The Top 5 Mistakes Home Buyers Make

12-Jan-2018

In today’s times, it is quite tough and intimidating to buy a house, especially, for the first-time home buyers. You will get all sorts of advice and information but when the financial stakes are so high, it is best to be thorough in checking facts of the zeroed-in property.

Here are top five mistakes to avoid while investing in real estate:
      1.Not checking your loan eligibility before booking a property – In case the lending bank doesn’t grant the loan amount you need, you have to arrange it from other sources (on heavy interests). This can be truly disastrous for your financial health! You may end up cancelling your purchase agreement and forfeiting your booking amount. Voora Tip: You can easily figure out your investment budget by sourcing indicative loan eligibility from banks or financial institutions (in housing sector). This is known as pre-approved loan status. They gauge your ‘loan repayment potential’ by inspecting your CIBIL score, employment documents, and existing loan records. Around 40-50% of your monthly salary is considered as affordable homeloan EMI.
      2.Selecting a property for emotional reasons – At times, people end up buying a house for its ‘vibe’ or its emotional significance to them. When they move in, many issues crop up - like insufficient electricity, poor locality, water shortage, high maintenance costs, poor construction, lack of infrastructure etc. They could have easily averted the crisis by being objective and choosing another property. Voora Tip: Be practical about the cost, facilities and location of the property. Talk to the residents of the building or take professional help to find the red flags. Then reflect if those flaws can be rectified or lived-with because there is nothing like ‘100% perfect flat’. Objective analysis can save years of distress.
      3.Don’t go by quoted prices – What builders promote in advertisements are never exact. They may refer the super-built up area (includes lobby, stairs etc.) as the size of the flat but the actual carpet area might be 30-40% lesser. They may not include floor rise (incremental price buyers pay for the desired floor), maintenance charges (to be paid in advance), car parking cost etc. Voora Tip: Do your research and ask relevant questions. Apart from the usual ‘hidden charges’, don’t forget to include stamp duty, GST, registration charges and home insurance premiums while calculating the overall cost of the house and monthly EMI amount.
      4.Not paying dues on time before applying for the homeloan – Loan lenders depend heavily on CIBIL scores for deciding on applicants’ loan eligibility. If there are delays in your EMI payments or changes in your income the CIBIL score dips. This reflects in lower loan amount (than pre-approved loan offer), higher interest rate or even loan rejection. Voora Tip: Plan your finances wisely. Don’t allow your credit score to change before you get your homeloan approved. Remember, pre-approved loans are not guaranteed ones. Any change in bank’s policy, your CIBIL score or Government regulations might throw your planning out of the window! Also, completely avoid taking new loans or credit cards. 
      5.Not seeking professional help – Purchasing a property can be a daunting process. These days many real estate constructions get delayed (sometimes for years) due to insufficient permits or approvals. Delayed Completion Certificate further defers the possession date. You may later find that a lot of things promised to you by the seller have not materialized.  Voora Tip: Lawyers are better equipped to read the fine prints in sale deeds, permits, and other relevant documents. By not taking legal help for verifying these documents you may save a few thousand but will end up losing in lakhs.

Doing meticulous research and financial planning can make your life easy in the long run and will allow your ‘dream home’ to be just that!