Smart Tips for First-Time Homebuyers in India

Buying a home is the largest investment in anyone's life. Buying for the first time requires a good understanding of certain aspects such as setting the right budget, deciding on the type of property, position, amenities, and builder character, and getting the home loan to buy your dream home and Investing In A Property.

Like our first date or our first job, the purchasing of our first home is also one of the most significant moments in our life. It's a dream come true for a lot of us. Still, buying a home requires a lot of careful planning and investment. Here are the top tips for you if you're buying a home for the first time.

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1. Get a fix on a budget

The first thing the home buyers need to do is to get a fix on the budget. Prices of homes will vary extensively depending on the type of property, location, and your budget. 

You may want a high-end property in a posh neighborhood, but it may not be within your budget. One way to get an idea of your budget is to use a home loan eligibility calculator.

By using a calculator, you can figure out your maximum eligible home loan quantum, and yearly payments for a certain loan quantum by considering a reasonable interest rate and a term of 15- 30 times. 

For this, it's important to look at your financial commitments because as a rule the total EMIs( equated yearly inaugurations) you should be paying across all loans shouldn't be more than 40 percent of your take-home income.

Also, relate Home Loan Affordability Calculator to know the affordability for your profile.

2. Decide on the type of property

This will depend on your budget. You need to decide what type of house you want. Most of us living in big metropolises would prefer buying an apartment. 

Consider factors such as the number of rooms depending on the number of family members, parents, and children. Try to arrive at the best fit based on your budget and needs.

Home buyers must consider the purpose for which you are buying a home, whether you are buying to live in or to invest. However, there are some things to consider in terms of how long you intend to stay if you are buying to live.

However, it would be advisable to consider the target audience and their interests before zeroing in on the quality of the property, if you are buying for investment.

3. Focus on the position

Choosing the right position is an important factor when buying a house for first-time home buyers, especially in a big megacity where traveling times can be long. Your work position, the distance of schools from your house access to public transport, and nearness to train or metro stations are some of the factors you would need to consider. 

Other factors that you need to keep in mind are a good neighborhood and closeness to the market area. The budget will also play an important part because home prices vary a lot depending on the position.

4. Consider amenities

It's important to decide on the services you want. Nowadays, apartment complexes are equipped with swimming pools, gymnasiums, gyms, and clubs. Decide which amenities would be demanded. For example, if you have little kiddies, a play area is a good thing to invest in and also, the Luxury Projects.

However, you would need a garage or a parking lot, If you have your own vehicle. It's important to choose the amenities precisely as all these will add up to the total cost of your home.

5. Choose a reputed builder

Since buying a home is a big commitment, it's important to check the expertise of the builder. Check the track record of the builder and see whether it has delivered projects on time in history. 

You can also speak to guests and see how their experience has been with the builder regarding the construction quality and delivery of what was promised. Avoid fly-by-night drivers with no track record who are making big promises.

However, a ready-to-move-in and affordable housing project is the best to avoid several issues with the builders, If you are in doubt. 

6. Select the right home loan

Since a home is a big-ticket purchase, very few people may come forward for a loan. Hence, one needs to get a home loan. You can talk to your bank, but it's a good idea to compare home loan rates and features offered by several lenders. 

Having your home loan approved is one of the most important ways when buy your house. A home loan also offers substantial tax benefits.

As the best practice, keep your home loan term as short as possible. Progressive interest payments on term loans are very high. 

As an example, the total interest payment for a 25- time home loan is 160 compared to 55 for a 10- time home loan.

7. Work on perfecting your Credit Score

All lenders consider the credit score and history of the home buyers before they agree to your loan. The advanced the credit score, the better your chances of securing the loan. 

Also, when you have a good credit score, you can negotiate explosively with the lender, thereby scoring lower interest rates. However, try to improve your credit score before you approach the lender, If you have a poor credit score.

8. Approach the Bank where you hold a Salary Account

While choosing home loan lenders, you're likely to land a better deal, if you approach a lender with whom you maintain your payment account. 

Since you're a client of the bank, you're likely to get lowered interest rates and other benefits. also, you can snappily repay the home loan EMIs by setting up an ECS installation for auto-clearance from your payment account.

9. Deciding on the Type of Interest Rate – Floating or Fixed

Home loans have two types of interest rates. In fixed rates, the interest rate is decided at the time of loan permission, and it remains the same for the entire term. In floating rates, the interest rate of the loan varies depending on market trends.

Generally, most borrowers conclude with fixed home loan rates, as they're assured of the same price until the end of the term. Still, this may not always be a smart choice. 

In case, the prevailing interest rates are high, going for the fixed interest rate isn't a smart choice, as your interest rate is fixed and you can not profit when the interest rates drop.

So, consider the market trends and prevailing interest rates before you decide whether to go for fixed or floating interest rates.

10. Save for a Down Payment

As mentioned before, home loans don't finance 100% of the property price. You need to pay from 10 – 25 of the property price from your fund.

The amount you pay for the property from your savings is known as the down payment. So, before you approach a home loan lender, make sure that you have saved the finances needed for the down payment.

To give an illustration, let's say, you are selling a flat worth. 60 lakhs. You need to pay around 20 of the property price, i.e... 12 lakhs out of fund. You can save this quantum by investing in equity-acquainted collective finances or recreating deposits 3 to 5 times before you plan to buy your dream home.

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FAQs

1. What are the key considerations for first-time home buyers in India?

Ans. First-time home buyers in India focus on setting the right budget, choosing the right property, considering the location, amenities, and list of builders, and getting and holding the right home loan with good credit scores.
 

2. How can I structure my mortgage?

You can use the qualified home loan calculator to check the maximum home loan based on your income and other financial commitments. Remember that your total EMI on all loans should not exceed 40% of your take-home income.
 

3. What factors should be considered when deciding on the type of property?

Your budget and family size are key factors. If you are in a city, popular buildings. Whether you’re buying for living or for investment, think about how long you intend to stay. Consider what potential tenants want to invest.
 

4. How important is location when buying a home?

The location is important. Consider proximity to your workplace, schools, public transportation, and markets. Good neighborhoods and accessibility are essential to a comfortable life.
 

5. What should I look for on the property?

Choose products that fit your lifestyle. Houses often offer amenities such as swimming pools, gyms, and sports facilities. Prioritize your happiness based on your family’s needs. Keep in mind that many factors can increase the overall cost.
 

6. How do I choose a reliable builder for my first home purchase?

Examine the records and distribution history of the manufacturer. Talk to previous customers about their experiences. Avoid those whose angels have no record. Ready-to-install projects can boost confidence.