SO you’ve been thinking of buying a home for yourself, your ‘own’ home. And what’s that you say, ‘You have no clue where to begin?’ This start-up-kit will do just that-help you begin.

Step 1: Why to buy ?

There could be one or a combination of any of the below-mentioned reasons for buying a home.

• You have surplus money and you want to invest it wisely to gain maximum returns.
• You have reached a stage in life, where you wish to buy a home for yourself.
• You wish to buy a home for your child / children, which indirectly translates to buying a home for investment.
• You should weigh carefully your reasons for buying a home, because that will help you decide where to buy a home and what price to pay for it.
• Spend some time on this step, and once you know what you want you can move to the next step.

Step 2: Where to buy?

If you are looking at a home purely from an investment perspective, then you should be looking at areas that are newly developed. For instance, if you intend to invest in a home in Mumbai/Thane/Navi Mumbai region, then one of the hottest new places to invest is Kharghar in Navi Mumbai. Even within Kharghar, the most recently developing areas are Kopra (Sector 10) and Owe (Sector 35). If you are interested in buying a home where you want to immediately move into, then Navi Mumbai as a whole offers one of the best living conditions in suburban Mumbai, as it has the best infrastructure in the whole of India, with huge open spaces in the form of parks and gardens, wide roads connecting all areas, a number of modern malls, 5-star hotels and educational institutions to support a fulfilling life-style. Kharghar and Koperkhairane offer the best opportunities for buying new homes in Navi Mumbai. If you intend to buy a home for both investment and for living, then too, once again, Kharghar and Koperkhairane offer the best opportunities.

Step 3: How much money to put in?

Once you have decided to join the elite homeowner group, the next step is to decide on what home should own you… oops should you own. Some factors to keep in mind:

This depends on how much you can afford to pay for your home. There are two ways of paying for a home. One is, you pay the entire amount out of your own pocket and the other is to pay a small down-payment from your own pocket and take a home-loan to pay for the remaining part.

Taking a home loan is always the best option, for it has the following benefits:

• You can increase the size and quality of your home, within the same budget.
• The government offers a lot of tax incentives on home loans.
• The rate of interest on home loans is the lowest compared to any other kind of loan.

Thus your capital appreciation is best by paying the least amount of interest So, assuming that you are going to take a loan, the following is a rough guide to how much home you can buy, depending on your salary and savings.

Step 4: Sourcing for down-payment?

You may think that you do not have sufficient funds for down-payment, but you will be surprised to know the sources that you can tap into. Here is a brief list of the same:

• Your bank balance.
• Your savings in Provident Funds.
• Your savings in Fixed Deposits.
• Your savings in Gold.
• Salary advances from your office.
• Borrowings from family.
• Your savings in Life Insurance Policy.

You may think that it is inadvisable to tap into some of the above sources as they are your life’s savings, but what you need to understand is that none of the above savings are ever going to give you the kind of returns that you will see in an investment in a home. Besides, investing in a home is the safest investment of all.

Step 5: How much to borrow?

You may think you know quite a lot about financing your home from the dipstick survey you have done but here is what the experts have to say: Budget before you buy Developing a household budget is a desirable activity before you buy a house. Doing so gives you a better focus on loan payment goals and how the new house will affect your total expenses. On an approximate basis, you can typically shell out anywhere from 40% to 50% of your salary for the monthly installment.

Myth: How can I pay both my rental as well as the installment?

In case you are presently staying in a rented apartment, and you are buying an under-construction house, then you may be worried that you have to pay both, rent as well as the bank installment. However, this is not true. While the building is in under construction stage, there are two choices where you can save on installment:

• The bank only charges you interest and doesn’t expect the principal amount to be returned during construction phase. This cuts down your installment by almost half.
• The bank doesn’t pay the entire loan amount to the builder in one go, but does so only partially, as per the status of the construction. Thus, you pay interest on only that portion of the loan, which the bank pays to the builder, and not the entire loan amount. This further reduces your interest itself, on an average, by half, over a period of 2 years (typical project completion time).

Thus, your average monthly outflow is about 25% of the actual installment, during the construction period. This is a small amount to pay for getting the substantial benefits of buying a home cheaply, during the early construction phase of the building.

What constitutes an NRI ?

Any person of Indian origin (Indian Citizen) living abroad for purpose of education, employment or carrying on business etc. for an long duration abroad is a non-resident Indian. Non-residents foreign citizens of Indian Origin are also treated on par with non-resident Indian Citizens (NRI’s) for purpose of certain facilities.

Do non-resident Indian Citizens require permission of Reserve Bank to acquire residential / commercial property in India?

You would need to check with you Charted Accountant on this and based on the current rule of RBI from time to time.

What payment modes can an NRI use for paying for the property?

There is no restriction or conditions on payment on buying a property. The normal banking channels are applicable. Remittance from abroad through normal banking channels NRO accounts in India (Deposits in dollars opened by residents or non-residents). NRE (Non Resident External Rupee accounts) FCNR (Foreign Currency Non-Resident accounts) in India.

What are the regulations for purchase of property?

FEMA stipulates that before making a purchase, special form called the IPI 7 needs to be filed with the central office of the RBI along with the title deed or any other certified copy of the document proving that the NRI has executed an agreement to purchase the property within the country within 90 days of the purchase of property along with bank certificate stating consideration paid for the purchase.

Do foreign citizens of Indian Origin require permission of Reserve Bank of India to purchase immovable property in India for their residential use ?

Reserve Bank has granted general permission to foreign citizens of Indian Origin, whether resident in India or Abroad, to purchase immovable property in India for their bonafide residential purpose. They are, therefore, not required to obtain separate permission of Reserve Bank.