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Essential Guide for First-Time Home Buyers

Updated: Mar 21, 2022
Essential-Guide-for-First-Time-Home-Buyers

Introduction

Buying your first home can be an exhilarating experience. While this is a journey that everyone looks forward to, you might need to prepare yourself to make some important decisions. If you do not know much about terms such as stamp duty, registration fees, property insurance, you need not worry. We hope to be with you every step on the way to make this experience easier for you. With that in mind, we hope this article will help you navigate this journey with some tried and tested tips that are essential for anyone set out to buy their first home.

Step 1: Determining a budget and securing funds

Before starting with the search for your dream home, it is important to have a good understanding of your budget. It is always a good idea to list out potential sources of funds in case you are planning to finance your home purchase with more than just savings. Keep a close check on your credit score. It is at this stage that you should seek out more information regarding home loans and the amount you are currently eligible to borrow. You can use Grihashakti’s home loan eligibility calculator to get an estimate of the maximum loan amount you may be able to get.

Step 2: Determining what your dream home looks like

The next crucial step to purchasing your first home is to make many small but important decisions revolving around the location, locality, number of bedrooms, etc of your investment. It would be a good idea to check if these factors align with your future goals. For instance, if you plan on starting a family in the future, it could help to buy a house in a locality nearby a school. Proximity to hospitals, banks, or post offices can also be an added advantage.

Step 3: Crunching the numbers

Some important numbers to look out for after determining your budget and what your dream house looks like could include the reselling potential and the rental rates in the area. These numbers can make a massive impact on determining the quality of your investment a few years from now. If you are purchasing a property with the intent of renting in mind, it can be helpful to note that rental rates can be ideal in highly populated areas. It could also be a good idea to crunch the numbers and account for additional charges and costs in the process such as those of real estate agents, lawyers, brokers, notaries, etc.

Step 4: Taking a home loan

This is one of the most important steps for first-time homebuyers and could mean a lot of research, comparing, reading for you. Luckily, there are a host of online resources to help you at this stage. You could take the help of many online calculators such as Grihashakti Home Loan Eligibility Calculator to check the maximum loan amount you may be able to get and check the lender’s eligibility criteria for a home loan. A home loan EMI calculator can also help you get an estimate of your monthly EMI, which can in turn help you plan your finances and. Keep in mind that your final eligibility for a loan can depend on several factors such as your age, repayment capacity, existing loans, etc. If you think that you need a larger loan amount, you can add a close family member with a good income and credit score as a co-applicant. You must also make sure that you have the required downpayment for the loan, along with other charges such as stamp duty and legal costs.

Here are some additional blogs that could help you to increase your knowledge on this subject Home Loan Blogs: Everything you want to know.

Step 5: Stamp duty, registration fees, etc

These are some of the costs besides the value of the property that has to be borne while taking ownership of your house. Although the stamp duty usually comes out to be about 5-7% of the property’s value, it varies from state to state since it is levied by state governments. These charges are not accounted for in the home loan. This is why it is recommended to pre-plan how you might be looking to shoulder these expenses. Doing this will help you prepare to buy your first home.

Please refer to the table below for information about the stamp duty and registration charges levied in some states.

City Stamp Duty Charges Registration Charges
Uttar Pradesh Male - 7%
Female - 7%-Rs 10,000
1%
Bangalore 2% - 3% 1%
Chennai 7% 1%
Delhi 4% - 6% 1%
Kerela 8% 2%
Kolkata 4% - 5% 1%
Mumbai 4% - 5% 1%

Please note that these rates are subject to vary. It could be a good idea to refer to your state government’s official website for exact detailed information about stamp duty and registration charges.

Step 6: Property insurance and future considerations

Already completed all the steps above? Congratulations! You have completed almost all the steps to finally taking a back seat and enjoying the comfort of your new home. However, the work is not finished just yet. A very important step is still waiting for your consideration. Property insurance can help safeguard you against damages. Relatively cheap but highly effective, these insurance policies can prove to be a good investment.

Must Read :Tips To Make Home Buying Process Less overwhelming

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