Buying a house in a neighborhood can be daunting because you don't know what to expect from living there. However, there are some methods that can help you evaluate the condition and the atmosphere of a neighborhood.
Talk to the people.
A friendly and cordial conversation with the neighborhood residents can help you understand the current state of affairs. They are more likely to share honest and realistic information if they find you amiable. Besides, they have a better assessment of the situation as they live there.
Visit the place day and night
The time of day can affect how a neighborhood looks and feels. In the morning, everything might appear normal and pleasant. However, the best neighborhoods to buy a home are those that are also calm and secure at night. This is important for your own safety and that of your family. Therefore, you should inspect the area during both day and night before making a decision.
Proximity to your workplace
The distance between your home and your workplace matters. Choose a location that is close to where you work. Even though many people now work from home or follow a hybrid model, you should think about the future as well. You might change jobs someday and need to commute again.
Independent House (Villa) Vs Apartment
When it comes to choosing between a villa and an apartment, there are several factors to consider. Here are some of the differences between the two:
Price: Villas usually cost more than apartments. The market value and the registered value of the properties often differ significantly. This is especially true when you build your own house on a land you buy. When you buy a pre-built villa or apartment, these differences are usually smaller.
Customization: Villas offer more scope for customization than apartments. Since villas are independent residences, they can be designed to meet the specific needs of the owner. Apartments, on the other hand, have a fixed layout and design.
Amenities: Apartments offer more amenities than villas. Most apartment complexes come with facilities such as swimming pools, gyms, and clubhouses that are shared by all residents. Villas, on the other hand, offer more privacy and exclusivity. If your budget allows, villas in a community could be a more appealing option.
Maintenance: Villas require more maintenance than apartments. Since villas have their own gardens and outdoor spaces, they need to be maintained regularly. Apartments, on the other hand, have common areas that are maintained by the management.
Location: Villas are generally located in quieter areas away from the hustle and bustle of the city. Apartments, on the other hand, are usually located in prime locations close to schools, hospitals, and shopping centers.
Ultimately, the choice between a villa and an apartment depends on your personal preferences and budget. If you value privacy and exclusivity and don’t mind spending more money on maintenance, a villa might be a good option for you. However, if you prefer convenience and access to amenities and don’t want to spend too much money on maintenance, an apartment might be a better choice.
Important aspects to consider while purchasing or constructing:
The benefits of having empty space in a community. Living in an apartment with some vacant land around it has an advantage over living in a crowded community. If the builder decides to add more towers or renovate the existing ones, the apartment owners can enjoy a longer lifespan of their property at a low or no cost.
On the other hand, if the apartment is in a densely populated community, all the residents have to agree and pay for the reconstruction, which may be difficult depending on their financial situation at that time.
When your children get older, you may require more space to park your bicycles or extra vehicles. It is important to plan ahead and ensure that you have enough parking space for additional car or bike etc.
The number of bedrooms in a house should depend on how many people live along with you, such as parents, children, etc. If you choose a villa, you may have the option to build an extra floor, but this is not possible with apartments. It is not about today, it is in future as well.
There is a higher appreciation for Independent House or Villa over apartment as there is higher square feet of land over apartments. Land is an appreciating asset while the building or construction is depreciating asset.
Financial Aspects
Buying a house requires a significant amount of money for the down payment. You should have at least 35% of the budget in your hand before you start looking for a house.
Typically, you need to pay 20% of the total property value from your own pocket, while the banks can fund the remaining 80%.
You also need to register the house in your name, which involves paying about 10% of the property value as registration fees to the government.
Furthermore, you should reserve at least 5% of the budget for interior design.
Home Loan / Loan for down payment
If you are slightly short of down payment, you can consider taking a gold loan. But it is not a good idea to go for personal loans to fund the down payment, as it will increase your monthly commitment without any tax benefits.
Financial Institutions for Loans
PSU Banks:
Overall loan eligibility is lower in PSU Banks over private banks and NBFCs. Example, if the net salary is Rs 100,000, then the general eligibility for home loan is 50,00,000 rupees.
Private Banks:
Overall loan eligibility is slightly higher in private banks over PSU Banks. Example, if the gross salary is Rs 100,000, then the general eligibility for home loan is 50 Lakh rupees. Service is generally better in Private banks over PSU Banks.
NBFCs:
NBFCs are generally more lenient in providing loans. They provide to customers with lower CIBIL score and fund higher amount than PSU and Private Banks. But the interest rates are comparatively higher than PSU and Private banks.
Loan Type
If you can keep some cash in your bank account, you may want to opt for SBI Max Gain or similar loan products that let you deposit cash in a linked account. This will reduce the interest you pay on the loan by the amount and duration of your deposit.
This type of loan may have a slightly higher interest rate, but you can easily offset it if you deposit at least 1% of your loan amount in the linked account.
How to Save or Invest Money for Down Payment
Depending on the tenure you have to purchase the house, you can choose various options:
Purchasing in less than a year:
Consider investing the money in P2P Lending products or Fixed Deposits or Debt Mutual Funds like Liquid Funds.
Purchasing in 3 years:
Consider in investing in Mutual Funds like Balanced Advantage Funds
Purchasing after 5 years
Consider investing Large Cap or Large plus Mid Cap funds as they bring in stability and good growth in the invested value. Investing through SIP brings in more discipline and helps you buying your new home faster.
Purchasing after 5 years
Consider investing mid and small cap funds as they bring in best returns in long run. Investing through SIP brings in more discipline and helps you buying your new home faster.
Please do not consider investing in any insurance products for purchasing your dream home. Insurance products covers risk but may not give you best returns like Mutual Funds. There is no need of risk cover for purchasing a house but you definitely need better returns.
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Very detailed