7-point homebuyer’s checklist for 2022

After several years of tardy growth, a surge in demand for residential property has led to a smart uptick in real estate prices across the country.

Delhi NCR saw the biggest jump in prices, with prices in Noida Extension and Greater Noida shooting up smartly (see chart). Despite the sharp rise, prices are still within reach in these micro markets. A 2-BHK house measuring 800 sq ft would cost roughly Rs.34-38 lakh, which makes the property affordable for the middleincome group. In Ahmedabad, the other city which has witnessed double-digit rise in prices in the past one year, a 800 sq ft property in the most happening micro markets will cost roughly Rs.40-48 lakh. This is about 10-12% costlier than last year, but still within the reach of middleclass households in the city.

If you are looking to buy a house, this could be a good time to take the plunge. Property prices have risen steadily in the past one year and home loan rates have gone up following the flurry of repo rate hikes this year. But though this has impacted affordability, analysts say the pent up demand is likely to push home prices up further in the coming months.

Have you applied for a pre-approved loan?

Though real estate portals make it look like child’s play, zeroing in on the right property can take several weeks of intense research. So, it’s a good idea to get a preapproved loan even as you are searching for your dream house. Lenders give an in-principle approval to the loan on the basis of the income and repayment capacity of the borrower.

Is the housing project registered under RERA?

The Real Estate Regulation Act (RERA) is a landmark legislation that protects the rights of the buyer and punishes the developer for delays, defects in structure and other shortcomings. RERA ensures timely delivery by preventing the builder from channelising funds to other projects. Check if the project is registered under RERA. However, though all states except Nagaland have implemented RERA, not all projects may be covered by the legislation. Also, don’t depend solely on RERA certification.

Should you go for ready or under construction flats?

One big dilemma for buyers is whether to pay more for a ready-to-move-in flat or book an under-construction house at a lower price. Though costlier, ready to move-in homes remove any uncertainty of delays. You get immediate possession of the house, move into new house and stop paying rent. If bought for investment, it starts generating rental income immediately.

Do you know the real area you are paying for?

You might find this unbelievable, but a lot of people don’t know how much area they are buying when they book a flat. Builders try to hoodwink buyers by touting the super area of the project. But this super area includes the common facilities such as the lobby, elevators, staircases and corridors which are used by all residents. These facilities can account for up to 20-25% of the super area quoted by the builder.

Can you afford the EMI?

When buying a house on a loan, take time to assess whether you can afford the EMI. Many people get emotional while buying property and overstretch their finances. Ideally, your loan to income ratio should be below 35%. This means, all your existing and the planned loan EMIs should not add up to more than 35% of your net monthly income. In some cases, this can go up to 40-45%, but going beyond 50% is a route map to disaster. Lenders keep this in mind when they extend you a loan, but further borrowing from other sources can push up the overall liability of the individual.

Will a fixed rate loan suit you more?

Given the rise in home loan rates in recent months, many home loan customers may be considering loans at a fixed rate rather than a floating rate. Fixed rate loans are costlier than floating rate loans by almost 100-150 basis points, but they don’t change. The prevailing rate for floating rate loans is about 7-7.5%, while fixed rate loans charge 7.9-8.5%. Understand the features of the fixed rate loan before you sign up. Many fixed rate loans are fixed only for a couple of years before they switch to a floating rate.

Do you have life insurance to cover the loan?

With almost 60-70% of the value of the property funded by a loan, you need to be ready for unforeseen circumstances. Buy a term insurance cover equal to the loan amount so that your family is not saddled with unaffordable debt if something happens to you. When the pandemic was raging, there were numerous cases where the sole breadwinner of a family passed away, leaving the dependents with a heavy liability.

Kolkata Outlook

The key employment hubs of Rajarhat and New Town have a large supply of 2-BHK and 3-BHK units, which are preferred by homebuyers. Further, these and some other localities of North and Central Kolkata are in high demand owing to their proximity to the airport and connectivity with the rest of the city.

By LNN (Liyaans News Network)