Home purchases figure prominently on the list of priorities for most individuals. In this respect, they try to save up as much as possible. But for an expensive investment such as homebuying, insufficient funds may present roadblocks. In such cases, housing loans can offer a convenient alternative.
However, before one applies for a loan, similar to finding the ideal lending institution and home loan scheme, one should also go house hunting the correct way in order to obtain stress-free loan approvals.
How to Select the Right Property
Home loan is a secured type of loan, wherein the property one seeks to buy with the borrowed money is placed as collateral with the financial institution, until the loan is repaid in full. Thus, your property is an important determinant of the quantum of loan that can be sanctioned. Although, aspiring home buyers naturally aim to avail of the best property within their means, it is imperative to find a suitable house, keeping in mind a few essential factors. These include:
1. Staying Within Your Budget
To begin with, one needs to prepare a budget to assess how much they can afford and then look within that price range. Usually, the cost of a house depends on several factors, such as the age of the building, its carpet area, location, amenities, accessibility, etc. Property pricing, as the foremost indicator, gives you a fair idea of the home loan principal amount that you could possibly apply for.
This is especially important as lenders offer only up to 90% of the property’s value as a house loan, following the RBI lending guidelines.
2. Location of the Property
It is important to choose the location of the property based on where you wish to take up residence. For instance, you may seek a house in a locality that is closer to your parents, relatives, friends, workplace, or children’s school.
Maximise your efforts to find a house that provides access to the basic essential services and facilities. Check the closest hospitals, shopping areas, bus stops, train stations, etc., in the neighbourhood. The surroundings of a property, which is in a prime location, is more likely to be conducive for enjoying a better quality of life. These factors are of paramount importance as they contribute to an enhanced valuation of your house, both in the present and the future and helps lenders offer greater value in terms of your home loan.
3. Size of the Property
There are no fixed rules while selecting the right fit for your housing needs. One should be aware of the actual layout and size of the property. A bigger house means a costlier property. So, select a home depending on the amount of space needed to comfortably accommodate your family and your belongings. At the same time, one should also keep in mind any specific area/room requirements that may come up in the later years.
Individuals can use an online area conversion calculator if they need to convert local area units into standard units of measures. This can be beneficial when estimating room/property sizes and to calculate the exact property area for transactions involving traditional area measurements.
4. Market Value of the Property
Your house is one of the most significant assets of your life. Hence, you should be aware of its probable value appreciation in the near future. Generally, the size, location and proximity to the best amenities boosts market valuation. You could get in touch with the local authority to find out about any development activities proposed in the locality, which may potentially see a surge in real estate prices.
5. Check the Project Credentials
Before you finalise a ready possession or under-construction property, examine the credentials of the builder/developer. It is always advisable to invest in housing projects of reputed builders. Otherwise, you may need to review the previous projects handled by the builder in question, to know about their goodwill in the market.
Further, it is important to assess whether the project has all the necessary legal permits and clearances for timely completion. Ensure that there is regular supply of electricity and water. You could scan the vicinity for industries or other sources of pollutants that may pose severe health risks.
If you are planning to buy a house on resale, find out the reason why it is being sold. Check the original house plan and look for any modifications made. Once you are satisfied with the property, proceed with the negotiations to close the deal.
Another crucial point to remember is that lenders normally maintain a list of blacklisted properties and builders. Lending institutions also keep a list of approved projects that can widen your property search even further. Besides, if you select from this list, you are assured of quicker loan approvals along with high quality properties.
Some financial institutions offer pre-approved loan deals. These enable prospective borrowers to gauge the amount of loan they might be eligible for, right at the onset. This helps greatly in refining the search for your preferred property. Additionally, a pre-approved loan expedites the entire housing loan process and you can expect quick disbursal of the loan amount that you want.