Things I considered while buying a house

For some buying a house is a once in a life time thing, some people end up buying a
couple of flats, some look it as an dream come true while for others its just
another investment, depending upon what your purpose is your search differs, your
needs differ and your budget differs. In either case buying a new property is not a
small thing, specially for the middle/upper middle class where people take up huge
loans and repay the amout for years and years. Recently i planed to buy a house, for
me there were various things in it, It was dream come true. It took me almost a
month to conclude on buying my SE K750i which was worth Rs.17800 [in Oct. 2005], i
had gone through various sites, thought about a various factors before buying my
cell phone, Comparatively buying a house is a much bigger decision and investment
inturn, there is quite a bit of planning required before buying a house.
I have been working for last 5 years in different companies, as my CTC increased
simultaneously increased my Tax cut, i had been very negligent on my tax planning
and used to end up paying huge amounts, after enquiring at a few places and talking
to friends I came to a conclusion that the best way to save tax through investments
is buying a house, and in my case it was a need of time. So there were no second
thoughts on buying a house, Now here i am suddenly out of my sleep and planning to
buy a house. I didnt knew at that time what i wanted, should it be a flat or a
rowhouse, didnt even knew the current rates in the locality, I was completely blank
about these things.

Its been almost 6 months now from that day and today i have booked my flat, coming
to this conclusion included lots of suggestions from friends and elders. Finally
after hunting for a descent flat for almost 6 months i booked a flat in a township
of 1200 flats. Now here is what i learnt in all these days.

There are a series of steps involved in deciding/booking a flat, if you follow then
in the right sequence, you already have answers to a lot of questions beforehand.

• I assume that you also plan to buy the flat by taking a loan as i did, first
  thing you should do is to check for the eligibility of loan against your current
  salary, here your net income is considered to derive at a figure as loan
  eligibility, the usual calculation is Your Gross Salary - [Your taxes + installments
  towards other loans if any.], the eligibility from different banks differ as some
  banks consider the fact that after you start paying your house loan installments
  your tax liability will deduct and give you more eligibility, some banks also
  consider yearly income that you get like some organizations dont reflect payment of
  Medical expenses on the employees salary slip which increases the gross and inturn
  your net take home, which means more eligibility. As far a your previous liabilities
  are concerned if the number of installments left to pay is less than 12 they are not
  considered while calculating your eligibility, but if they are more than 12 then it
  reduces the eligibility to a considerable amount for eg., i was paying a 2 wheeler
  loan while i was opting for a new house, the monthly installment was about Rs.1260
  but it reduced my eligibility by about 1.5 to 2 lakhs.
  
  
• Now that you know your home loan eligibility you can go ahead and decide what
  you want, you need to have a clear picture of your purpose behind taking a house, if
  its just for an investment ususally there is less thinking involved but if you plan
  to shift in your new house immediately after buying it, there are quite a few things
  to think about like
  
  
  
  
  1. Your family strength.
     
  2. Your preferences as to whether you want to go for a rowhouse or a flat.
     
  3. Your constraints as to whether you want to go for a township or you are happy with a single building apartment.
     
  
  
  
• While buying a flat there are two major things to consider, the locality and
  the location, when i say the locality i mean, is it a residential area, are there
  enough residential projects around, these things do matter considering the future
  developement that is to take place in the locality, if its a planned residential
  area, future developements in the surroundings happen keeping in mind the strength
  of residential projects/flats in the area. with location of the site there is a
  differnt set of things to consider about like
  
  
  
  
  1. Distance to Nearest school, Shopping complex, Theatre, Market.
     
  2. Distance between your office and house, you dont wanna end up travelling for hours every day to reach office.
     
  3. Growth prospects in the area, this is one very important factor, coz if there
     is growth/developement in the area the per/sqft. rate in the areas hikes and, this
     helps if you plan to sell your flat in future.
     
     Here there is one thing to consider, in most developed areas i found the rates are
     almost double things just go way out of hands, but if you try to explore the areas
     surrounding the developed patch there is a good chance of finding a good deal and
     travelling 1 or 2 KM extra is better than spending crazy amounts buying a flat in a
     fully developed area.
     
     
  
  
• Think about your possession requirements, Usually bookings for flats start way
  before hand and you get possesion after almost 12 to 15 months from the day of
  booking, but its a better deal to book a flat at its construction stage, for various
  reasons
  
  
  
  
  1. By the time you get possession of the flat the rates have almost doubled in the area.
     
  2. If made an advance payment, which usually people do and is a better option,
     after loan dibursement, you get a specific percentage of the remaining amount as
     interest from the builder. This amount keeps on reducing with increasing
     construction stages of the building, but at the time of possession you get a descent
     amount which is helpful for payment of OTM [One time Maintenance] or Society charges.
     
     
     
  
  
• Amenities play an important role for some while some dont mind skipping them, I
  would classify Amenities as internal amenities and external [common amenities], more
  concentration should be on the internal amenities as those are the ones you use
  often, questions to ask are,
  
  
  
  
  1. Does the builder provide solar water heating system?
     
  2. Is false ceiling provided?
     
  3. Does the builder provide an intercom system?
     
  4. Are there some security systems installed?
     
  5. Are sanitary fittings provided from a reputed company?
     
  6. Is there an Aquagard provision in the kitchen?
     
  7. Is there a MS Grill to the sliding windows?
     
  
  while it depends from person to person how much weightage you wanna give to the
  external amenities like Swimming pool, Gymnasium, Tennis court, Landscape garden
  etc., these things increase the cost of the flat by a considerable amount in the
  form of OTM [One time Maintenance], which you eventually end up paying more and
  more. Also it depends upon how seriously has the builder taken these things, i have
  seen projects where in a township of more than 1000 flats the swimming pool and the
  landscape garden are way too small and just in for name sake.
  
  
• We started with the Loan considerations lets end with the the same there are a
  lot of things to consider while opting for the loan, the first thing to do is let
  the banks know that you are interested in a house loan, in a few days you will find
  various banks calling you with different offers, Bargain is the keyword, you always
  get a better deal after you create competetion between these banks.
  
  
  
  
  1. Keep a number of sets ready for all the documents that you require to submit in
     the banks as you will need to provide your documents to various documents to get a
     better deal.
     
     
  2. Keep a check on factors like processing fees and pre-payment/ forclosure
     charges, they are very much negotiable.
     
     
  3. With interest rates, i would suggest go for fluctuating rate of interest, even
     if the rate of interest increases in future, the one applicable for you doenst hike
     up equally it just increases by .25 or .50 which again differs from bank to bank.
     
     
  4. Some banks do force you to take Insurance with the loan, remember that you have an option not to take it, use your option.
     
     
  5. The loan given to you is usually 85% to 90% of the total of following factors
     [Rate*Area + Parking Charges + MSEB(Electricity Meter and installation) Chares] the
     components generally not included are OTM [One time Maintenance], Society formation
     charges and Stampduty + Registration charges. but you can always negotiate with the
     bank to get these included in your loan amount.
     
     
  6. After getting an approval of 90 to 92% from the bank most of them opt for a
     personal loan to cover the rest as it some of it needs to be paid immediately, keep
     in mind that you can get both the loans on the same salary if you process documents
     for both the loans at the same time, talk you your angent and he should be in a
     position to get you out of it.
     
     
  
  

These were a few thigns that i considered while buying my house, i saw almost 30 to
40 sites and decided upon the flat i took, while doing your fincancial calculations
keep in mind to consider only regular income, if you are considering any income
which is not regular for paying the installments it might get you in a fix, Also
consider the budget that you will require to buy the furniture in your house and
plan your possession in such a way that by the time you get he possession of your
house you have cleared your personal loan + saved a handful amount.


Hope this article helps you in making a better decision for buying a house.