What To Do Before You Go Discount-Grabbing This Festive Season
This may turn out to be the festive season real estate developers in India have been waiting for for a long time. Reluctant buyers, who have been keenly watching from a distance the many developments taking place in the sector in the past couple of years, may this festive season change their mind about being mere spectators. Several states are about done setting up real estate regulatory authorities. The Goods and Services Tax (GST) has also subsumed the many levies buyers of property had to pay before July this year. On its part, the Reserve Bank of India has also reduced key policy rates, bringing down the overall cost of borrowing a home loan. Banks, too, have reduced rates in the recent past. Additionally they are also offering attractive options to customers keeping in mind the festive season.
"The influx of liquidity in the system has ensured attractive home loan rates which combined with the positive effect of GST on ready-to-move homes will hopefully turn fence-sitters into buyers," House of Hiranandani Chairman and Managing Director Surendra Hiranandani told media recently.
Developers are also leaving no stone unturned to ensure fence-sitters get out of their tarrying state. While some of them offering buyers free car parking, modular kitchens, gold chains and other pricey appliances, others are giving you cost-free maintenance for a year or a waiver in stamp duty or a free holiday at a foreign location. The selling game seems to have gone several steps ahead with some developers willing to shelter you in their ready-to-move-in units till the time your under-construction property is ready if you decide to invest with them this festive season.
Such offers would certainly be hard to resist, would they not? However, great precision on your part would be required to make the most of these offers. While making up your mind about an offer, you most certainly have to assess your financial condition, apart from looking for the finer details of a discount offer that looks too good to be true.
Examining the offer
As you may have experienced after making impulsive purchases of daily items, most discount offers may be more baffling than dazzling. You end up buying something to attain something for free. Sometime, you would end up wondering whether you needed any of the two items, at all! We are certain that home buying is much different. The ticket-size of the purchase is big enough to keep a check on your impulsive behaviour. However, you cannot completely deny that discounts do move you deeply. The sellers would not be carving these offers, spending lakhs of rupees if they did not yield desired results. Suppose you find the offer to occupy a ready-to-move-in property of this developer while your own home is getting constructed quite reasonable. How better can it get? It is not for some gold chain or a free modular kitchen that you are falling for, after all! At this juncture is it important to pay attention to one crucial point --- what is the cost of this property you are investing in? Make sure the prices are inflated to make up for the losses the developer might incur in letting you occupy its ready-to-move-in unit for the time being. At no point during the entire home purchase process, you can overlook your responsibility of carrying out cost-benefit analysis.
This task is not limited only to picking the best property. The same is true when you go looking for a home loan.
EMI waivers and cash-back offers may all be quite good, but you as borrowers have to be mindful of one crucial fact that most of these offers are created to hold you up for a longer period. For instance, you would be able to reap the benefits of the offers only if you stick with a bank for a certain period. Considering we Indians like to pay off our debts as soon as we can (an average Indian borrower pay off his loan in a matter of 8-10 years), opting for a home loan plan that demands you stick with a financial institution for a long period may not be ideal.
It would be better if we get done with this examination first. This may be the best time to invest in property. Rates are down; loans are cheaper; discount offers are in aplenty, et cetera. While concentration on outside movements, we often fail to assess our financial position as far as home buying is concerned. Yes, there are banks which would provide you as much as 90 per cent loan to buy a home; Yes, you can make the big purchase with very little money since you do not have to pay a huge amount to the developer presently; Yes, rates may increase in future, making you feel sorry about postponing your plans! These are all fair points, but home purchase is a long-term commitment. If you though the spending process would end as soon as you are done with the developers, you are absolutely wrong. Your property would constantly demand more and more from you. Understandably, a house purchase decision should only be made if you are on a strong financial footing.
Also read: Are you ready to take a home loan?