set to begin with us? Let’s know more in this post!

What are your requirements?

When you venture out to buy your first home, you will find no shortage of attractive real estate properties with stunning features. Most of the leading builders will lure you with their glossy brochures and offerings that may excite you to go for it. But you must focus on opting for a property that makes sense for your current and future needs. Hence, ask yourself why you are buying a home – is it for self-use or investment? Based on your needs, you can then break down your needs on the following elements:

Size of the home

If it is for your family, then you should assess if it can suffice the current and future needs. If it is for a small family, then having an extra room for guests may be a good option. Investing in a home for renting and other purposes should not be too big or too small.

You should also look for amenities that your new house is offering – it is up to decide for a home that falls under budget, mid-level and luxury levels.

Location preferences

Many people buy an affordable home, but it is too far from city limits that commuting between it becomes a daunting task. Hence, you should always buy a home in a location that provides you with all basics such as such:

Proximity to ATMs, supermarkets, Parks, Public Transport channels, Hospitals, Schools, Colleges and Railway Stations and Airport must be preferred.

Living in the heart of the city will help you access every service without wasting your precious time in commuting.

What about home possession?

Some builders may take time to give you possession of your home. Hence, you need to be sure of that before going with the purchase. RERA rules can now help you get the home possession on time. But the recent COVID-19 outbreak may have its effects and after-effects on the time when you will get the ownership of your house.

Determine your budget for the home

The next thing is being aware of the cost that you will need to bear for the construction or the purchase of the new home. You may have some savings that you may want to use as well. Hence, you will need to calculate an amount that will suffice for your new home. Based on your home loan eligibility, you can get an amount ranging between Rs.20 lakh and Rs.3.5 crore. You can check out the home loan eligibility by using the home loan eligibility calculator available on a lender’s website for free.

Know the resale value and rental rates in the area

Your home is an investment that you can liquidate later to meet many needs. Hence, it is significant to know how much resale value your new house will get. The same is true for buyers who are doing that for rental purposes. You can consult a real estate property expert to help you with this. 

Buy your home from a known builder

Your home is a big investment, and you can’t take it lightly. Hence, you should ensure to buy it only from a reputed builder. Before finalizing a property dealer, you must know about its history and performance records. You can get it online on real estate review sites. Once you are satisfied, only then you should go ahead with the purchase. It will also help you get the loan approval for a new home or construction quickly. It is because lenders are aware that a builder is reputable enough or not.

Approach a builder with a pre-approved home loan offer

If you have a robust CIBIL Score, repayment and employment history, then lenders provide you with pre-approved loan offers. It helps you avoid many complexities of the loan and fasten the entire process. Hence, you can check out if a lender is offering you a pre-approved home loan offer or not. If yes, then you can approach your builder and negotiate for a lower price for your new home. When they know that you already have a loan offer, they may not want to lose a customer. And they may oblige with the reduced home price. 

Parking is a must

The new home that you want to buy must have parking space for your 2 or 4 wheeler. Many times, there is no or little space for this. And it may hassle you later. Ensure that your builder is offering parking space for your vehicles, along with one for guest vehicles.  

What about the AMC of the property?

If you are buying a new home, then you will be asked to pay the Annual Maintenance Charges. It will be an obligation on your overall outlays. Such charges are levied towards the upkeep of your home and the society where you live. If there are some issues, then this money is utilized for the same. Hence, you should be well informed about this charge before buying a new home. 

Choose a suitable lender

Lenders may attract you with many offers. But you should also see if they are offering a lower rate of interest, larger loan amount and tenor and other benefits. The best thing to do that will be landing on a third-party website and compare all offers.

Know about extra costs along with EMIs

Other than home loan EMIs that you will need to pay, you may also need to manage some extra costs. It may be about foreclosure, prepayments, EMI defaults and late payment charges. Thus, you should ensure to know it beforehand to avoid surprises later.

Availing property insurance is a must

You may protect your property against several damages by availing proper insurance for it. It will cover you for any legal issues, the problem with its title, and some degree of damages and beyond. The premiums are well within your budget, and it will relax you for sure.

Try to pay a large portion as the down payment

No lender will finance the entire cost of your new home. And the maximum that it will cover will be under 80-90%. The remaining needs to be arranged on your own. And it is what is known as the down payment. The thumb rule says that you need to put at least 20% of the cost of the home as a down payment. It will help you pay interest + EMIs on the remaining 80%. But if you can pay more, then you can reduce the charges further.

Make way for loan approval and EMIs

Taking a loan means paying EMIs, and it will affect your monthly outlays. Hence, you should readjust your expenses so that you can pay timely EMIs. And your focus should also be on getting the loan approval. Having a CIBIL Score of 750+, along with consistent repayment and employment history, can help you. Also, having a lower debt to income ratio can help in getting approval for a large amount. If you have ongoing debts, then you should clear it off without applying for a home loan. Why? It will convince your lender to sanction a considerable loan amount.      

Go for home loan balance transfer facility

If you an ongoing home loan borrower and want to reduce the loan burden, then you can switch to a new lender offering lower rates. It may help you pay reduced EMIs and save money. But your existing lender may charge 1% of the remaining balance as the processing charge to facilitate this. Thus, you should see if you can save when going for balance transfer and not. Leading lenders can also offer you a top-up loan to cover your other needs when you opt for home loan refinance. It may come with a tenor as that of your home loan and help you pay smaller EMIs.

Opt for a home loan via the Pradhan Mantri Awas Yojana

The Pradhan Mantri Awas Yojana (PMAY) lets you avail the interest subsidy of up to 6.5% amounting to Rs.2.67 lakh. It can be availed on home loans of up to Rs.12 lakh. You can apply for a higher amount, but the rest of the amount will not give you subsidy benefits on interest portion. If you are earning between Rs.6 lakh and Rs.18 lakh per year, then you go for PMAY home loan and save on EMIs. You only need to be aged between 24 and 60 years, along with a valid Aadhaar number to begin applying. Another crucial eligibility norm is that it should be your family’s first pucca home in India. Here, a family consists of husband, wife, unmarried sons and daughters.

You can calculate the exact subsidy on the interest portion of your PMAY home loan by using the PMAY Subsidy Calculator. It can also help you with precise EMI that you will pay after subsidy deductions.

You are now aware of the home loan guide that will surely help you approach, manage and repay your home loan with much confidence.

You can apply for housing finance online on a lender’s website or loan app and save time and efforts during the ongoing COVID-19 lockdown.