Best Way To Buy A Home
Opting for home loans is the best way to buy a home. However doing a comparative study and settling
Owning a home, though a treasured wish for many, requires meticulous planning and involves substantial financial considerations. Unless the homebuyer is wellinformed or an expert himself, he needs help and guidance to understand the intricacies of the home buying process. It is also imperative for one to understand that demand in the real estate sector is pre-dominantly a function of the property prices. One of the biggest concerns of present times is that residential prices have moved up. It is understandable that this affects the buying decisions more than anything else. Hence if prices rise significantly from here, it would be difficult for the demand to sustain, as buying a property may become unaffordable for the common man. Some other concerns which buyers have are timely delivery of projects, quality of construction, among others.
Despite this, most often home buyers focus on ‘home loan interest rates’ at the time of making their buying decision. While interest rate plays a role in the entire value chain, buyers need to understand that it is only one link in the long chain. Since rates are floating they are likely to change several times during the long loan tenure of 15 to 20 years. Hence other important aspects also need to be looked at, which may have longterm implications on the entire transaction.
Buyers need not worry about finance as it is available relatively easily. What is important for a customer is the property he plans to buy – whether it is the right one, whether the land has a clear title, whether the builder has good credentials and good track record in terms of timely delivery.
Housing finance is a long term loan and during this period things could change dramatically. How then does a customer safeguard against all the uncertainties? How does one select his housing finance partner?
When it comes to buying a branded product you don’t have to worry about the quality as the name provides the comfort. However while buying a property there are a number of issues like the quality of the builder, issues with regard to resale properties or properties purchased from development authorities and their related documentation and these issues differ from city to city , state to state. Buying a house is an event which happens once in our lifetime for most of us, hence buying it with full knowledge is vital. The lender’s experience in this field and its reputation will certainly make a difference.
In this backdrop, choosing a good housing finance company to handhold the customer right through his home buying process has gained far greater importance today. Since a home loan is a long-term commitment of 15-20 years, several factors like expertise, quality of service, indepth Domain knowledge and the company’s level of commitment and transparency right through, company’s loan procedure, the product range, fine-print that goes along with the interest rate, documentation, quality of services offered and safe retrieval of the title deed and other relevant documents of the property deposited as a security for the housing loan on closure of the loan, are critical.
Some finance institutions like HDFC are focused on housing loans, which is their core business since many decades. Long years of experience have helped such institutions to understand the market dynamics of the real estate industry thoroughly. They also offer value-added services, and deliver professional services through their specialist team of trained and experienced professionals. Most often than not they follow a single window concept supported by robust systems and processes that are aimed at maximizing customer convenience at every stage of their buying process.
Choose a lender that offers the widest range of customised home loans which not only facilitate optimisation of tax benefits, but also provide flexible repayment options such as acceleration of EMI, FLIP, etc. tailor made to suit the customers’ requirement. The product range should include a Home Improvement Loan (HIL), Home Extension Loan, Home Conversion Loan, which facilitates a smooth conversion of one loan to another, Home Equity Loan and the works. Some of them tie up regularly up with developers to bring special packages exclusively for their customers Do look out for them. Reputed banks also offer special terms for their existing customers on HIL and Loan Against Property (Topup Loan).
It is better to choose a lender who arrives at the loan eligibility of an individual based on his cash flow and not the price of the underlined asset which he plans to buy. Lenders essentially look at the individual’s repaying capacity which is based on factors such as income, age, qualifications, work experience, no of dependents, job profile, spouse’s income (in case of joint application), savings pattern, credit history and repayment track record. Home buyers are required to submit a few of documents along with the home loan application form and need to ensure that they are in order, to avoid rejection/possible delay in approval of their loan by the lender. For instance, a Salaried Resident Indian needs to submit documents such as Identity and Residence Proof, Latest Salary-slip, Form 16 and bank statements for the last six months.
While home buyers can choose a fixed or a floating interest rate loan, most prefer a floating rate loan in the current scenario. Floating rates are generally priced lower than the fixed rate, thus giving buyers the advantage of paying a lower interest rate.
Of late many customers are seen going in for certain fixed period loans that could be converted to floating rates. Banks spell out the time limit for such a mixed package. However since these fixed rates at for a very short period of one to three years, it is important to know the effective rates for 15 or 20 years.
At the end, one can say, “Do your home work well, read the terms and conditions carefully, before opting for a loan.”
Courtesy times property dtd 10/10/2010
For more information about real estate, Indian real estate, real estate india, realty firm, residential property, commercial property log on to http://www.zameen-zaidad.com
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