Post demonetization the property prices have seen a continued downward trend. This on one hand, while, is not so good situation for investors but on the other hand, is possibly the right time for the end-user to buy the property. Not only the property prices are down the banks and financial institutions are also doling out longer duration loans at lower interest rates.
This makes the whole proposition to buy the house an affordable transaction. One can evaluate investing in an under-construction property or can choose from the ready to move in properties put up for resale by the existing owner. In case you are evaluating the latter option, then the following four things are must be kept in mind before buying.
Documentation The resale property could have been passed on from the original buyer to multiple owners. It is highly important to check on the complete trail of sale purchase. The deeds and transfers right from the first owner to the existing owner should be available in original and in verifiable condition. In case of incomplete documentation, you may be investing in an asset that may lead to losses. Also, verification of documentation is of high importance. In case you are looking at taking a home loan, the same would get initiated by the home finance company, but if the purchase is being made from your own funds (which is unlikely given the benefits available on a home loan) the documents should be verified through a lawyer who is expert into this process. The title should be clear and there should not be any other claimant to the property. In case of co-ownership, all the owners should sign the sale deed.
Funding Buying a property involves large sums of money. While most of the borrowers check on the home loan interest rates, they miss out on the other vital aspects of this loan. No bank or housing finance institution will fund 100% of the property value. While it could go up to as high as 90%, in case of a second hand property it may drop further depending upon the location, type of property, age etc. You would be required to foot in larger margin money if the bank decides to fund a lower amount of the market value. So it is advisable to check on the availability of funding from the lending institutions while weighing options. Another important aspect of funding is your eligibility. No lending institution will extend loans beyond your means to pay it. So it becomes apply important for you to check on the loan size that you would get granted.
There is an umpteen number of calculators available online today to help you get to the math of debt to burden ratio. Since apart from eligibility, your credit worthiness also plays a highly important role, it is advisable to check the CIBIL report before applying for a loan. It is available for free today and it will only help you get to know your current position. In case of an issue like a low credit score, you can work on it rather than going in for loans for bad credit that can turn out to be very expensive.
Maintenance This may seem to be a non-issue but can turn out to be a highly expensive affair if not considered initially. There are two aspects to it. First is the cost involved to make the place livable as per your need and taste and the other is the ongoing maintenance cost.
In case the property is being purchased from an investor and has been closed for years or in the situation where the property is quite old, you may be required to invest a large sum of money to make it habitable before you actually move in. Secondly, the ongoing maintenance costs can put a dent in your monthly outflow in case of a high end apartment complex and definitely needs to be considered while you are evaluating the property.
Other costs Then there are other costs like registration, transfer, legal among others that will escalate the overall cost of acquisition of the property and must be considered before the decision is taken.