Owning a home is one of the largest financial investments most individuals will make in their lifetime. Therefore, it is important to do your homework prior to buying a home. Many times the best way to understand the buying process for first-time homebuyers is by asking questions. Here are some frequently asked questions from first-time homebuyers’ with answers before the purchase of a flat:
1. How will I know when I am ready to buy a house?
Ask yourself these questions when considering whether you’re ready to buy a house:-
• Do I have a steady job?
• Do I have enough money in the bank?
• Have I Saved Enough For A Down Payment?
• Do I have a low credit score?
• Am I carrying a long-term debt, like car payments?
• Can I afford to pay a mortgage, taxes, utilities, and insurance?
• After I buy the house, will I have any money left?
2. What is the difference between carpet area, built-up and super built-up area?
Before buy flats from any developer, it is important to understand the terminologies used by developers are important to avoid any mistakes. Developers and real estate dealers in India often use the terms - carpet area, built-up area and super built-up area. This area of the apartment does not include the area covered by the external walls, balcony or terrace. Built-up area is the area which is the sum of the carpet area and the thickness of walls of the housing unit. The super built-up area is the total sum of the built-up area and the area occupied by common areas like the lobby, lifts, staircase, garden, shafts, clubhouse, generator rooms, swimming pool, etc.
3. What are the taxes that I need to pay when buying a property?
• Taxation is an important aspect of buying a flat in India. Home buyers need to pay the following taxes:
• Tax Deduction at Source (TDS):- This type of tax deducts some percentage of amount during a sale transaction by a buyer.
• Stamp duty:- Stamp duty is a tax payable at the time the property is transferred. The stamp duty charges vary from state to state.
• Service Tax:– Service tax is a Central government tax levied on the transaction of under-construction properties. It is not applicable to toa `ready to move in' property.
• Value Added Tax (VAT):- VAT is also dependent on rules and regulations of the concerned state. It is applicable only when you buy an under-construction property, not while buying a completed project.
• Registration Tax:- While buying property, the buyer will have to register property documents with a registering officer. The registration charge is 1% of the ‘agreement value’ but it can vary from one state to another.
• Property Tax:- Another tax that a buyer needs to pay after moving into a new home is Property Tax, also called the House Tax. It is a local tax levied on property, comprising building complex and the land belonging to the property.
4. Should I take a home loan even if I have enough money to buy a house?
It is always advisable to take a home loan as it helps you in availing several tax benefits. Here are some of the pros of buying a house without using a home loan such as the price of the property is less as you are not paying any interest, you are free from going through bank paperwork for the home loan and you will get peace of mind as there is no worry of paying EMIs. On the other hand, here are some of the cons of not taking home loan such as no tax benefits, a big amount of your savings is locked in one investment, and you are losing your liquidity.
5. What are the documents needed to apply for a home loan?
Here are the following documents which you need to submit for a home loan :-
• Proof of Identity:
PAN, Driving license, Voter ID, Passport, Aadhar Card, Ration card
• Proof of Income:
Salaried Applicants: Latest 3 Months pay slip, IT returns for the last three years and Form 16 for the last three years. Self Employed Applicants: IT returns for the past three years along with computation of income as certified by a CA
• Guarantor Form (Optional)