Being able to own a home of their own is often the biggest motivation for people to work hard and save money. In India, a home is more than just a piece of property, it is also a source of pride, security and stability. More Indians today are looking to invest in residential property, instead of living in rented houses as tenants. This is further bolstered by the number of first time home buyer benefits being offered today.
The Economic Survey 2017-18 revealed that only 28% of urban Indians live in rented houses as compared to 1961 when as many as 54% lived in rented houses.
The current Indian real estate market is booming, making it the perfect investment opportunity for almost guaranteed returns. Rapid improvements in infrastructural developments in the suburbs and increased competitiveness among property developers have given home buyers immense choice when it comes to finding a home to invest in.
These market conditions have also been supported by a slew of economic policies and first time home buyer benefits introduced by the government to make home ownership accessible to all. The RERA act was a landmark move to bring about transparency in the real estate sector and protect a buyer’s interests. The complex and highly variable tax structure in real estate was also eliminated with the introduction of GST, which standardised tax rates across the country. But, arguably, the most ambitious move to encourage more people to buy homes was the launch of the ‘Housing for All’ scheme which offered heavily subsidised interest rates on home loans. This was one of the best first time home buyer benefits in India to encourage more people to invest.
These factors have made this the perfect time to invest in a home of your own. However, for first time home buyers in India, the entire process can seem confusing and intimidating. This in-depth guide to buying a house will help you understand every step involved in the homebuying process and ensure that it goes smoothly.
Things First-Time Home BuyersShould Know Before Investing
Best Investment Destinations to Buy a Home
Types of Residential Property
Things to Check BeforeBooking a Home
Documents Required to Buy a House
The Complete Home LoanApplication Process
How to Save Taxes on a Real Estate Investment
A Step-by-Step Guide onHow to Register Your Property
You might have decided to invest in real estate, but how do you find the right home to purchase? A glossy brochure can seem very attractive, but there are deeper aspects to look into before deciding whether a property will be a worthwhile investment.
Knowing exactly what questions to ask before zeroing in on a property can be the difference between a good investment and a bad investment.
A smart real estate purchase will deliver a high ROI margin while a bad real estate investment depreciates over time. For most ongoing projects, the factors that can influence price appreciation might not be immediately evident. This is why, understanding what to look for in a project can help a first home buyer make the right decision.
If you have decided to take the leap into real estate investment, here are a few first home buyer tips to follow.
If there’s one thing home buyers have no shortage of, it’s the number of choices available in today’s real estate market. The challenge then becomes not to find investment options, but to narrow them down. The two questions to ask yourself when looking for a home are:
Many financial institutions offer first time home buyer benefits in the form of lower interest rates. But a home loan can only finance 80% of the total property value, so the remaining 20% needs to come from your personal finances. Before you set out on a house hunt, make a complete evaluation of your personal finances and decide how much you can realistically afford to spend on a home.
With the huge number of projects coming up, the variety of residences available for first time home buyers in India have also increased. Typically, you can choose from three main types of residential properties:
Based on your budget and needs, you can decide which option is the best fit for you.
The location of your new home is crucial both on a personal level and from an investment perspective.
A few questions to ask yourself before deciding on a location are:
If you are planning to apply for a home loan, as most first time home buyers do, your credit score, or CIBIL score, can be a make or break factor. The CIBIL score is based on your financial credit history and can be analysed through the following categories:
Banks might not approve your home loan application if it is low, so if you do have a bad CIBIL score, it’s a good idea to take steps to increase it before applying.
Making a real estate investment is not the best time to test your luck with a gamble. While unknown builders might attract you with lower prices, you can never be sure of their quality of construction, if they have the required approvals or if they will complete the project on time This is why, you should always choose a reputed builder to ensure that the process goes smoothly.
For more information on how to prepare for your house hunt, read 7 Things a First-Time Home Buyer Should Know Before Investing.
One of the biggest advantages of living in your own house is that you have the liberty to make any change you’d like. If you find your walls drab, you can repaint them. If you want to drill holes in your wall to hang a few picture frames, no one can stop you.
But if there’s one thing you can’t change, it’s the location of your home. If you want to avoid a bad investment (and all of us do), the key is to identify a location that will guarantee the highest returns.
Choosing a location for purchasing your first home takes a little bit of research and a lot of foresight. You shouldn’t focus too much on how the neighbourhood is at present, but how it will grow in the future. Luckily, India is at a very exciting point of its development, where cities are expanding and suburbs are becoming hot investment destinations.
When it comes to selecting the perfect location for your home, here is a new home buyer’s guide to help you decide.
Bangalore is India’s biggest technological hub, attracting some of the biggest corporations in the world who are opening their offices here. As most of these organisations are opening up in the former outskirts of the city, it has led to a huge opportunity for real estate growth in these parts.
Bangalore offers the ideal trifecta every homebuyer is looking for: low prices, high appreciation and excellent locations.
The plethora of residential apartments in Bangalore that are being constructed offer home buyers an unmatched lifestyle. You can read more on What Makes Bangalore an Investor’s Paradise to help make your investment decision easier.
Within Bangalore, a number of localities have emerged as some of the best places to buy a home.
The turning point in Sarjapur’s history came when Wipro opened up its campus here. This acted as a catalyst for Sarjapur’s development, encouraging other large companies to also invest in this area. With the infrastructural improvements and economic growth leading to an influx of people moving to Sarjapur, property values here have skyrocketed. There have been a number of beautiful residential projects in Sarjapur launched which offer plenty of choice to customers. Another factor driving Sarjapur’s growth is its close proximity to major commercial hubs like Koramangala.
Take a look at Sarjapur’s Growth Through the Ages to understand how this locality transformed from a textile manufacturing centre to a technological hub.
Hennur is a major developmental zone in North Bangalore which gained prominence after the inauguration of the Kempegowda International Airport nearby. This led to several major tech companies opening up in Hennur like Larsen and Toubro, Nvidia, Target Corporation and more. With the growth in opportunities, more people were looking to buy residential properties in Hennur, which in turn, pushed up property values in the area. Its strategic location on the Outer Ring Road also makes it very accessible to other parts of the city.
Read more about Why Hennur Road is the Place to Be if you are keen to invest here.
Whitefield today has become almost synonymous with the technological dominance of Bangalore. This former suburb is now home to huge MNCs like IBM, SAP Laboratories, Mphasis and more. With hundreds of thousands of people moving here for jobs, residential apartments in Whitefield are some of the most luxurious in the city. This upward growth will not be stopping anytime soon as the Namma Metro project will make Whitefield even more accessible to other parts of the city.
Hebbal is widely considered the next Whitefield of Bangalore as it has witnessed a massive flow of investments from huge corporations, which have accelerated the development of this area. With the setting up of large tech centres like Manyata Tech Park, Hebbal has seen a growing demand for excellent-quality accommodation. If you plan on living in your new home, investing in Hebbal can mean that you will live very close to work. Even if you are looking for a home as an investment, Hebbal is still the best option as it will give you a steady stream of tenants and also high price appreciation.
Chennai has one of the best property markets in the country as the number of unsold inventory here is very low as compared to other metro cities. The Old Mahabalipuram Road (OMR) is one of the most important investment zones in Chennai since it is home to Chennai’s biggest technological corridors. Infrastructural developments also mean that the residents of OMR can enjoy the same comforts here that they would in other parts of the city. Real estate investments in OMR are almost foolproof as the rates of property appreciation don’t look like they’re going to come down anytime soon. Apartments in Chennai offer residents convenient amenities and luxurious living spaces.
Read why Suburban Chennai Is the New Housing Destination for homebuyers looking to make the best returns on their investment.
Vizag is the largest city in Andhra Pradesh and has been gaining prominence for its massive growth potential. Suburban areas like Parawada and Achutapuram have become favourites for IT companies looking to open up their offices in this city. Vizag also offers unmatched quality of life for its residents and is ranked as one of the cleanest cities in India. These factors combine to make this city one of the best places in India to make a good real estate investment. The new apartments in Vizag which are coming up also offer unmatched construction quality to its residents.
Kolkata is emerging as one of the most promising cities in India to invest in real estate. The real estate market here has grown by almost 30% from 2014-17. The city is also expanding rapidly, with suburban areas like Uttarpara becoming favoured destinations for both residential and commercial real estate investments. Since the market is still growing, the property prices are still comparatively low. But with the current price trends showing steady growth, these rates are certain to appreciate in the future.
When it comes to choosing a home to invest in, homebuyers today enjoy a greater variety of options than they ever did before. When you are trying to zero in on the perfect home for your family, it’s important that you don’t just focus on your present needs, but those which might arise in the future.
If you have a family of three at present, do you think this number might grow in the future? Will your parents or in-laws move into your home later on? Asking yourself these questions will help you find the right home that ticks all your boxes.
Homebuyers exploring their options are usually faced with four options, each with their own plus points. Here’s a home buyer’s guide to find the perfect apartment to fit your requirements and budget.
Apartments are the most popular and widely-available types of real estate available. There are a number of reasons why apartments are so attractive to homebuyers:
From very affordable basic apartments to ultra-luxury homes, apartments cater to almost every budget.
Apartment buildings are usually manned by 24×7 security guards, CCTV cameras in common areas and other advanced security features.
Apartments these days have a permanent maintenance department for the regular upkeep of the building and can also provide an electrician, plumber or any other service you might need.
Most associations regularly organise fun events, so you can mingle with your new neighbours and maintain an active social life. If you have young children, apartments will help them find playmates and ensure that they will never feel lonely or bored.
Residents in an apartment usually have access to common amenities like a swimming pool, clubhouse and gym. Since these facilities are shared among all, their upkeep is also taken care of by the building maintenance department.
A convertible home is a relatively new concept which is becoming increasingly popular among homebuyers. These homes are futuristically designed with an extra room that you can adapt to your specific needs. The possibilities for how you can use this convertible room are endless.
Here’s Everything You Need to Know About Convertible Homes to help you decide whether this is the best option for you.
If space and privacy are your biggest priorities, villas are the perfect option for you. These homes usually come with a private garden and terrace so you have ample space to enjoy. While villas were always considered to be very expensive in the past, today they have become comparatively more affordable as the market becomes more competitive.
Many homebuyers who want to invest in a villa are hesitant because they are concerned about security. However, gated communities can solve this problem as the individual villas are located within a common neighbourhood that has round-the-clock security.
Villaments are the latest trend in the real estate business and the concept is quickly catching on. These homes are uniquely designed to combine the best aspects of villas and apartments. If you want the affordability, security and convenience of an apartment but also the space and privacy of a villa, villaments can be the solution to your dilemma.
Since this is a relatively new concept, here’s Everything You Must Know About Villament Accommodation. This will help you learn more and will act as a guide to buying a house in India that fits your needs.
Often times, the price advertised is not the same price you end up paying for a home. The cost of an apartment as specified by the builder doesn’t always include additional charges such as service tax, clubhouse membership fees, maintenance charges, parking fees, etc. Some builders might even charge you extra if you want to buy a house on a higher floor or in a tower with a special view. Make sure you find out all the extra costs involved before you commit yourself to investing your hard-earned money in it.
At the time of booking a house, you will usually be required to pay a certain amount as a token fee to finalise your agreement. You will then have to sign a three-way contract between yourself, the builder and the bank you are receiving a home loan from to pay the remaining amount of the property value. This contract is called the buyer-builder agreement. It is very important that you carefully read the fine print of the contract before you unwittingly sign an agreement that might not be beneficial to you.
Many buyer-builder agreements have terms and conditions which specify that the builder can raise prices of the house before handing over if the market fluctuates. Once you sign this, there is no legal avenue for you to challenge the builder against additional payments. If you have a lawyer, ask them to comb through it completely before purchasing your first home.
Ensuring that the builder has all the required certificates and approvals in place can prevent you from getting involved in any legal hassles later on. Some of the approvals you should check for before purchasing your first home include:
Everyone wants their home loan application and property registration appointment to go smoothly the first time. However, if you don’t have the correct documents, you might have to reapply and wait longer.
Personal documents act as proof of your details and financial situation. These documents are usually required at the time of applying for a home loan. The documents related to the property include verification of its legal status, the credibility of the project and certificates from relevant authorities.
Here is a guide to the complete first-time home buyer checklist of documents you will need to present throughout the process.
In the past, buying property was considered a choice available to only a few who were privileged enough to be able to afford it. Now, however, it has become more accessible to most income groups. One of the reasons for this has been banks relaxing their interest rates and application requirements, especially for first time home buyers. Home loans have given people the capacity to buy their dream home by allowing them to pay the full property value in monthly instalments. Many banks have also introduced attractive first time home buyer benefits to encourage more people to invest. However, it’s important to remember that a home loan can’t cover the full cost of a property.
For those not familiar with it, applying for a home loan can seem like a tedious and complicated procedure. However, once you understand the process, you can prepare for it and learn how to purchase your first home with zero hassles.
Here’s a new home buyer’s guide to all the steps involved in the loan application process.
Once you decide on a bank to take out a loan with, you can download the home loan application form from their website or collect it in person. This form usually includes your personal and financial details. You will also need to attach specified documents as proof of the information you have provided. To understand the exact procedure involved, the websites of these institutions are an important source of first time home buyer information.
Banks are always undertaking a risk when they give out loans because there is a chance that you might not pay them back. This is why they conduct a thorough background check to verify your details and assess your repayment capacity. Most times, the bank will send a representative to your home or office and evaluate your documents.
Banks use a number of parameters to judge the repayment capacity of an individual. Younger applicants usually get preference as they have a greater number of working years left to repay the loan. It also helps if you work with a reputable and well-known organisation. For self-employed individuals, a financial statement of your business will tell banks how stable your income is.
One of the most important factors taken into consideration by banks is your CIBIL score. If your CIBIL score is below 750, you should take measures to increase it before applying for a loan.
Banks will send their representative to visit the property and check whether it is a good investment. Some of the details they look out for include:
After the bank has verified your personal and property details, they will sanction your loan. The draft of the agreement will be approved by a lawyer and then has to be signed by you. You will also need to hand over the original property documents to the bank who will keep it with them as security until you have repaid the entire loan amount. When you receive the cheque for the entire loan amount, it will usually be made out to the builder and not to you personally.
To learn more about this process, read our Quick Handbook: The Complete Home Loan Process in India.
There are a number of ways to claim first-time home buyer benefits for tax deductions against the interest payable on your home loan:
If you have only one house under your name and you aren’t living in it, then you won’t have to pay any additional taxes. For people with two or more houses where one is lying vacant, they will need to calculate the ‘notional rent value’ of the house and pay taxes on it. The notional rent is calculated taking into account the current price trends of the location. You can also claim tax deductions against this amount.
There are two main types of tax that are applicable when you are selling your property: Short-Term Capital Gains Tax (STCG) and Long-Term Capital Gains Tax (LTCG).
Read Best Tax-Saving Options to Explore in the Home-Buying Process to find out more ingenious ways to reduce your tax burden.
After what might have seemed like a lifetime, you have finally navigated the maze that is property investment and reached the reward: the keys to your own home. But before you plan a much-needed celebration to mark this milestone in your life, there is one last process you need to complete before owning your first home.
Even if you have started paying the home loan instalments and received the handover of your home, you are still not considered the legal owner of the property. According to section 17 of the Property Registration Act of 1908, a person will not be able to claim any legal right over a property unless it has been duly registered in their name. Not doing so will leave you vulnerable to property disputes in the future as it is not legally yours.
To ensure that you have complete ownership of your new home, here’s a few steps to help first time home buyers register their property.
Stamp duty is a form of tax that is levied by the state government and is either calculated as the current circle rate or as a percentage of the total property value of the house, whichever of the two is higher. Since the stamp duty can increase as the property value appreciates, it’s important that you register your property as soon as possible.
A sales deed needs to be typed on stamp paper which can be purchased through a vendor or on an e-stamp paper which can be downloaded online. As it is a legal document, you will need to get a good lawyer to draft it on your behalf. Once the deed has been drafted and signed, the submission of documents to the sub-registrar should not exceed four months from this date of execution.
When you meet your sub-registrar to register your property, they will first have to check the following documents:
After you make an appointment with your local sub-registrar, you can meet them on the scheduled date to submit your documents. After the sub-registrar checks the documents and stamp duty paid for validity, you will be asked to pay the registration fees. They will then give you the registered documents but will keep the copies to maintain their records.
With these documents, you can now celebrate owning your first home!
You can read our Guide to Registering Your Property to understand how a first time home buyer benefits from registering their new house.