So how to buy a house in your local area? If you want to make your house buying process super smooth without worrying about all the possible disputes, then this article is for you. We will know those ten steps that you can use to buy the house of your dream. So let’s begin.
Ten Steps to Buy A House of Your Dreams in India
First I want to tell you that a loan is a loaded gun. If you can’t handle it, then it might destroy you. So, be very careful when considering a home loan. Discuss it with a loan advisor before taking the final decision.
Table of Contents
1. Figure Out How Much You Can Afford to buy a house
Just think a little bit and write it down on paper, how much can you afford for this house? That will determine all the next steps you should take to purchase your dream home.
When it comes to collecting money, you have two options:
- Self-Financed: You will put all the money it takes from the down payment to the agent’s commission into finalizing the purchase. But, you may not have all the money it requires right now. In that case, you can use Bank finance.
- Bank Financed: The Bank will finance the purchase. You will only pay the down payment (20% of the property value). The banks will you the remaining part, not at once, but time by time.
But when it comes to the Home loan, many banks will not approve your request. There are some rules and regulations you must follow to get the money.
Documents Required for A Home Loan
- Your age should be minimum of 18 years
- Income ₹20,000+
- CIBIL score (credit score) 750+
- Photographs passport-sized
- Identify proof
- Residence proof
- Bank Account Statement
- Property detailed documents
- And many others
The bank will give you 40% – 70% money of the property value. If you can’t pay the mortgage payment, the bank will auction the property, and they will recover their money with profit. The better your Credit reports are, the more money you will get.
So first, know how much money you can afford and then select the location, the area you want to live.
2. Decide the Location of Your House
The real estate industry is all about location, location, and location because it is the heart of a property. A good location is where people want to live, the crime rates are almost zero, and there are jobs looking for people to fill up. Everything a person needs to make their life easy. That is considered a good location.
For example, a house near a:
- Grocery store
- Shopping malls
- Cinema halls
- Any popular landmark
If it is, then it shall be considered a good house. Yes, these kinds of houses are expensive as the demand is high. Everyone wants to live in that area. That’s why you must know how much you can afford. So you don’t go beyond your limits and regret it later.
And a good location gives you a great resale value if you want to move to a different place by selling it. You will gain some profit out of it if the location is good. That’s why choosing a good house location is an important thing if you want some resale value from it.
3. Check the Resale Value before the You Buy A House
For example, you want to live in that house for about three years. After that, you want to move somewhere else as your work recommends. In that case, you should check the resale value of this kind of property after three years. Ask your agent about this, and they will give you an estimate no.
And do check the builder’s reputation because it also affects the resale value. If the developer is well known in the market, you can expect a good resale value after three years. If not, then you might have to sell it for a loss.
Check it, and then consider to buy the house. But not before considering the Registration and Stump duty charges from the Government.
4. Registration and Stump Duty Charges
These charges may vary in every state in India. But the basic fees you have to pay while you buy a house ad those are:
- Registration charge: 1% of the total property value
Stump duty charges in India:
- 5% if the property value exceeds ₹45 lakhs
- 3% property ₹21 lakhs – ₹45 lakhs
- 2% property below ₹21 lakhs
But it may vary in every state. Check it before registering the house.
5. Choose A Good Real Estate Agent
A good agent can make or break your deal. Choose someone who will help you find the best house according to your need. Not the person who just wants their commission.
In this home buying process you need three agents:
- A real estate agent
- A mortgage broker and
- A tax accountant.
Choose them wisely. These guys can make or break your deal.
6. Now Select The Type of House You Want
What type of property do you want, a ready-to-move-in or an under-construction. It’s nothing but a personal choice. It’s up to what you are going to choose.
In the under-construction, less money is required compared to the ready-to-move-in. But that does not mean it’s the best. You will choose according to your needs. I shall select a ready-to-move because it has fewer headaches.
7. Check The Additional Cost You Have to Pay
Most home buyers do not add the additional cost to their plan while they buy a house. And that thing made them think, is this going to be profitable if I sell it after 3 – 5 years.
That’s why you have to add all the additional costs to your data list. Costs such as:
- Agent fees
- Mortgage broker
- Home inspector
- Attorney and
- Property maintenance fees.
These will add up to a lot of money. So, add everything to your data and then think about the profit.
8. You May Need A Home Insurance
Home insurance is always a good decision for the protection of your house. If you take a home loan, the banks will force you to take the insurance along with it. It’s their law, and you have to follow that.
In India, the insurance rate varies from ₹250 – to ₹500. It depends on the value of your house and the facilities the bank provides. The insurance is not mandatory, but it is good if you take one.
9. Check The Rental Value of Your House
Also, check the rental value of that house if you want to rent it out in the near future. The best way to know that is to walk around that area and try to find out how much money people are paying every month. You can ask your agent to give these details.
10. A Final World On How to Buy a House
I think you should treat it as an investment, not just a house that you will live in for the rest of your life. Because if you take it as an investment, you will make a better decision.
I recommend you check the resale value and the rental value of it. Remember, as we say in the real estate business:
- “Your profit is made when you buy, not when you sell.”
Share this with your friends to help them choose the best house possible. Thank you, take care.
What is the best location to buy a house?
The best location is near a school, college, metro, highway, hospital, grocery store, shopping malls, cinema halls, and any popular landmark.
What are the additional cost when buying a house?
Agent fees, mortgage broker fees, home inspector fees, attorney fees, and property maintenance fees are the additional expenses.
What are the registration charges on the property?
The registration charge in India is 1 percent of the total property value.
What are the stamp duty fees in India?
The average stump duty charge is from 2 to 5 percent which can vary on the total value of your property.