The
first step in the home buying is the identification and analysis of
what you require from a home. It is important that you zone in on
the absolute essentials you need and segregate them from what you
would want to have from your home and, finally what would be good to
have in your home. The home buying decision becomes considerably
easier if you create these three categories to start with
:
Compulsory Requirements : These are
all the features that must be absolutely present in the home you
are planning to buy.
Preferred Requirements : These are
all the features that are not absolutely necessary but which you
would like to have.
Optional Requirements : These are
all the features that would be an additional bonus in the home but
which you can do without.
Estimate of Funds
The next step is to estimate and
establish the funds at your disposal. Given the variance in property
prices today across most places, it becomes imperative to calculate
in advance the total funding capability you have for the proposed
purchase of your home and then arrive at a budget. The funds may be
available from various sources : your personal savings, Housing
Finance Institutions, your Provident Fund, Employer Loans or
borrowings from friends or relatives.
In case, you find that
you will require a loan from a Housing Finance Institution, a good
idea would be to get a pre-approval sanction from one who will
pre-qualify you for a mortgage loan. This will give you a fair idea
of how much money you actually qualify for and can actually borrow
when you apply for a real mortgage. Additionally, some of the issues
and procedures associated with the actual loan application may get
resolved during this pre-approval phase.
Estimate of Costs
One important aspect to bear in mind
while budgeting for your purchase is that the price you pay for your
apartment is always less than your total outgo in financial terms.
Any agreement for sale of property attracts stamp duty of anywhere
between 6(six)% to 12(twelve)% of the sale value of the apartment -
variable across different states of India and dependant on the sale
value of the apartment - and registration fees of around 1%(one)
percent of the sale value of the apartment. Additional one-time
payments that are required to be made (and are usually collected by
the promoter/builder at the time of handing over possession) are
deposits for water connection, electrical meters and connection,
premiums for enclosures like balconies, etc., legal costs for
conveyance, society formation charges and, often, in the case of
large multi-building complexes, a lumpsum corpus/sinking fund which
generates interest to take care of the common facilities like
internal roads, street-lighting, etc.
