Home Buying In 10 Simple Steps
If you think home buying is a tedious process, here are 10 different steps you need to go through, to own your dream home.
- Selecting property
Searching for property in the desired location or through internet is the first step every home seeker takes. Once shortlisted properties, he contacts the developers and does background check on the developer. He then compares the shortlisted properties based on carpet area, specifications, prices etc. He takes professional advice if needed and then finalises the property to be purchased. He might also try out “soft-launch” or “pre-launch” that are 10-15 per cent cheaper than the market rate.
- Brokerage Fee
If the home buyer relies on a broker for a variety of property options, brokerage has to be paid. It varies between 1-2 per cent of the total value of the property or it is negotiated for pre-decided whole amount. Part of the brokerage fee is paid at the time of payment of token money and the remaining amount is paid at the time of registration of the property.
Generally developers quote the 'saleable' or 'super built-up' area. The rate of the property is often called as the 'base rate'. There could be many other components such as 'floor rise', infrastructure development costs, car parking cost, referential location charge, society and club membership fee if that exists, electricity and water charges etc that contributes to the total purchase price of an apartment. The home buyer has to take into account the stamp duty and registration fee, which will be a percentage of the total price of the apartment.
- Token Money
Token money is paid to the developer while confirming the booking of an apartment. The amount is proportional to the value of the property. Home buyer needs to arrange for the remaining amount within a time period after the payment of token money.
- Down Payment
Down payment is different for under construction and ready-for-possession buildings. It is usually between 10-20 per cent of the total price minus the token money paid for under-construction projects. For ready-for-possession buildings, the down payment is the entire sum of money less minus the token money amount.
- Getting loan
Most of the home buyers opt for home loans while purchasing property. Some developers have tie ups with banks in this regard, which makes home buyer's job easy. The bank examines all the property documents required for applying for home loans, and then decides the credit limit. Though the bank issues an approval letter to the home buyers right away, the actual transaction takes place once the registration of the property is complete. The bank pays directly to the builder as per his payment schedule and the status of construction.
- Registering the property
The next step after down payment and obtaining the approval letter from the bank, the developer initiates formalities for registration of the property. The agreement mentions in it, the timeline within which the builder needs to complete the construction and hand over the possession to the home buyer.
- Possession of the premises
When the construction gets over the developer receives an Occupancy Certificate (OC) by the local body that confirms the hand over of the physical possession of the premises to the buyer. A possession certificate is also issued by the developer. The home buyer needs to cross check all the specifications and amenities exists as promised by the developer, before taking the hand over from the developer. All the dues related to the purchase of the property also needs to be paid at the time of receiving the possession of the premises.
- Maintenance by the developer
Normally the developer is responsible for the maintenance of the building for a period of 18 months from the date of receiving the OC. This includes general cleaning, security payment of electricity charges for the common areas, property tax, running costs of DG sets and any repair or maintenance works.
- Formation of the housing society
The developer also initiates the formation of a housing society. The developer normally creates a bank account in the name of the society and transfers the unspent money on the project. The society elects it representatives and takes responsibility of maintenance of the building and collection of maintenance charges.