Buying a house is a lifelong dream for many and a significant accomplishment. However, thorough research and patience are required. Since investing in a property is a one-time decision that cannot be reversed; hence careful consideration & persistence are key to making a successful house purchase.
The housing market can be pretty competitive, but we’re here to make your house hunting easier. Our step-by-step guide will help you make an informed decision and simplify the home-buying process. Let’s begin!
Process of Buying a Home with Loan
In most cases, a home loan is availed for purchasing a home. Following is the standard step-by-step process:
Home Buying Process Steps
Step 1: Set a Budget
Before you start the house-buying process, it’s important to set a budget. Decide on an estimated amount you want to spend on a property and consider your savings and any potential home loans. Remember that purchasing a house is a one-time investment, so make sure you set a budget that meets your requirements and is financially feasible.
Step 2: Determine Location & Property Type
The next crucial step is determining the type of property you are looking for and its location. Based on your family’s needs, choose the property type – flat, builder floor, standalone house, duplex, row house, or plot to construct a house. Consider what facilities and kind of living you want, as well as the number of bedrooms (BHKs) you require.
Once you have decided on the kind of property you want, the next step is to select a location. While everyone aspires to own a property in a prime area, houses in these locations can be quite expensive. Consider balancing your budget with your desired neighborhood. You can search for properties near premium areas or in up-and-coming suburbs that are expected to become premium.
Make a well-informed decision on the location of your property, ensuring that basic amenities, such as grocery stores, schools, hospitals, etc., are closely located.
Step 3: Consider Rent Potential of the House
If you’re buying a house for investment purposes, it’s essential to research the rent rates in the locations where you’re considering buying. This can help you choose a property that will provide better returns on your investment.
Step 4: Evaluate Resale Value of the House
Before making a decision on a house, take into account its resale value. Don’t just focus on location, but also assess the potential future value of the property. Research market trends & statistics to estimate its future value.
Step 5: Review Home Loan Eligibility & EMI
There are numerous lenders in the market that offer home loans, but it’s important to determine your eligibility first. Eligibility criteria vary among lenders and are based on factors such as age, salary, credit score, work experience, etc. It’s recommended to maintain an excellent credit score to secure a loan with a lower interest rate.
Once you’ve determined your eligibility, calculate the monthly payments (EMI) that you’ll need to make over the loan term. This can be done using an online home loan EMI calculator.
Choose a loan term and EMI that fits within your budget. Generally, the shorter the term, the higher the EMI, and vice versa. It’s usually recommended to ensure that the EMI does not exceed 40% of your monthly salary.
Step 6: Fees for Stamp Duty & Registration
When purchasing a property, there are additional fees that must be paid, including registration charges, stamp duty, sales tax, and income tax. These fees are collected by the Indian Government. Figure out these fees after finalizing a property and set aside funds for them as they are not included in the home loan amount.
Step 7: Other Costs Associated with Property
After buying a property, you will encounter additional costs like those of real estate agents and society maintenance charges on receiving possession. Take these charges into account as well when deciding on a house.
Step 8: Get All The Required Documents from Builder
After buying a property, make sure to receive all the necessary documents such as the Sale Agreement, Payment Receipts, Demand Letter, Architect Letter, Builder NOC, etc.
1) What is the process of buying a home?
Purchasing a home involves setting a budget, determining location & property type, reviewing home loan eligibility & EMI, considering additional costs, and receiving all the documents after purchase.
A Step-by-Step Guide on How to Buy a House
Check out this simplified 8-step guide on purchasing your dream home with the help of a home loan. Make a well-informed decision with this informative blog.