Paperwork is the last thing you think of when you look at a
beautiful new apartment. Eyes full of dreams; you imagine your bed against the
far wall of the bedroom, wonder how an overstuffed sofa might look in that
airy, spacious living room and think of how much play area your little one
might enjoy in her tiny, colourful bedroom. However, purchasing a house, just
like purchasing any other asset, comes with more than its fair share of
paperwork and dreary responsibility.
Understandably then, this drives the typical first-time home
buyer to be either too careful or quite careless. While it is natural to be
jittery about spending a lifetime's worth of savings, it is certainly not
forgiveable to waste a golden opportunity to buy the right property just
because you took too long to arrive at a decision. The idea is to strike a
balance, cut the clutter and focus only on the critical, important things, such
as:
1. Location: Nothing is more important than location. Before
you even consider a certain property for purchase, check out whether the
building or complex is located close to important amenities such as schools,
hospitals, malls, etc. Even if you have to go further due to budget
constraints, figure out all about transportation options, so that your family
is not inconvenienced on a daily basis. The jackpot, of course, is if you can
clinch a place close to your place of work. Imagine coming home for a quick
lunch on a workday and getting home within 15-20 minutes after your day's work
is done.
2. Price, budget and benchmarking: What is your budget?
Before you step into the market, find out your net worth and your loan
eligibility. Don't forget to deduct the cost of any other loans and liabilities
you are still shouldering. The amount that remains is your final, real budget.
However, this does not mean that the cost of the house can be the same as this
figure. When you go out to look at properties, add another 11-12 per cent to
the quoted cost. This will take care of additional expenses such as stamp duty,
registration costs, VAT, brokerage commission, loan processing fee, et al. Once
you have shortlisted a property, call a few brokers/agents in that area and
enquire about the typical cost of a similar-sized flat in that locality. The
amount they quote should not vary by more than 5 to 10 per cent against the
amount that you are paying for your new house.
3. Loan eligibility and duration: With the salary your
spouse and you make, you might be eligible for a loan worth a crore. However,
should you really take on that big a loan? The answer varies as per your
mindset. Some people argue that you should max out a loan, since it enables you
to save tax from day one. Besides, as you grow in your career, so will your
income, which will enable you to pay off the loan quicker. Nevertheless, the
other side of the coin is - what if your situation changes? What if your spouse
cannot or does not wish to continue his/her career? What if there is an
unforeseen expense? The idea is to keep enough buffer to carry you through the
lean periods as well. So, do take out a term life insurance worth as much as
the cost of your house. It is simply a wise way to guarantee that your home and
family are secure, in the face of any eventuality.
4. Life stage: Two years ago, Bandra-based Rakesh tied the
knot with Malad-based Sakshi. Since their homes were small, the couple had to
find accommodation on their own. Not wishing to move away from the western
suburbs, they maxed out their loans to purchase a tiny one-bedroom apartment in
Khar. Soon after, they had a baby and due to medical issues, Sakshi had to give
up her career to take care of their child. Today, Rakesh is the only
bread-winner, taking care of the monthly expenses, as he pays off their loan at
a total EMI of Rs 95,000 per month. One can only imagine the pressure of being
in this situation. So, before you buy a house, do consider your own life stage
and your future in your chosen career.
5. Estimated maintenance costs: Figure out how much it will
cost to live in this particular location, in this particular building. Some
societies charge as much as Rs 10,000-15,000 for maintenance. If the house is
far from the city centre, you might pay extra for rickshaw fare or other
transportation.
6. Rent or buy, based on your career prospects: If your job
makes you move cities/countries every few years, it might make more sense to
purchase a house in the city where your family or relatives live and to take a
place on rent wherever you might be working at the moment. This way, your
property purchase brings you returns in the form of rent and/or price rise,
whenever you choose to sell it and if you have a family nearby, they can be
roped in to monitor or conduct occasional checks on your property.
7. Leave paperwork to the professionals: For your very first
purchase, see if you'd like to get an experienced lawyer or real estate agent
to look over the documents and make sure that all is in place. It's just an
additional buffer against making beginners' mistakes.
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