7 Mistakes to avoid while buying your first home
7 Mistakes to avoid while buying your first home
While we are not here to discuss the idea of “settlement”, we are witnessing an increasing trend of home purchases being from early investors – people in the under 30 demographic, who now see merit in viewing a home purchase as an investment. It is a wise choice, say seasoned industry watchers at Prisha Properties, you can be even free of debt by the time you are forty, which is why the idea appeals to the millennial and GenZ increasingly.
So how do you choose the right home? Can you just pick up a property and buy it? Of course not. These are fixed assets, and need some amount of cautious planning and checks. Here is a little list of mistakes you should pay attention to:
The real estate scene and wide variety of options available, not to mention factors like budget, facilities are enough to put buyers into a dilemma, confusing them. However, we suggest you make a list of what you want. Do you want a big house? Or a smaller place which is at the center of the city. Do you want a living space closer to the most happening spots of the city? Or do you want a quiet outskirts bungalow? List out your wants, match them to your needs, so you have a nice list of filters you should apply to zero down on your dream house.
Legal & technical aspects:
Even if it is a purchase out of your own funds, or a Bank loan, in which case the bank will do the necessary – speak to the valuer-technical expert and the lawyer giving the legal opinion. They are experts for a reason, and it’ll ensure you won’t have any surprises or shocks in the future.
This is a huge investment. It is very different from buying vegetables or groceries for obvious reasons. And you should spend enough time on it. DO not get too excited and give in into the first apartment or house you see. Even if the first one you see is the perfect fit, look around, understand market trends, and do not give into the idea that it’ll get sold out. Look at least 7 houses as a rule, even if you are looking at them in a digital mode.
The location is a big factor when we choose where we stay, even when it is a rental space, isn’t it? Why does it matter so much? Because it affects your quality of life. Imagine staying in the middle of nowhere, and having just one bus that takes you the only grocery store 30 km away? Sure, sounds great for a living in the wild episode, but I’m sure you’d soon be exhausted. Look for schools & day-care, super markets and pharmacies, basic shopping areas, hospitals and the general neighborhood. It is a place you’ll spend significant time, which is why choosing it matters the most, says a housing expert from Prisha Property Bangalore.
An area that is quite simple, but scares a lot of us – budget and finances. As a thumb rule look for homes that are 15-20% lower than your budget. We will tell you why. When you get a quote from your builder, you are getting an estimate for just the basic structure + common amenities promised. The 15-20% is for your interiors, stamp duty, registration fees and miscellaneous. Also be prepared to keep a buffer for the first 6 months. The usual formula we advise is a buffer of 6 months of expected rent from the property. Sudden surprises the form of pending fees and challans, electrical fittings about which you changed your mind, a garden or even a house warming party might be covered under that. If it doesn’t you can always put it as your emergency home fund.
The market is flooded with products that promise you the lowest rate of interest or the least down payment. But ask yourself – this is a long term plan. 10,15,20 or even 30 years into the future. You will have a fair idea of your projected finances. Do not bite of more than you can chew, at the same time do not bite less either. This is a great time to invest and both property prices and interest rates are super attractive. Keep the 60-40 rule in mind. All your expenses, including your investments like SIPs, insurance premiums, miscellaneous expenses, PF, pension plans and proposed home loan installment must not exceed 60% of your monthly pay.
First hand vs used dilemma:
Unlike a car or other electronic item, the rate at which a home depreciates is lower. In fact, though the building might have depreciation, the cost of land always increases over time, which is why you do not see a huge difference in costs between new and used ventures. However, what you should definitely look at are the softer aspects like quality of construction, repair and renovation costs if any, remodeling as per your tastes. You cannot be penny wise pound foolish – not with a home.
Being a home owner is a cherished dream for most Indians. However it is important to be clear of your wants, needs and budgets. Don’t go overboard, and don’t compromise too much either. Like in everything else, a balance is crucial.