Top 5 Tips and Benefits for First-Time Home Buyers
Owning a home is the archetypal Indian ideal. But, as it is quite evident, soaring real estate prices, a turbulent stock market, and increasing costs of living have made purchasing a home incredibly difficult and daunting. If you have gathered the resources to buy your dream home, then let me remind you that it is not enough. You should also have the right knowledge and awareness to ensure that your real estate investment is worth every penny.
As a first-time home buyer, it is imperative that you are extra careful and have an in-depth understanding of the process involved in buying a home. Likewise, looking for the right home requires time, effort, and commitment. You should meticulously weigh your options in tandem with your current lifestyle and your budget. Last but not least, remember that the house you buy should be future-proof, implying it should serve the needs of your family for years to come.
Top 5 Financial Tips for First-Time Home Buyers in India
1. Choose the Property Before You Apply For The Loan
Financing a house is expensive. So, it is likely that you will be applying for a home loan. But, before you apply for the loan, make sure to scout for the right house and property and visit it in person. Knowing the nitty-gritty of the property can help you opt for the ideal home loan.
Likewise, when you look for a home loan, check out flexible repayment options, attractive interest rates, and easy availability. All major commercial banks, housing finance companies, and a few NBFCs offer home loans. But remember that home loans do not pay the entire price of the property. Usually, most home loans pay only 60 to 80 percent of the property’s price, and the rest has to be paid out of pocket.
2. Save for Down Payments
Home loans do not finance 100 percent of your property’s price. You need to pay around 10 to 25 percent of the home’s cost from your pocket—something that we call a down payment. Before approaching a house loan lender, save the down payment.
3. Verify the Property’s Documents and Paperwork
The third financial tip for first-time home buyers is to check the paperwork and ensure that the property chosen is free from any dispute. So, check the RERA registration documents, ensure that there is no encumbrance on the property, verify if the seller is the rightful owner of the home, and so forth. Well-verified property documents also make the loan-availing process quite easier.
4 . Borrow What is Required
Another financial problem that first-time home buyers often face is overborrowing. It is an easy problem to get entrapped in. So, have a clear plan in place and know exactly how much you will require to fund the purchase of your first home. Then, ensure that you only borrow the said amount. Such stringency will prevent you from falling prey to a debt trap, where you have to take on more loans to repay existing liabilities.
5 . Prepare to Pay the EMI
Quite understandably, a home loan is a long-term commitment. There are several tax advantages to taking a home loan. But you also have to ensure that you have enough money to make monthly EMI payments.
Now that we have touched upon the five financial tips for first-time home buyers, let us delve into another dimension of the topic.
Top 5 Ancillary Tips to First-Time Home Buyers
1. Consider the Size of the House
While gauging the size of the house, it is essential to be mindful of other factors, such as your budget, the number of family members living in the house today and future prospects, whether the house is for self-use or brought from an investment perspective, and so forth. Answering these questions will help you decide the ideal size of the dwelling.
2. Floor Rise
Real estate developers often levy a higher rate per square foot for apartments that are located on higher floors in a high-rise building. So, the 1st floor of the same apartment complex can be cheaper than the 10th floor. Similarly, corner flats are also sold for a premium. Keep these conditions in mind while buying your new home.
3. Location Should Be A Priority
Deciding the location is one of the most crucial factors to consider as a first-time home buyer. Properties within the city centre are convenient, but they will cost more per square foot. Similarly, you can see a reduction in property prices as you move to the suburbs. Other local nitty-gritties to keep in mind while buying a new home are cost per square foot, proximity to your work, availability of lifestyle amenities like supermarkets, nearness to your children’s educational opportunities, etc.
4. Opt for a Reputed Home Builder
The builder is the real estate company in charge of constructing your abode and handing you over the finished apartment in a designated time frame. It is quite common for builders to suffer from financial stress and delay their projects. To avoid such hassles, research the builder thoroughly before committing to the purchase.
5. Check the amenities
Last but not least, the apartment you choose should be in a complex with amenities such as parking lots, clubhouses, gardens, convenience stores, etc.
Let us now wrap up the article by checking out the benefits to first-time home buyers.
The Top 5 Benefits of Being a First-Time Home Buyer in India
1. Deduction of Principal Amount Under Section 80C
First-time home loan borrowers are entitled to tax relaxations of up to INR 1.5 lakh on the principal repayment of their house.
2 . Section 23(b): Tax Deduction for Interest Paid
When computing self-occupied house property income, housing loan interest up to INR 2 lakh is deductible.
3 . Non-House Rent Allowance Concession
If their employers don’t provide HRA, first-time homebuyers can get Section 80 GG reimbursements.
4 . Deduction on GST
First-time home buyers with an average income of 18 lakhs per annum can enjoy benefits of up to INR 2.7 lakhs under the Pradhan Mantri Awas Yojana.
5 . Pradhan Mantri Awas Yojana (PMAY)
First-time home buyers belonging to economically weaker sections (EWS), lower income groups, and middle-income groups can claim tax concessions on home loans under PMAY.
So, there we have it: a crisp overview of the top 5 benefits and tips for first-time home buyers.