Tuesday, 11 August 2015

What you need to check while buying a house

Buying a first home or second for end-use? Buying for pure investment or as a retirement settlement? While buying a property, you may be thinking of basics, such as budget and the location but are you sure you are mindful of the intricacies? Since real estate is a long-term asset, make the most of your investment by keeping the following in mind-

Budget: Liked a property priced at Rs 50 lakh? Have you made a list of extra costs that will eventually play up? Besides what has been listed (listed values are an indicator of the kind of rates prevailing in the market), you may have to incur costs, such as TDS on property, stamp duty and registration charges, brokerage, preferential location charges, services like insurance, service taxes, home loan processing charges, real estate and stock broking, pipeline transport of goods, site formation or demolition, club memberships, legal consultancy services, electricity exchange and related internal or external developments.

The right choice: Consider why you are buying a house? If it is for end-use, you may want to foresee the necessary changes you would have to make to adjust to a growing family, visiting parents, frequent guests, etc. Your lifestyle also matters.

Have you been living in India or abroad? Do you prefer the fast moving cosmopolitan culture prevalent in Tier I cities or would you want to settle down in a small city, may be your native town? Consider whether you would like an independent house or an apartment culture. If you pick the former, the onus of maintaining the property is thoroughly on you. In case of an apartment, conveniences are shared and therefore emergencies would be handled collectively. If end-use is your motive, you may want to plan ahead.

Planning for the future: If your purpose is rental returns, make sure that the location you are banking on is close to an existing or upcoming job hub. This would ensure that there is regular demand for housing in the area. Social and civic aspects also affect the pricing. In big cities such as Mumbai where property values are way too high, there are people who do not mind going in for rental properties because as per calculations, they find it a profitable option.

For tenants like this, livability quotient is a priority. Therefore, schools, colleges, hospitals, banks, jobs, water and power security is what will impact how much your property will yield. Although there is no right time to buy a house, it is never a bad idea to start young because it gives you the leeway to repay your EMIs over a longer term for your own convenience. Is it profitable to buy or rent?

Documents to check: Owning a home is easy. What is difficult is to ensure that all the checks have been made. Do you know that living in a house that doesn’t have an occupancy certificate may bar you from public conveniences such as water and power? As a buyer you should be careful before you tread.

Here’s a list of 12 documents you must check before taking ownership of the house-

Sale deed, Mother deed, Building approval PLA, Commencement Certificate (under construction), Conversion certificate - Agricultural to Non-Agricultural, Khata certificate and extract certificate, Encumbrance certificate, Betterment charges, Power of Attorney, Latest tax receipt, Completion certificate, Occupancy Certificate, Cross check your information.

There are enough people out there who are ready to advice you. This can be your family, peer group, brokers and agents or any other. While each one of them can guide you as per their experience and knowledge, never fail to do your own research. Ultimately you are the best judge of your lifestyle. There are formal indices in the market such as PropIndex that keep you up-to-date about historic rates and trends. This makes it easier for a prospective buyer to gauge market conditions. Rather than speculating, you can help yourself by making sure that you are investing right based on facts.

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