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We have created this guide to
help you with your property
purchasing decision-making
process. The information has
been compiled from a variety of
reliable sources, including
legal and finance professionals,
and has been written objectively
without bias towards any
commercial interests. Please
feel free to browse the areas
that interest you and recommend
this to anyone you know who may
benefit by reading it. |
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Choosing a builder |
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A brief overview on
what you should look
for in a property
development company,
when you set out to
buy a house. |
If you are
like most people, buying a home
will be one of the most
significant decisions you will
make. And unless you are
extremely wealthy, it will also
be one of the biggest financial
commitments you will undertake.
As such, you want to be as sure
as you can that you are not
going to get any nasty surprises
in the process and one of the
ways to help achieve that is to
make sure that the property you
are buying is from a reputable
builder. Set out below are a few
guidelines on what you should
look for when choosing a builder
from whom to purchase your dream
home.
History
Look at the past performance of
the company. How long have they
been in business? How much
experience do they have? Have
they grown over the years or has
the company remained stagnant?
Of course, past performance
provides no guarantee about the
future, but generally speaking,
a company that has been in
business for some time and that
has grown over the years is
obviously doing things right.
Previous projects
Take a look at some of the past
projects that the company has
constructed. Speak to owners and
residents and learn what their
experiences were like. Most
people are happy to help if
asked to, and since purchasing a
house is a decision that you
will have to live with for many
years to come, time spent now
will be well worth it in the
long run.
Reputation
What sort of a reputation does
the company have? What do its
customers say? Did the company
behave in an upright and ethical
manner in its dealings? Has the
company successfully delivered
what it promised its customers?
If a customer had a complaint
about something, was the company
helpful in trying to resolve the
issue? Once again, speak to
existing owners of properties
built by the company and satisfy
yourself that the company you
are considering buying from is
one whom you would be happy to
do business with.
Customer service
Is the sales staff of the
company helpful? Do they answer
your questions openly and
honestly or are they being
evasive? Do they return your
calls promptly or do you end up
doing all the running around to
get hold of them? Are you
welcomed into their office if
you wish to visit? Knowledgeable
and enthusiastic staff usually
indicates that the company
provides a good, open and honest
working environment and this is
another indicator that the
company is trustworthy.
Memberships of Associations
Is the company an active member
of local industry associations
and bodies? Is it working to
improve conditions for itself
and its customers? Is it
committed to maintaining quality
standards and transparency in
business? Active participation
and promotion of such ideals
usually indicates a company's
long-term commitment to the
industry in which it operates.
These companies recognise that
to succeed over the long-term
they must continue to push
towards higher standards and
will often be found at the
forefront of industry
development.
You can and should take the
necessary steps to satisfy
yourself that they company you
will be dealing with is one that
is honest, professional and
competent. Your final decision
will be one that you will live
with for many years, so do all
you can to make sure that the
future will be all you wish it
to be. |
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Documentation |
Correct and
complete documentation is
essential when buying a house. A
legal professional who
specialises in property matters
has helped us compile an
overview of the documentary
requirements in buying a house.
The contents of this page are
meant to serve as a general
guide only and should not be
used as a substitute for
professional legal advice. It is
vital that you appoint a
solicitor to assist you with the
documents for your property
purchase, irrespective of your
level of experience. Not only
will this ensure that you are
getting correct up-to-date
professional advice and
assistance, there are some
things that only a qualified
solicitor will be able to do. |
Clear Title
The first, and arguably the most
important step, before buying a
property is to have your
solicitor inspect and approve
the original title documents to
ensure that the property you
intend to purchase is not
encumbered or otherwise the
subject of any legal dispute.
Without clear title you will be
unable to get a loan against the
property and you will face a
host of legal complications that
may result in you losing money
and/or the property itself.
Approved Building Plan
Prior to commencing
construction, the
builder/developer will create a
Building Plan that will contain,
amongst other things, the layout
of the project, the number of
buildings, floors and apartments
and other information directly
related to how the
builder/developer intends to
construct the project. This
Building Plan must be approved
by the Municipal Corporation (or
concerned authority) and your
solicitor should check to ensure
that such approval has been
obtained and that the property
you intend you purchase is
legally sanctioned/approved.
Agreement for Sale
Also referred to as a Conveyance
Deed or Sale Deed, this a deed
document that sets out the terms
and conditions upon which the
builder/developer has agreed to
sell the property. It will
contain the responsibilities of
the builder/developer in terms
of deliverables in accordance
with the approved plans, and
will also set out your payment
obligations for the same. The
Maharashtra Ownership Flats Act,
1963 requires that copies of the
title certificate and the
Approved Building Plan be
attached to the Agreement of
Sale.
Commencement Certificate
Once the building plan has been
approved, the Municipal
Corporation (or concerned
authority) will issue a
Commencement Certificate, which
enables the builder/developer to
begin construction.
Completion/Occupation
Certificate
Once the building has been
completed in all respects, the
Municipal Corporation (or
concerned authority) will
inspect the prEMIses to ensure
compliance with safety
regulations and all approvals
that had been granted during
construction. Once satisfied
that these criteria have been
met, a Completion/Occupation
Certificate is issued which
certifies that the building is
complete and fit for occupation. |
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Finance |
Unless you
are extremely wealthy, you are
going to be one of the great
majority who take out a mortgage
to finance the purchase of their
home. A finance professional
connected to one of India’s
biggest housing finance
companies has helped us create
this overview of housing
finance.
Unless you are extremely
wealthy, you will need to avail
of a housing loan to assist you
in the purchase of your
property. Given that this will
most likely be one of the most
significant financial decisions
that you will make, it is vital
that you exercise care and
caution in what you do. On this
page we have set out a few steps
and guidelines in obtaining a
housing loan. This is meant to
serve as a general guide only
and you should be aware that
different lenders have different
criteria when extending loans.
The best way to determine
exactly what is available to you
is to speak to banks and/or
financial institutions or to
avail of the assistance of one
of the many housing finance
professionals who make their
services available for a fee.
Determine how much you can
borrow
As a general rule of thumb,
lenders are willing to extend
loans equal to 60% to 85% of the
value of the property, subject
to various considerations
including the age of the
property, it's condition and of
course, your repayment ability.
Within these parameters, a loan
equal to 2 to 3 times your
annual household income is
common. Bear in mind that some
lenders will base their finance
on the value of the property
only, and any additional costs
you incur, such as legal fees,
stamp duty, registration charges
etc, will have to be borne by
you.
Determine your repayment ability
A housing loan is repaid by
Equal Monthly Installments (EMI)
and lenders normally look to
ensure that the EMI of your loan
will not exceed 50% of your
monthly household income. Your
EMI must be met on time to avoid
the risk of losing your home so
be very honest with yourself
about your repayment ability.
You will no doubt have to make
sacrifices in some areas to
accommodate your loan repayment
obligations, so be clear about
what changes in lifestyle you
should expect. This is not a
time for daydreaming. Be
realistic and honest with
yourself.
Interest rates vary
The amount and period of a loan
will have a bearing on the
interest rate you pay. Interest
rates also vary by lender, so do
your research and find the best
available deal. Some lenders
offer fixed or floating rate
mortgages. Fixed rate mortgages
give you peace of mind when
interest rates rise, but you
lose out if they fall. Speak to
lending institutions or finance
professionals about the pros and
cons of the different options
available to you.
Up-front charges
Some lenders impose a processing
fee, while others may have an
administrative charge for
processing your loan
application. Some lenders will
require you to bear the cost of
legal appraisal or other
ancillary charges. These on time
charges may be collected up
front, in which case you will
need to have the funds readily
available. Some lenders will
deduct these sums from the loan
amount, in which case you will
need to "top up" the loan to
ensure that you are able to make
full payment for the property.
Either way, you are paying these
charges, so find out what they
are and compare offers from
different lenders.
Commitment Fees and Prepayment
Penalty
A lender will charge you a
commitment fee on your loan if
you agree to borrow from them
and then you do not utilise the
loan for an extended period of
time. The actual time before a
commitment fee becomes
applicable will vary by lender.
Lenders will also charge you a
prepayment penalty if you prepay
all or a part of the loan,
because prepayment impairs the
ability of a lending institution
to plan it's finances and this
in turn creates a cost for them.
Insurance
Some lenders will require you to
take out an insurance policy on
the property, or may require you
to maintain a certain minimum
amount of life insurance
coverage for the tenor of the
loan, at your own expense. You
may be asked to assign the
benefits of these policies to
the lending company, or they may
ask to be named as
co-beneficiaries on the
policies. This is done by a
lender to ensure that if
something untoward were to
happen to the property or the
borrower, the lending company
would have adequate security to
cover their financial exposure.
Any surplus proceeds from any
insurance claim that has been
applied towards repaying the
loan will go back to the insured
party/beneficiary.
Choose a lender
After carefully considering all
the different options available
to you, you will finally need to
decide on which company to
borrow from. Housing finance is
a competitive market and many
lenders will offer "sweeteners"
to try and make their loans more
attractive. While you shouldn't
base your borrowing decision on
freebies alone, be aware that
there are attractive deals on
offer. |
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Loan
calculator |
Wondering
what your EMI would be if you
bought that dream home?
Use this
handy tool to work out your
borrowing costs.
EMI CALCULATOR |
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