Buying a home for the first time? Make sure you stay away from these five blunders.
#1. Reaching beyond your budget
Regardless of the loan amount you are ready to borrow, you have to set limits yourself. This will not only help you plan your purchases well ahead of time but also ensure that you do not financially harm yourself. The maximum borrowing amount is based on multiple factors like your previous loans, credit score, CIBIL records, savings and investments, as well as your income. Based on these, your bank will give you an estimate on your loan limits. It is wise to plan all your real estate and miscellaneous expenses within these limits. A good way to figure out your loan, if your CIBIL records and other loans are in order, is to consider 50% of your salary as EMI and multiply by the number of years you are planning to work.
#2. Ignoring overhead costs of purchase
A common mistake property buyers often make is not consider the actual cost of the home that they will be responsible for. The final expenses on a home are higher than the quoted price and banks only provide a loan on the actual quoted amount. All the overhead expenses are for the homeowner to bear, which can often run into several lakhs of rupees. Registration, car parking, stamp duty and other miscellaneous expenses are variable based on location and project and are not covered in a typical home loan.
#3. Not considering the super built-up area
The advertised area of an apartment is always the super built-up area i.e. if you find a 2,000 sqft home, you should know that the apartment itself will not be 2,000 sqft. In fact, it will be lower than this number and the area also includes staircases, lifts, passages etc. The exact square footage of the home is known as the carpet area and is almost never advertised. So when you talk to your realtor, ask them about the carpet area, not the advertised number.
#4. Not taking expert legal counsel
It is of utmost important to study and verify the documents of the property before you commit to it. Certain property documents require the eye of a legal expert and you are privy to more mistakes if you choose not to seek counsel. Lawyers can understand the fine print of agreements and interpret the certificates in the right manner. They can also guide you on the legalese that follows throughout the process of purchasing a home.
#5. Purchasing disputed homes/land
Not all disputed lands are empty. Sometimes, builders may start construction despite its status and that is always a risky proposition. If you buy a home on dispute land, whether knowingly or unknowingly, you can be in a lot of trouble. Once the local government reclaims the land and slaps hefty fines, you won’t be able to sell your property owing to its disputed status.
Before considering a purchase, ensure that the land is free from any legal, environmental or archaeological disputes.