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How to buy your dream house? Some tips before buying house

July 14, 2010  by: meensatwork  Points: 25   Category: Others  Earning $1.60   Views: 2501

This article lists important points to be considered before buying a house. Some important tips you should care before buying any properties.


(Image source:smartwayinsureconsultant.com/images/dream%20house.jpg)

Do you like to own a house?The answer will be definitely yes.Who does not want to own your house?It is almost everyone's dream to own a house.Whether it is big or small house, depends on the capacity of the person. Many people buy houses these days to avoid income tax.

It is not easy to buy a house.There are so many things involved. There is one saying in Tamil "Veetai Katti Par.Kalyanthai Panni Par". It means "Try to construct a house or Make a marriage". Both are very important steps in our life and we have to take every step very carefully.This article lists some points to be considered before buying a house which i have gathered,experienced and learnt from my friends and relatives when we bought a house.

Finalise the Budget

(Image source:economicpopulist.org/files/images/money_tree02.jpg,nhhometeam.com/mortgages/DebttoIncome.jpg)

This is the and foremost step to be taken in buying a house. First one should think how much he can afford for buying a house? To decide this, take a paper and note down all the calculations given below.

1. Total amount in your savings ( Fixed Deposit / Savings etc )
2. Value of the property you already own ( In case, if you are selling or pledging a property, this details are needed )
3. If other than you, some persons are earning in your family and they are willing to
contribute some amount, then include that amount.
4. Jewellary - If you wish to pledge jewellary and use the money for your house,then
include the value of the jewels.

1. Total Monthly Expenses of your family ( List all the fixed expenses like groceries, telephone bills,EB bills, Educational expenses,medical expenses etc ).
2. Miscellaneous Expenses ( Put some amout for this category as we may have some
unexpected expenses )
3. If you are paying for some debt, then include that amount also here.

Based on the above two list, you will arrive at a figure which is left in your hands
every month. Take 75% of the amount as your EMI when you apply for a loan. For example, if the savings is Rs. 25,000 then you can take a loan up to 25 lakhs provided your salary meets the criteria set by the loan. Now the first step is completed and the budget is decided.

Type of house

(Image source:hafsabuilders.in/images/kazura-injampakkam-big.jpg,gulf-daily-news.com/source/xxviii/001/images/bbb.jpg)

Now you have to choose whether you are going to buy individual house or a multi storey apartment.Both has its own merits and demerits.

Independent House:
The main advantage of independent house is that you are the owner of the land. The rate for the land will be appreciated much in future.The major drawback is there will be no association or similar to that and you have to face and solve each problem in your house.

The main advantage of an apartment is that security or neigbours will be available to help in case of emergency. There will be an association which will handle the problems and reduce the burden on you. The disadvantage is that you own only a small portion of the land even though the price of the apartment may appreciate in future.

You can make this decision after discussing with your family members. Also decide the number of bed rooms ( 2 or 3 ) you need.

Decide the locality

(Image source:mapsofindia.com/maps/tamilnadu/chennai-map.gif)

Find out the localities where you can get house within your budget.If you are buying a house for investment purpose, then you can choose a locality near some IT or other companies so that you can get good rent for your house. If you are going to shift to the house by yourself, then choose a location near to your office or your wife's office or your children's school whichever is applicable.

Searching the house

(Image source:real-estate-cary.com/Images/house_serch_lt.jpg)

There are many options available today to search a house.My suggestion is not to go for house brokers as you have to give commission for them which is usually 1 to 3% of the total value of the house. The other options are:
1. Advertisements in Newspapers
2. By getting information from your friends or relatives
3. Real estate websites like 99acres.com,sulekha.com,magicbricks.com etc
4. Advertisements in your office intranet.(Most of the IT companies have this facility).
5. Posting advertisements about your requirement in free classifieds or in websites.

Select the builder

(Image source:logodesignxperts.com/images/logos/Construction_logos/Home_Builders_Logo.jpg)

If you are going for a multi storey apartment, then find out the reputed builders in your city and select one from them. If you are going for an indpendent house or small apartment and the builder is local to the area, then find out the other projects successfully completed by the builder and have a look at them.

Check list for the house

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If you are going to have a look at a multi storey apartment under construction or going to start construction then enquire the following details.
1.Rate per sq.ft
2.Number of Bed rooms
3.Number of Bath rooms
4.Car parking facility
5. Registration charges
6. Additional charges ( for EB,Car parking,Registration etc)
7. Completion Date
8. Amenities provided ( like shopping mall,school etc)
9. Proximity to Essential things like railway station,bus stop, hospital etc.
10. Water facilities
11. Drainage facilities

Many companies will put fancy numbers on their advertisments and later add so many hidden charges.It is better to know all that in the initial stage itself.

If you are going to have a look at a already finished house,then points 7 and 8 may not
be applicable.In addition to the above points,add these also given below:
1.Age of the house
2.Furnishing of the house (Semi furnished,Fully furnished or Unfurnished)
3.If you are going to buy from the owner,then ask the reason for selling the house.

Visit to the house

(Image source:askoki.co.uk/myimagelibrary/images/full/ASKOKI_site_visit_1.jpg)

Now you have gathered all details and now it is time to make a visit to the house.If the
house is under construction or yet to start, you cannot observe many things. But if it is
a completely built house, then check the below things.

1. Check the approach road to the house whether it is good or bad.Some houses will not
have proper roads at all or too narrow and it will be difficult for a car to go through
2. Check what is present on four corners of the house. If majority of the corners are vacant lands, then it will be less safe. Also vacant lands are the source for dumping waste in our country and you can get many insects.
3. Drink the water in your house.If possible take a sample of the water and measure its TDS(Level of purity).
4. Check the sunlight in the house.Some houses will be very dark so that you have to use
lights in day also.
5. Check if there are any severe cracks in the house.
6. Check if has got all the facilities you need.
7. Check with the neighbours of the house about the area and how the roads will look during reason as many roads will be flooded with water during rain and it will be difficult for transportation.
8. Check whether the area is safe to live.Some areas will have too many incidents of burglaries.
9. Enquire about the electricity supply in that area.Some areas will have severe power cuts and low voltage problems always.
9. If you are satisfied with all the points above, then get a civil engineer to have a look
at the construction of the house.


(Image source:digitaldocs.co.uk/8.jpg)

So you have chosen a house. The last and important step before finalising the house is
to verify its documents with the help of a lawyer.The list of documents that needs to
be checked are

1. Parent document of the house
2. Building plan
3. Approval of the plan by CMDA or other local bodies
4. NOC (No Objection Certificate) from the corporation or other local government office.
5. Encumberance certificate - This documents list all the previous registrations/purchases done on this property. This certificate for the past 15 years should be checked. It can be get by applying online also.
6. Receipts of tax payments like water tax etc.Some builders would not have paid this and when you buy this house, you will be forced to pay for the whole period.

If your lawyer checks these documents and gives approval, then you can go to the next

Housing Loan

(Image source:myloan24x7.com/images/house.gif)

Now everything is set for you to own a house and the final step is to apply a housing loan. For that you have to choose the following things:
1. Bank
2. Interest (Fixed/Floating)
3. Tenure (No of years for loan repayment)

Find out bank which offers maximum tenure and low interest rates. When it comes to housing loans, it is better to go for government banks as they will reduce interest rate immediately if the government slashes the interest rate.Private banks will take some time to reduce the interest rates.

Coming to the interest rates,there are basically two options namely fixed and floating.As the name indicates, fixed means the interest rate is fixed through out the tenure of repayment. Fixed interest is between 14 to 15% in most of the banks.Floating means it is not constant and it may increase or decrease depending on the economic and market trends. Now most banks offer 8 to 8.25% interest rates. It is better to go for floating as there is a chance of decrease in future and it is less than the fixed rate.

Most banks offer the loan repayment tenure for 10,15 or 20 years. Usually for NRIs it is less than 10 years.The best option is the longest tenure as the EMI will be less compared to short tenures. It is not necessary that we have to pay EMI for 20 years as the tenure is 20 years. Many banks offer bulk repayment facilities where we can repay few lakhs and the EMI will be reduced.Some banks offer bulk repayment any time during the tenure will some have restrictions like bulk repayment is possible only after 3 years.When the bank offical visits you for offering loan, find out the maximum information and clarify all the doubts even it is silly. Because here also many persons will not tell important details unless we ask them and they will try to sign the application from us.

SBI,LIC housing finance and HDFC are good banks for getting housing loan. Also housing principal and EMI(upto Rs.1,50,000 per annum) are exempted from income tax.

If i have missed any important point,please share it in comments.

Author: Kumaresh        
Posted Date: 07/15/2010    Points:2    

What a article about buying dream house. Thanks Meean for writing it. These tips are very useful who is intended to buy a house. I also has to buy but not now .. may be in future.
You have presented topic very nicely. Good work.

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