Every time I think about buying my own home, there is an inner fear that alerts me not to risk. Being a first time home buyer, I know how scary it is to understand the tax benefits and other stuffs.
But then I found a fix, get to know the basics, the fear slowly disappears 🙂
Let’s deal with legal part first!
It’s always safe to re-check, and make sure that all the sanctions, plan approvals and other stuffs are original and correct.
“The best solution is, either contact a close relative/ friend who is well experienced in buying and selling properties, or avail a home-loan. Home loan is recommended , because banks would’ve already verified all the projects of the developers, so if a home loan is availed, the legal issues are 99% ruled out.”
How good is the builder?
Research a lot on the builder, even a simple google search will help. There are lots of comments and ratings available over the internet, just don’t miss this.
Also, don’t forget to get a word-of-mouth advice from your friends and relatives. This always help a lot, they might put you through a couple who are already a customer of the builder, and in turn might have a valuable advice for you
Payment Plans: Construction-Linked or Time-Linked ?
Construction-linked Plan – Initial booking is done for an amount upfront, and the rest of the amount can be paid on each construction stage. For eg, 10% when flooring is done, 10 % once concrete is done etc
Time – linked Plan – In this plan, the payment isn’t linked to construction milestones. For eg, if you agree to pay INR 50000 a month, you will have to pay till your tenure (even if the construction isn’t completed on time)
“Construction linked plans are recommended , you could hold the payment when a construction milestone isn’t completed, but this isn’t possible in Time-linked plans”
Interest Rates: Fixed, Floating or Fixed – Floating?
Fixed interest – this means that the rate of interest remains the same through your loan. There is no change at all
Floating interest – the interest rate may vary depending on the market fluctuation, meaning that the interest rate may be 11% this year, but 14% next year. And may be 18%, in the next 5 years?
Fixed – Floating interest – In this case, the interest rate remains the same for few years in the initial stage, but will vary after the initial set of years
“Fixed interest is recommended, because there is no fluctuation in the interest payment”
First Time Home Buyer Tax Benefits
Section 80C: The principal amount of home loan, that is paid every year , is subject to tax exemption under Section 80C. The stamp duty and registration charges could also be included in to this section . The maximum amount for this is INR 1,50,000.
Section 24: Tax exemption for up to INR 2,00,000 under Section 24 is available for interest payment on home-loans, but wait, there is a catch. This is applicable only when the property is fully constructed and self-occupied, and construction certificate is provided.