If you're a first-time buyer - there's plenty of them around these days, with young professionals looking to invest in property - you need to do some home work before taking the plunge.
Today the inclination to invest in property early on seems to have assumed importance for young professionals. But, buying your first property entails a lot of hard work, given the amount of documentation and verification required. So, here’s some tips on how you can do some smart work before taking the realty plunge.
“The task of buying property may seem daunting, but with some planning, it could be very rewarding. It is all about making informed choices at every stage of the process which starts with deciding the budget: which means we don’t want to bite off more than we can chew,” says Shantosh Kumar, who bought his first apartment recently. According to him, the choice of area and the builder or promoter is the toughest to make, after he decided on his budget. “I had to check if the area had the potential for development, quality infrastructure and good connectivity,” he adds.
As in choosing the area, the choice of builder must also be backed by considerable home work, say experts. “The developer’s track record needs to be thoroughly checked in terms of market standing or reputation, construction track record (compliance to rules, safety norms) and legal track record — whether there are any court cases pending against the builder, for instance,” says Ramesh Nair, Managing Director, Jones Lang LaSalle, (Chennai), an international firm that specialises in real estate.
Ask your builder
Knowing what to ask for from the builder is the next step towards your home. “Builders, when approached, should provide all the required documents of the property he is selling. The buyer should find out how the fixed square feet area being offered is arrived at, by asking for a detailed breakup. This will help them know the actual carpet area within their house, which will exclude the common areas, staircases, and the lobbies. The other important detail that needs to be checked is the undivided share of the plot on which the apartment is being constructed,” says T. Chitty Babu, President, CREDAI, Tamil Nadu.
Next, discuss with the builder the additional costs you would incur, like covered car parking, and your choice in flooring, wall painting, and bath fittings. Also, check what is being offered in the common areas like the gymnasium, swimming pool, party hall to which you will have access.
Get it verified
Once you have made your decision, it is mandatory to seek the advice of a legal expert. It is the lawyer who will be able to scrutinise, on your behalf, the various documents the builder has provided you with, so that there are no legal tangles. “A lawyer dealing with real estate should verify the original title deed, the Encumbrance Certificate (which proves the property is free from legal issues like mortgages and loans), and the patta of the land. He must insist on a thorough physical inspection of the said property, by his client, so that they know exactly what they are paying for. He must also insist that the builder strictly adheres to the sanctioned plan during construction,” says P.B. Ramanujam, Advocate and Notary Public.
Following the lawyer’s consent, the next step is the finance. Younger professionals seem to be taking up financial liabilities like a property investment right at the beginning of their careers, according to Mathew Joseph, Senior General Manager and Regional Head, HDFC Bank. “The financial partner in such a venture should have the internal strength to verify the documents furnished by the customer. The customer should ensure that there are no secret clauses in the agreement. If a loan has been taken with a fixed rate of interest, it should be constant throughout the payback period. The customer must look out for misleading clauses like ‘money market clauses’ or ‘unavoidable/unforeseen circumstances’ that limit the fixed rate of interest to a particular period of time.
“Keeping in mind the new RBI guidelines, the buyer needs to first check the percentage of the project the bank is allowed to fund, and if he is capable of pumping in the remaining amount,” says J. Vengkataramani, who recently sold his house.
Though this may make things more difficult, the tax benefits given to first time buyers, on the interest and principle payable, are still things to cheer about, he adds.
The last stage is monitoring the project’s progress from the buyer’s side. On receiving the flat or house, you must check if the builder has delivered on all that was promised with the help of a licensed surveyor and enquire about the after-sale commitments.
That’s how you buy your first home — tedious, but worth the effort.
What You Need To Know
Suburban properties need the approval of the Department of Town Planning, while projects within city limits need the CMDA's approval.
Current RBI guidelines have set the upper limit for home loans at 80% of the total value of the property. Earlier it was up to 85%.