Complete Guide to Buying Your Dream House

The year 2020 and 2021 has been a learning curve for everyone. It has shown us the true priorities of life and the importance of being financially stable. While everyone’s path to becoming financially stable is different, there is one thing common in everyone’s plan, i.e., owning a home.

Owning a home gives you a sense of accomplishment and makes you feel secure, which gives you the strength to face the world with confidence. If you still don’t own a house property, you shouldn't delay your plans to own one. This new year, make a resolution to buy new home in 2023.

Top 5 reasons why you should buy new home in 2023:

• With rising costs of input materials, your dream house will cost more to buy
• Living on rent is expensive in the long term and gives no return compared to owning a home
• The value of your house will appreciate over the long term
• Favourable government policies for first-time house buyers and attractive interest rates on home loan
• Watch your loved ones grow in life at the comfort of your own house, where there are no restrictions

Buying a New Home - Checklist

If you are planning to buy new home, here are the things you should keep in mind before purchasing one.

1 Budget

A proper budget is very important when moving forward to buy a new home. If you are planning to take out a loan to buy new home, check how much percentage of your monthly income can be used for home loan EMIs after meeting all your financial obligations.

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The idea is, your new home should be within your financial means and should not result in financial stress.

2 Location

Your new home should have access to good road connectivity and all basic amenities like water supply, electricity, etc. It’s better to buy a new home in a location which is projected to develop over the next 20 years and where the price is within your budget. Also, such properties have a high resale value.

3 Loan Eligibility

You should check the home loan eligibility and maximum loan you can avail of before applying for a home loan to finance the purchase. For instance, your home loan eligibility depends on your repayment capacity, credit score, down-payment as most lenders require you to make at least 10% as a down payment. (please note that this percentage could be higher depending on your eligibility and the lender’s policy)

You can use our free online home loan eligibility calculator to check the maximum amount you may be eligible to get as a home loan.

4 Stamp Duty and Registration Charges

You should not miss out on the stamp duty, registration fees, local body taxes while planning for the budget. Before zeroing on the house property, check out the market valuation of the property in the books of the local municipal body and the stamp duty charges.

5 Additional Fees and Commission

Look out for additional charges such as real-estate agent commission, monthly maintenance charges, charges and commission by the lender, lawyer, brokers, etc. If you are buying a pre-owned property, run a check on the property and verify, whether the property is clear from any legal hurdles, and has all the necessary paperwork. Lenders may reject applications for purchasing homes that are under arbitration, or have insufficient paperwork.

6 Tax Planning

Do you know, both interest component and principal component on home loan EMI qualifies for tax deductions under different sections of Income Tax Act. And, to get the maximum benefits of tax deductions on home loan, you need to plan your EMI amount as per your income and repayment capacity.

7 Essentials to Buy for New Home

After buying a new home, you may need to invest a little more to make the place liveable, like buying furniture, electrical equipment, kitchenware, security equipment (locks, CCTV) etc. If there is a frequent power outage in that area, you would need to put up a power backup system in place.

While budgeting, you need to consider all these expenses beforehand, so that you can plan accordingly.

Home Loan Eligibility and Documentation

The basic home loan eligibility criteria at Grihashakti are:

• Applicant must be a resident Indian
• Age must be above 21 years and below 65 years at the time of application for a home loan
• Salaried individuals should have a stable income source and must be employed in a reputed organisation with at least 1 year of work experience, and 6 months in the current organisation.
• Applicant should have a CIBIL credit score of 700 and above
• Applicants must meet the specified monthly minimum income criteria as per employment type and location.
• Down payment for the property

For self-employed professionals, the minimum monthly income criteria depend on the nature of the job and industry.

• PAN and KYC documents
• Proof of income for salaried employees (salary slips, IT returns, Form 16)
• Proof of income for self-employed (IT returns, CA audited business financials)
• Bank statements of the past 6 months
• Complete set of documents relating to the property you wish to purchase

Now, you know the drill, things to do before buying a new home. Therefore, start planning your next year and realize the dream of owning a new home in 2023.

Must Read : How to Achieve your Dream of Owning a House Using PMAY Subsidy Scheme