Important things to consider before buying a flat/house by home loan

Buying a flat or independent house is a dream and goal for a majority of working employees & self-employed. Many people after getting settled in a good job or business, plan to buy a home. Making a perfect decision is an important and responsible step for all the people who plan to buy a residential property, because now a days the high ratio of employees are buying homes by getting the loans from national and commercial banks.

We should concentrate on certain parameters before purchasing a residential property through a housing loan. Let’s discuss on those one by one.

Firstly, consider your current net salary; Banks will approve the loan based on your net take home salary and deduct the regular monthly installment amount based on the loan amount taken. Hence based on your capability of paying monthly installments, you decide the loan amount to be taken i.e. the budget you are planning to apply. You should be able to manage you normal livelihood expenditures even after salary deduction for loan installments.  Loan amount will be given maximum upto 20 years tenure based on your age and monthly deduction amounts decided based on the tenure of the loan. Better idea is you can put a maximum possible tenure for the housing loan repayments and whenever you have a good amount of money like 1 lakh, 5o thousands or whatever. Just pay the cash at the bank against the repayment of your loan so that your loan amount and deductions will reduce accordingly. You can complete the loan bit faster

Secondly, search for a flat or other residential property within your budget amount. Also note that you may get the loan amount of 80% to 90% of the total property cost, so you should be in a position to manage to pay remaining 10% to 20% of amount plus registration cost of property by cash at your end. If you are purchasing a newly constructed flat, builder may charge extra cost for amenities such as development of flat or house and for vehicle parking space as well. So discuss end to end cost, negotiate the final amount then only go for purchase.

Thirdly, check the past 20 years history of the property thoroughly such as encumbrance certificate, link documents and registration documents etc. of the property.

It is a good idea to buy a home, but need to estimate the things proactively before finalizing it. People living in rural areas can easily manage all these compared to the employees living in cities because of cost of living and cost of property. If you take a home loan, before approving the loan, banks will also analyze the legal proceedings and engineering plan of the property; if all the conditions are satisfied then only they approve the loan. If someone who is looking to buy home with cash and without the intervention of bank loan, should also consider all the above parameters before buying except the first topic. Hence if we can manage all the above, can surely fulfill the dream of owning a sweet home

The income tax exemption advantage also available for home loan installment amount paid in every financial year (till the closure of the loan amount), which can be done by submitting investment declaration form to your employer

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