EMI affordability
As a golden rule never let your EMI exceed 40-45 % of your net monthly income. If you earn more, you can always pre-pay your loan with additional disposable funds as most banks do not have pre-payment penalties now-a-days.
Down Payment
You will need to contribute at least 20-25% of the property value you choose. No bank will give you 100% home loan. 20% you have to arrange.
Tenure of the Loan
As a golden rule never let your EMI exceed 40-45 % of your net monthly income. If you earn more, you can always pre-pay your loan with additional disposable funds as most banks do not have pre-payment penalties now-a-days.
Interest Type
Fixed ROI means that the interest rate will remain constant for a period of 5-10 years and in some cases throughout the tenure of the loan. Floating ROI means that the interest rate can change anytime depending on the RBI norms and various Government policies and market conditions.
Charges and Penalties
As such there should be no extra charges except for the processing fees, legal verification charges in some cases, stamp duty on home loan amount. Make sure you are aware of all these charges and ask the banks a list of charges applicable in all cases in writing; never take their word for anything.
Insurance for Loan
Get home loan insurance or get yourself an insurance equivalent to the home loan amount. In case of any unfortunate event, certain insurance policies will pay for the pending loan amount that will provide you benefits in the event of disability, loss of job, some critical illness.
Tax Benefits
Be aware of all the tax implications as well as tax benefits you are entitled to receive while servicing your home loan. You are entitled to complete exemption of interest on home loan in India you pay, up to an amount of Rs. 150,000 and up to Rs. 100,000 on the principal amount.
Consider this before buying a property
While locating a property, the buyer needs to be clear whether the property is only for investment purposes or for actual use. If the property you are buying is for actual use then you need to consider whether that area has sufficient infrastructure.
This will include:
- Access to roads
- Power back up
- Water supply
- Shopping complex
- Hospitals and other health centers or clinics and chemist shops
- Bus stations
- Recreational facilities
- Entertainment outlets
- Educational institutions
- Fully landscaped (optional) etc.
The wide range of properties offered for sale and with various attractive facilities lures the buyers and are sometimes misleading also. Just set your eyes on a reliable builder and identify the property, which have least risk involved.
Making the right choice
Investing in a landed property is a major financial commitment for every family, hence one needs to put in a great deal of thought, consideration and planning while thinking of buying a property. Today, the choice of landed property is diverse ranging from plots/land, flats/apartments, individual villas, twin villas, duplex houses etc to mention a few. Before finalizing on any project or property that you like, it is necessary to study and investigate the desired property on the following parameters. This is required to ensure that you do not encounter any unforeseen problems or legal hassles after you have acquired the said property.
- Ensure that the property you are looking for is situated in an area equipped with the necessary lifestyle amenities that are pertinent for comfortable living.
- Ensure that the real estate developer you have chosen is reliable. This can be done by looking into their previous projects and company track record.
- Make sure that the property that you are looking to purchase is approved and possesses a clear title and sale deed. While purchasing flats and villas ensure that the project is CMDA approved and also that the building plans are as per government specifications.
- Study the project layout and project specifications in great detail to ensure that you are thoroughly comfortable with the services being offered.
- Approach banking institutions before hand to enquire into the prospect of securing a home loan if required.
- Your home is a valuable investment; secure it with a suitable Home Insurance Policy. Home insurance policies protect against various natural and man made disasters including – thefts & burglaries, fire, earthquake, floods, explosions etc.