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Lessons: Own A Home



Age: 23
Venue: Your rented bachelor pad which you share with two others.
Scene: It stinks of last night's revellery, with food and Coke cans lying all around. Your bedroom is a mess of clothes, used and unused. You're a happy hedonist and you couldn't be happier.

Situation 2:
Age: 33
Venue: Your rented bachelor pad which you share with two others.
Scene: It stinks of last night's revellery, with food and Coke cans lying all around. Your bedroom is a mess of clothes, used and unused. You're an unhappy camper. You want some space to yourself. You can't wait to move on.

That's it. That's the term: you can't wait to move on!

You want a real home. Your own. And so you plan.

Jaideep De of Narains Corp, a realty firm, says, "Your new home should give value additions to your lifestyle in terms of space, location, conveniences, proximity to schools and colleges, lifestyle amenities such as clubhouse, pool, gentry profile. It should basically complement your arrival."

How do you ensure all this?

Photograph: Khaled Desouki/Getty Images

Step 1: ThinkBefore you start searching for a new home, put your mind to it.

~ Money
The starting point of everything (sadly, the end point, too). Work out a comfortable budget without stretching yourself.

"A rule of thumb: don't let the value of your dream property exceed four to five times your annual income," says Certified Financial Planner Gaurav Mashruwala.

~ Location
As your bachelor days melt behind you, being close to pubs and malls can no longer be priority. Think ahead. Use parameters such as proximity to a school or workplace or simply cleaner environment.

~ Stage
You have visions of buying land and developing it from scratch. How romantic. Wake up. It is just not feasible, unless you have loads of money.

You would rather choose a pre-furnished flat or, at best, a raw khoka (a recent trend, where you get a bare flat that you do up as per your tastes), and design it as you please.Step 2: PlanWhen do you want this to happen? That will dictate the right investment strategy. Your investment frame should correspond with the time frame you have set to buy your new home.

Harsh Roongta, CEO, Apnaloan, says, "The best place to invest is a place which will keep pace with the ups and downs of the realty market. Real Estate Investment Trust will soon be available for the retail investors and that will do the trick."

Mashruwala advises Systematic Investment Plans for disciplined savings.

Step 3: Execute
Moving into a new phase could bring some unpleasant surprises. For example, you may not have accounted for registration fees and stamp duty. These can be around right to 14 per cent (depending on the state in which you reside), of the cost of the home.

Rajiv Sabharwal, COO, ICICI Home Finance Ltd, says, "A bank will finance up to 85 per cent of the total cost of the home. You will have to put in the balance margin amount."

Other expenses include a fee of 0.5 per cent as administration or processing fee, car parking, annual maintenance and clubhouse charges.Just so you can glide into your new home, and not struggle through it, we have some extra tips for you.

~ A large initial down payment will reduce your future interest burden. Try and plan towards it.

~ If you have not finished paying up for your older housing and want to buy a new one, here's what you can do: go in for a short term bridging loan, available with most banks, to tide you in that period.

Taking a house loan from the same bank also gives you the same advantage. Do shop around to check for better options.

Banks usually give you 15 to 20 years to repay home loans. But most end up paying within seven to eight years. See if you can take a shorter tenure loan or higher Equated Monthly Installment (this saves on interest, too).

~ Play safe. Look for a lender who does not have prepayment charges or at least lets you partly prepay your loan.

~ Go easy on the creature comforts. A den full of the latest gizmos or a home gym are not essential at this stage and can be looked into later.

~ Your home is your liability. It drains money and does not give any returns. Gaurav Mashruwala says, "Do not buy a house any larger than you need. For a nuclear family, a two bedroom-hall-kitchen apartment will suffice."

At the end of the day, "Our homes are the biggest influences on our lifestyles," says Devang Shah of Right Returns Financial Planning.


Source: Money Control

By vayaM CS