In my previous post here (BYDH 1), I had shared a PPT presentation about how to avoid getting duped while buying your dream house. Now, I start a series wherein I’ll try to amplify the subject in short byte-size posts. So, here, we go.
1. The process of buying a house, whether an apartment or an independent unit, goes through a process that entails observing certain standard precautions. For the sake of convenience, we can divide the same into three stages viz.
(a) Before booking
(b) Between booking and acquiring possession
(c) After taking over the unit.
2. Before taking the plunge by paying the ‘token/booking amount’ the following aspects should be clear in the mind of every conscious home buyer:-
(a) Requirement vs. Budget & Finance: Decide on your requirement on the type and size of the house that you want to buy. Whereas the dreams can be infinite the finances are seldom so. Therefore, decide on these aspects basing purely on affordability. Though we are not talking about financial planning here, it is always better to arrive at a realistic figure after factoring into the total likely cost and the total funds available including those through the finance. The ‘cost’ would typically include-
(i) The total amount to be paid to the builder including the basic sale price (BSP), premier location charges (PLC), floor rise charges, amenities, taxes, and sundry expenses. It is always a good idea to get a cost break-up sheet and look for hidden costs especially the likely escalation amount of 10-80% of the cost depending upon the stage of construction etc.
(ii) Registration & Stamp Duty and Mutation Fees etc.
(iii) Finishing costs including woodwork, fixtures & fittings, and society charges.
(b) Ready to move-in vs under-construction property – Whereas the under-construction property always seems to be a considerable cost saving, I personally recommend a ready to move in the property if, of course, one can muster the funds in one go which is not a big issue these days where the banks are ready to finance up to 80% of the cost. Among the many benefits of buying a ready to move-in property some are as follows:-
(i) Both the physical property and the paperwork are available for checking before one pays in full.
(ii) No fear of delays or total project failure.
(iii) No cost escalation
(iv) Early rental returns/saving
(v) Tax saving on house property
3. Thus, as is evident from the above, it’s always a good idea to invest some time into the pre-booking period i.e. before one is lead into erroneous decisions on the basis of the rosy pictures painted by the willy real estate agents and/or the spin-doctor salespersons.