8 Steps to your first home

Author: Manoj Viswanathan – Managing Director and the Chief Executive Officer of Home First Finance Company India Ltd.

For each of us somewhere there exists a perfect partner, a perfect job, a perfect life with a perfect home. Or does it? In reality, once you decide to buy a house you start going through website listings, suggestions from well-wishers and newspaper classifieds, the differences between them soon start blurring. They all start looking like the same house viewed from a different angle. Before you resort to the game of Akkad-Bakkad to make one of the biggest decisions for your family, just hear me out.

What you really need before even seeing these houses is a basis on which you can compare them - basic functionality, neighborhood safety and facilities can never be taken for granted. Judge them based on these factors and you will have yourself a house which is not only dreamy and welcoming but also has everything you need at the snap of a finger – a real deal!

So, here are the 8 commandments of home buying to keep in mind when you start looking for a house:

1.     What's the purpose and usage – Is this house an investment or your next home? Who all will live in it?  Would you want a readymade home or a house in construction? Do you want a garden in your house? Answers to these questions can tell you all about the size of plot and house you want. While a new house will be costlier as compared to an old one, in the long term it will incur much less maintenance and repair expenditure in comparison. If you are going for an old house, make sure to have the waterproofing, plumbing and electrical connections thoroughly checked beforehand to prevent any unpleasant surprises.

2.  Locality of your choice – Is your neighborhood safe to live in? Are there good schools and hospitals nearby? Is there a big market in the vicinity? How about the local transport availability? Does your area come under the green zone or industrial area? An NA (Non-Agricultural) certificate is mandatory while purchasing a house. While some of these questions can be answered by the Google Gods, I would still suggest visiting the locality in person. Knock on your neighbor’s door and have a chat. Check out the locality at odd hours, does it feel safe in the dead of the night?

3.    Budgeting and Property Cost – Now that you have done so much research into home purchase, do not forget to ask your new neighbors also known as your new friends about the going rate for houses in the area. Even if the built-up area and construction quality is different, you have a ballpark idea of the cost with a minor 5-10% difference. A quick online research goes a long way in creating solid benchmarks and you are an Indian, use your birthright. There’s always a scope to negotiate and bargain.

4.  Builder of the House – While you are a first-time buyer, chances are that your builder has constructed a few houses before (I mean, you are trusting your life’s dream with this guy). Get as much information as possible on your builder’s previous projects. Ask Google, about timely completion of previous projects, overall reputation, customer feedback and reviews. Online property forums are a boon to mankind!

5.  Quality of Construction – If you are buying an under-construction apartment, there is no information better than the eye test. Call out your inner detective Shrikant Tiwari and befriend officials / “thekedar s” at the construction site or the watchman. Ask questions regarding delivery time, any problems with water supply or water logging or any noticeable structural flaws. Get fresh local gossip with tea and enjoy the little sips.

6.  Legal and Technical Documentation – Any housing you may have opted for, get into the details of the property “title deeds” and “registration” paperwork. Ensure the agreement clearly mentions the carpet area, built-up area and super built-up area along with the final price that you have negotiated. It is advisable to run it by your lawyer to be on the safer side. Some of the technical stuff like fire, water, electricity approvals are a must. In fact, before you start living in the new home, you have to get an occupational certificate (OC). In an apartment complex, the developer needs to have all the above approvals along with other NOCs. This due diligence is very important!

7.  Financing your dream home - Now that you are confident about your choice of property and you have got a sweet deal, next is - how you are going to fund it. A loan is generally a good option here. Look for a housing finance company or a bank that will allow you to pre-pay your loan easily. This will help you become debt free soon. Also, you will get tax benefits on a housing loan. Yes! Extra savings! Banks and other lending institutions usually put up an “Approved Project” stamp on signboards. It essentially indicates that Banks / NBFCs have studied this project and are fine with sanctioning a home loan. Avoid taking personal loans or borrowing from relatives etc., as these are short term loans and will put undue pressure on your monthly cash flows.

8.  Resaleability of the property – One last point and a much underrated one at that. I know you are not planning to resell this house in the near future. However, one way to evaluate your home as a long-term investment is through its Resale Value. Also, God forbid, should some unforeseen circumstances lead us down this path, it is a smart idea to be aware of our own wealth.

Long list! But if you have read the entire thing, you are now more confident about the steps to buy a house. Just follow them like a checklist for every property you like and you will be able to make a much more informed decision. At least, then you can boast of a perfect house, a perfect life will take a couple more commandments though!