We all dream of buying a house of our own at some point in our life. To buy a house is a massive accomplishment, but it does require a lot of research and patience. One must be very clear while investing in a house, because usually it is a lifetime decision that cannot be reversed. For example, if you are unhappy with your car purchase, you can change it, but a house cannot be changed that easily. Buying a property requires care, diligence and perseverance.
House hunting is quite a task due to the competitive market. To help you make a well-informed decision, we are here to help you with this whole procedure. If you are already in the process of hunting for a house, this guide will help you make your home buying easier. Here is a step-by-step guide that will help you make a wiser and more informed decision while buying a house. Also, we have covered the best time to buy a house.
How to Buy A House – Step by Step Guide
Now that you have decided to buy a house. We make it easier for you with our 8-step guide to buying a house:
Step 1: Finalize a Budget
The first and the foremost step in the process to buy a house is finalizing a budget. Decide an approximate amount for which you want to buy a property. We advise you that you should always pre-decide the property amount as per your budget, so as not to go overboard. First, you should dig up your savings, and if you have enough to make a down payment, well and good. Otherwise, you can always go for a home loan. Buying a property is a one-time thing, so make sure that you decide the amount that satisfies your needs and is budget-friendly.
Step 2: Zero Down the Location and Property Type
Another critical step is to decide what kind of property you want and in which location. As per your family requirements, you must select the property type- flat, builder floor, constructed house, duplex house, row house, plot to build a house. You can decide this based on what facilities and type of living you want to go for. You also have to decide what type of BHK property you need.
Example, if you are an end-user of the property having six family members, then a four BHK house will suit you; if it is for an investment purpose, you can go for a two or three BHK. If your budget allows you to have a duplex, that can also be your option.
Once the type of property is decided, then you should focus on location. We may all want to own a property in a premium location. However, the rates are pretty high in such areas. So, you need to make a trade off between the budget you have and the type of locality you wish to settle down in. You may decide to look for a property adjacent to the premium location where you want to buy a house. Or you may opt for an upcoming locality in the suburbs that is slated to become premium. Make an informed decision while choosing an area of the property. You should ensure the basic amenities are within 500 meters of the house, like a grocery shop, school, hospital and more.
Step 3: Explore Rent Rates of the Property
Are you buying a house for an investment purpose? Check the rent rates in locations where you wish to buy the property. The rental rates will help you decide the right property and location. This way, you can have better earnings from the property bought for investment.
Step 4: Resale Value of the Property
Before you decide on the property, you must consider the property’s resale value. Do not blindly focus on the property location; you must consider the property’s resale value. Estimate the future value of property by going through the market statistics. If you decide just for the location, then in future sales, the property’s price will be less than other houses around, which should not be the case.
Step 5: Check Loan Eligibility and EMI
Everyone cannot afford to buy a house on a down payment, so we take a route of loans. There are plenty of lenders available in the market who offer home loans, but you should always check the eligibility before applying for the loan. The eligibility criteria of every bank differ as per the RBI regulations. The eligibility is decided by factoring in age, salary, credit score, work experience etc. We highly recommend having a good credit score (CIBIL score) to get a loan at a lower interest rate.
Once you have checked the eligibility, you must calculate the EMI to pay during the decided tenure. Calculating EMI is easy using the home loan EMI calculator of Magicbricks. Select the tenure and EMI according to your financial condition. The shorter the tenure, the higher the EMI and the higher the tenure, the lower the EMI. As a rule of thumb, your EMI should not be more than 40% of your monthly salary.
Step 6:Stamp Duty and Registration Fee
While buying a house, there are a few additional charges to be paid. Charges like registration charges, stamp duty, sales tax, and income tax are paid mandatorily. The Government of India collects all these charges. Once you have decided on the property, calculate your state’s stamp duty charges and registration charges. The costs vary for every state; some states might have higher rates than others. For example, Tamil Nadu has the highest stamp duty and registration charges. Always check these charges to create a fund for these charges separately.
Note: Such charges are not included in the home loan amount..
Step 7: Additional Costs Related to Property
There are many third parties involved when you buy a property, such as real estate agents, home inspectors, mortgage brokers, lawyers and more. Consider their charges and a few other charges like society’s maintenance charges if you buy a flat in a society. Also, check all the documents and make a checklist of the documents you need to check before purchasing a property or submitting it.
Once a property is bought, ensure to have documents like Title Deed, commencement certificate, occupancy certificate, sale agreement etc. Must check the property’s age, if it is a disputed property, house within municipalities etc.
Step 8: Insurance of the Property
Make sure; we repeat, make sure to get your property insured. It will keep the future of your property safe. The insurance amount can be used for any issues related to the property’s title, legal issues, property damages etc. There are various home insurance policies available in the market; choose the one which suits you the best. They have different protection elements. Once this is done, you can peacefully live in your dream house or enjoy the rent from your property.
Success tips for young home buyers
Is this the Best Time to Buy a House?
The market situation plays a vital role in deciding when to buy a property. In India, the economy has fallen due to Covid-19, leading to a fall in real estate prices. So, if you are contemplating buying a property, then this is the right time.
- Low property rates: Considering the market’s current situation, the property rates have fallen due to less demand. Property prices have indeed started increasing still they remain low compared to pre covid era. All in all, you can save a good amount of money.
- Interest rates all-time low: Currently, the interest rates are all-time low. To support the economy, the RBI cut the repo rate by 115 basis points (bps), due to which the interest rates have decreased. Lenders are offering home loans at as low as 6.50%. Further added incentives provided by a few banks are- No EMIs until possession. A low-interest rate is one benefit that will help you save money when you buy a house.
- Processing fees: Few significant banks like SBI, ICICI Bank and HDFC Bank have waived off processing fees on home loans. Even if they are charging, the processing fee is less when compared to earlier times.
- Cut in stamp duty charges: States like Maharashtra have temporarily cut stamp duty charges, and a few other states have also decreased the stamp duty charges on the property. For example, if you buy a property worth Rs 25 lakh in Mumbai, you will have to pay a stamp duty of 3%, which makes stamp duty charges Rs 75,000. Earlier stamp duty charges were 5% at that time. You would have to pay Rs 1,25,000. So, you save Rs 50,000 here.
Home Ownership is gaining popularity among buyers
In Sum – when buying a house
To sum it up, when the thought of buying a house arises in your mind, this step by step guide will help you buy a house of your dreams. Keep these factors in mind like studying the market, knowing the property prices, checking the eligibility, checking the documents checklist etc. Also, if you think that this is the right time to buy a property, you must consider it. Otherwise, you can search for the right property type when favourable market conditions. If conditions are favourable, then buy the house of your dreams.
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