Perform these checks before you buy a house

Deciding to buy your own home is only half the job well done – the other half involves performing some essential checks before applying for a home loan.

After much deliberation (and paying rent money for years) you have reached a decision: you will now buy your own house. But after taking stock of your finances, you realise that you have only about a quarter of the money that you might actually need. The remainder must come from a home loan.

Accordingly, you start looking at houses and finally find one that you really like. But before you rush off to apply for a home loan, do check:

1. The locality. The house you buy must be located in an area that has all or most of these amenities: a hospital, school, entertainment centre, garden or park, gymnasium, swimming pool, fire brigade, grocery stores, bus stand, etc. Take a walk around the neighbourhood to see where everything is located and how far the house is from your place of work. Also speak to the immediate neighbours on the floor and ask them about their experiences in that locality. Find out if the building has any rules that you are not comfortable with, such as a ‘no pets’ policy.
2. Who is the developer? If you are scoping out under-construction properties, you must run a thorough background check of the developer’s credentials. With the real estate market facing a slowdown at the moment, many projects are stuck for lack of permission and funds, so you should ensure you are not stalled in your home purchase. Take a look at the developer’s other projects to determine quality of work and speed of completion. The best idea is to look for homes in projects that have a pre-sale tie-up with housing loan lenders. The loan process proceeds quite fast in such cases.
3. Is the price right? Do not accept the quoted price at face value: get in touch with a reputed broker in the area to find out the current market price for the house you want to buy. If the price is correctly quoted, you can run a calculation check using a home loan EMI calculator to see if you can afford to pay the EMI on the loan amount you require. If you are being charged above the asking price, find out why and negotiate heavily.
4. After you find your dream house, it is time to assess your finances again. Use a home loan EMI calculator to arrive at an EMI figure that you can repay every month without over straining your budget. You can use the home loan EMI calculator also to check the difference in monthly outgo basis fixed and floating rate of interest.