Five questions to ask before you buy a house in India - Hulu Magazine
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Five questions to ask before you buy a house in India

Property prices a still very high and despite the high interest cuts, borrowing has not been significantly reduced.

For one couple, saving for their child’s education and marriage as well as retirement will be simple. This situation could however change if the goal of owning a house carried by one spouse appears in the household financial plan. Addition of the one goal can jeopardize their plan as they may have to liquidate existing investments to raise money for down payment. Buyers are currently optimistic about future income, job security and comfort with the cost of borrowing. Despite increase in buyer sentiment, most parts of the country are still not a good investment as property prices are still high.

Research on how consumer sentiment has increased in recent months.

Affording a home loan may seem like a no-brainer but most homeowners take one then find it difficult to repay the monthly fee. The home loan EMI is calculated at 40% of net household income provided that one does not have other loans, to avoid putting too much repayment pressure on a household..

If the home loan accounts for 50% of the household income, other goals will have to be downsized binned. Banks however, have a different way of calculating affordability. They consider your liabilities before they give loans. Before taking a loan, make allowances for unexpected changes in the market.

Factor in the add-on costs that are not included with the base price.

Rent vs. analysis.

Before getting the loan, you should first establish if you want to buy a house to live in or live on the rent the house will possibly bring. There exists rent-or- buying calculators but is highly recommended. It takes into account, cost of the house, down payment, interest incurred, expected appreciation and comparisons to similar accommodation in the area.

Test drive

Property is appreciating at a slower pace therefore, before buying an investment with a loan, assess if the property will appreciate at a rate higher than that of the loan.

Other major goals

Home buyers should be aware that home purchasing plans would have major implications on other financial goals e.g. retirement and marriage.

Contingency plans

Real estate is not a liquid investment and can therefore not be broken up to parts and sold at short notice. One should only invest in this when the money will not be needed on a short notice. An emergency fund should be available to handle expenses for 3-6 months.

Unexpected events

An insurance cover should be taken that is equal to outstanding loans.

Delayed project have become common and may cause loss of tax benefits offered on the home loan if possession is not done in time.

Unscrupulous actions done by builders

  • Prices are going up- it makes a person sign in haste and panic.
  • Assured rentals.
  • Sample flats.
  • Free goods accompanying the house-this may include free AC’s or kitchen. You have been charged for it and it is mostly of poor quality.

Generally speaking, the questions asked in this article about buying a house can be asked anywhere in the world; home ownership is an aspiration and goal of everyone around the world and the same challenges are being dealt with in other places.

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