It is no surprise that the majority of first-time home buyers regret their decisions after buying a house. This is because they lack information and experience on the things to be taken care of before purchasing a first-time home.
First-time home buying can be a very challenging process from determining your budget to choosing a location to managing paperwork to finding the right agent. All these things can be an absolute nightmare for you. So, to ease your journey and to make your first-time home-buying experience special, we bring you a simple and easy guide.
Things You Need to Remember before first-time home buying
- Determining A Budget
For buying a house for the first time, you must assess your financial condition to streamline the process.
Income stability: You must analyse your monthly income, expenditure, savings and debt to determine how much you can pay for your new house every month. You should not pay more than 30-32% of your monthly income in this respect.
Savings assessment: This assessment will help you calculate the amount you will be able to pay for a down payment for first-time home buying. The more the downpayment amount, the smoother will be your journey. But under normal circumstances, you can aim for 20-25% of property value.
Additional expense: Additional costs like property tax, maintenance fee, stamp duty, registration fee, commission of agent etc will cost nearly 5-7 % of property value. So, be prepared for that as well.
Home loan: If your income and savings are not enough then you can apply for a home loan and curate the loan amount, loan tenure and interest rate as per your financial status. But you need to make sure that you are eligible for the loan based on your income, credit score etc.
Pro-tips:
Try to pay your home insurance as early as possible so that your payment does not get hampered by inflation and changing economic conditions.
Look for those houses where the rate is 10-12% less than your actual budget so that you do not have any difficulty paying for the additional charges.
Be very careful of the interest rate of home loans. Even a little increment in interest rate may abruptly impact your EMIs.
- Choosing A Suitable Location:
After you have taken care of the finance part, here comes the second most important part that many people do not seem to care much about and regret later. Be mindful of the following factors for first-time home buying.
Connectivity and Accessibility: You need to make sure that institutions like schools, workplaces, markets, and hospitals are easily accessible from your home. Also, the condition of road and traffic, ease of transportation, drainage and sanitation are very important factors to be taken into consideration for first-time home buying.
Safety and Security: You must have an inspection of your locality and research the crime rate and other safety measures of that area. The presence of security guards, CCTV, good street-light etc. might give you assurance on safety and security of your place.
Future Development: You should be well aware of the chances of any future development by both the public and private sectors. I’m sure you do not want your newly bought house to be demolished for building a wide road or a new shopping mall.
Neighbourhood Type: Living in a happy and friendly neighbourhood may add extra fun to your first-time home-buying experience. The presence of a park, library, gym, restaurants, shopping mall etc makes a good neighbourhood.
Pro-tips:
Never buy a house virtually. You must inspect the house and the neighbourhood at least once.
If the house is 10-20 years old then make sure the house appliances like an air conditioner or heater etc are working well.
Builder’s reputation must play an important role for first-time home buyers.
Try not to buy a house in an area where a large number of sellers exist. It may lead to an increased price of house.
- Type Of Property:
Here comes the decision-making part for first-time home buying. You may consider the following criteria and choose the best type of property for yourself.
Type of home: You must have an idea of whether you want to buy a house, an apartment or a flat. Deciding beforehand about the type of home may save you time and energy.
Size of property: Based on your financial status and budget, you can decide whether you want a small house for yourself or a larger one to fit multiple generations.
Pro-tips:
Try to buy a house from an older seller. There is the possibility of having lower rate, better negotiation, better construction, a bigger house and an already established neighbourhood. The only flip-side will be that you might not get an up-to-date house.
If possible, buy a house which will fit multiple generations. It will give you much peace of mind in case of any future demographic changes in your family.
- Resolving Legal Matters:
Here comes another very important but extremely hectic step. Ignoring this step can cause heavy loss to your property.
First, be very careful of the ownership status of the seller. There should not be any ambiguity or legal dispute regarding ownership status.
The other legal documents that you must check are approved building plans, property tax receipts, NOC from relevant authorities, environmental clearance, property use permits etc.
Further, check if the building has RERA registration (Real Estate Regulatory Authority registration).
Negotiation And Closing Deals:
You should have a clear understanding of the market rate of property and negotiate with your dealer accordingly. Also, make sure to choose the right dealer with authenticity and experience. You can also seek the help of legal practitioners to resolve the legal matters associated with first-time home buying.
Pro-tips:
If you fear a worsening economic condition or higher inflation then try to lock the rate so that you do not have to pay much in future.
Make sure to discuss the commission of your agent early to save yourself from surprising payments and any kind of exploitation.
Try to shop with at least 3 agents so you get the best house at the lowest price.
- Buying And Registration:
Here comes the end of the journey where you can finally enjoy your newly-bought property. But the following steps should be taken into consideration:
Register your house from the authorities along with all the necessary documents.
You can also opt for home insurance to save your new property from any kind of damage.
Make sure to pay your property tax regularly.
Summing up
Seeing your income and savings fulfilling your dream of buying a new house is indeed wonderful. But first-time home buying in India or any other country is an extremely hectic and time-consuming process. Hopefully, this guide will help you ease your journey. Once you complete the process and shift to your new house, make sure to decorate and maintain it well. This way you will not only have a happy time living there but also ensure the chance of reselling your house at a good price.
