Guide For First Time Home Buyers In India

A home is a significant financial investment; you don't want to get it wrong.

Here are several tips for first-time home purchasers.

1. Set a budget:

The foremost step of buying a house is to set a budget. When you approach a broker, they will show you many different options and their prices. Looking at that, you can get a rough estimate of your ideal house's cost.

Now, you can consider your savings and decide on a budget. While exploring house options, it is advisable to never go over your budget. Use an EMI calculator to determine your monthly payment in advance and plan better.

2. Decide the type of home you want:

You can find different types of accommodations in India. Numerous choices exist, including apartments/flats, bungalows, duplexes, farmhouses, row houses, and penthouses. Each one has its pros and cons that you must consider.

Apartments or flats are the most preferred ones today. They are compact, come with amenities, and have security.

Bungalows, on the other hand, are spacious and found in semi-urban spaces in India. Penthouses and farmhouses are the more luxurious options.

3. Buy the right property at the correct location:

Choosing the site for your real estate is crucial. You can choose to live in a suburb or a city. Suburbs are quieter and have less expensive homes. However, cities offer better healthcare centres, transport systems, schools, etc.

While selecting the property, make sure to choose a good neighbourhood. A quiet, family-friendly neighbourhood with nearby schools and hospitals is usually ideal.

4. Have a rough estimate of the size of your home:

The perfect home is neither too spacious nor too cramped. Thus, consider the size of your family when selecting a residence.

If you're looking for apartments, you can select 2 BHKs, 3 BHKs, or 4 BHKs. Similarly, your broker will show you similar flats. The same goes for bungalows, farmhouses, etc.

5. Select the amenities you need:

Most first-time home buyers are unaware of the different features and amenities they want in their house. Elevators, terraces, parking areas, gardens, and backup power are standard features typically found in most homes. You should inform your broker about the amenities that you wish to have.

6. Do a proper home inspection before buying:

Many people make the mistake of moving in without physically inspecting the property. Do not repeat this mistake. Inspect the property for mold, pests, and other such things.

7. Work with a reputed builder:

If you are investing in an ongoing project, work with reputed builders. Reputable promoters finish their projects within the stipulated time and deliver the product as promised.

8. Explore First home loans:

While applying for a home, thinking about your long-term life ahead is essential. Sometimes, you might not have enough savings to buy a home of your dreams. In that case, you can always rely on a mortgage for your first home to bridge the gap.

Home loans can provide the financial support needed to turn your dream into reality. Here are some important things to know about home loans:

• To avail of a home loan, check your eligibility criteria. It depends on several factors.
• Your loan amount usually depends on your income, and it is about 80 to 90% of the house's total value.
• While opting for a loan, you must also decide whether you want a fixed or floating rate home loan.
• A stable loan interest rate is perfect for those who value financial predictability. Fixed interest rates remain unaffected by market fluctuations, guaranteeing a stable EMI payment for the entire loan term.
• Variable interest rates tend to be lower than fixed ones. When home loan interest rates decrease, you can use them by choosing variable rates.
• Don't forget processing fees and additional charges like stamp duty when budgeting.
• Use an EMI calculator to get clarity on your expected monthly payment.
• One added advantage is the tax benefits you can claim under Section 80C of the Income Tax Act, offering you more peace of mind.

FAQs

1. What are the tax benefits of taking a home loan?
You can claim tax benefits under Section 80C on the principal repayment of your home loan. Additionally, you can claim deductions on the interest paid under Section 24(b), which can significantly reduce your taxable income.

2. How do I check my eligibility for a home loan?
Loan applicants must meet specific eligibility criteria, such as a stable income, good credit score, and employment stability. These factors help lenders decide the loan amount and tenure.

3. What is the difference between fixed and floating rate home loans?
A fixed-rate home loan offers a constant loan interest rate, ensuring a predictable monthly payment. In contrast, floating rate home loans have variable rates that can change with market conditions.

4. What are the processing fees involved?
Most lenders, including Piramal Finance, charge processing fees up to a certain percentage of the loan amount. This is usually a one-time charge that covers administrative expenses.

5. How can an EMI calculator help me?
An EMI calculator helps you estimate your monthly payment based on the loan amount, interest rate, and tenure. It's a handy tool for financial planning before applying for a home loan.

6. Do I have to pay stamp duty when buying a home?
Yes, stamp duty is a mandatory government charge payable during property registration. It varies by state and is over and above the property cost and loan amount.

7. Can I get a loan to buy a home even if I don’t have full savings?
Absolutely. Home loans are designed to support individuals who don’t have full savings. Lenders typically finance up to 80%-90% of the property value, making it easier for you to buy a home.

8. What documents are required to apply for a home loan?
You'll need basic documents like ID proof, address proof, income proof, and bank statements. The exact requirements may vary depending on whether you're salaried or self-employed.

9. How do interest rates affect my home loan repayment?
Lower home loan interest rates reduce your overall loan burden, while higher rates increase your EMIs. That's why it's crucial to compare rates before choosing a lender.