Planning to buy your First House? Buying your own house is a dream come true for everyone. There’s plenty to look forward to as a first-time home buyer, from browsing houses online to touring prospective neighbourhoods. Purchasing a house is one of the biggest personal and financial decisions you’ll make and often one of the most complicated. There are legal terms, real estate agents, mortgage lenders and loan terms to deal with and it can all get very overwhelming very quickly. To get you started, here are some basic steps that will give you a sense of control from the start

  1. Purchase cost - Estimate the total cost of ownership, including parking charges, stamp duty, registration charges, maintenance, one-time deposits for apartments, new furniture/furnishings that a customer may have to purchase. All this could contribute to almost 5-20 percent of the bare cost of the apartment.
  2. Property area - It is important to understand about the final usable area of the apartment, especially in case of apartments under construction. You must evaluate the carpet area as this is the liveable area that you will finally get to use. If you are quoted the built up or super built up area, always ask for the carpet area. You may have this separately verified from a property valuation agency. In case of a bank loan, the bank will do such verification as part of its loan process. 
  3. Running cost of property - Estimate the total cost of running a home. This will include maintenance charges, property tax, EMI in case of a loan, increased commuting charges as compared to your present place. Please ensure that this fits into your monthly budget.
  4. Legal assistance - Hire a lawyer to go through all documents on the land and the property. It is difficult for a consumer to understand a 7/12 extract (Maharashtra) filled with industry jargon, such as title deed, land use, approvals from municipal corporation, occupational certificate especially if the property is a not purchased from the builder directly. If you are planning to take a loan, the bank will do all verifications so this may not be as critical.
  5. Property Value - Find the average range of prices in the neighbourhood by asking around. One should speak to people in 2-3 neighbouring buildings to get an idea. There could be a range of 5-10 percent difference even within neighbouring buildings, depending on the quality of construction, exact configuration of apartment, etc.
  6. Builder Track record - If you are buying an under-construction apartment, then visit buildings delivered already by the same builder to check out on quality of the construction, assuming that it would be the minimum quality he would deliver here. You can ask the occupants of the older building on whether the building was developed on time, or the developers handed over the building to the society amiably, etc.
  7. Payment Terms - Discuss with the seller upfront on the cash component, if any. These things spring up at the last moment and most of us do not have access to large amounts of cash. Do avoid payments in cash as far as possible, as such exchanges will have to trail, in case any dispute or cancellation happens later on.
  8. Residents - It’s equally important to check whether most of the other occupants in the building are like-minded and in the similar age group. If the residents are not like-minded, conflicts emerge eventually over a period of time on how to maintain the building, adjusting on parking spaces, whether pet animals are allowed in the elevator etc. You can avoid staying in buildings with a mix of 1BHK, 2BHK, 3BHK apartments – different budgets and income levels of occupants – will cause grief in the long run.
  9. Rent potential - If you are buying the apartment as an investment, think through the profile of your typical tenant and whether the location of your apartment is good enough for such a tenant. If it is related to your commute, see if the apartment is close to the railway station. If there is a parking space, check if you require two parking slots.
  10. Facilities and convenience of stay - Speak with the building watchman or the watchman of the neighbouring building in case the building in which you will buy the flat is under construction, to find out the situation of water supply, electricity supply, availability of domestic help, level of security and safety, neighbourhood grocery stores, deliveries from restaurants, gyms, day care centres, hospitals and schools, depending on your life situation and your need.
  11. Finance for property - Get your loan sorted early to plan your finances. Explore rates for woman co-ownership or senior citizen, if applicable. Ease of customer service, options to manage your loan digitally etc., should also be considered as this will be a long duration loan. Explore your options wisely and fish for the best offer.
  12. Investment - If you are buying the apartment as an investment, please ensure that it fits into your overall asset allocation and that you have a balanced mix between equities, debt instruments and real estate. A mix of 40:20:40 is recommended between the three, for investors below 50 years of age. Also, calculate your annual returns from the real estate as a combination of 2-3 percent rental income plus the expected capital appreciation less maintenance charges.

To sum it up, buying an apartment is possibly the biggest decision you would take, ranking after your marriage and having a child. You have a responsibility towards yourself and towards your family and doing all the above due diligence before buying your apartment will ensure that “What you thought is what you got”!

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