how to buy a flat

8/13/2019 How to Buy a Flat

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Table Of Contents

1. How to buy a flat? - Intro 2. Choosing your flat! - Location 3. >> Functionality 4. >> Quality of construction.. 5. About home loans! 6. Legal problems with land!! 7. Actual procedure....

1.

How to buy a flat ? - Introduction

For most people, buying a flat is one of the biggest buys they make in their life. It involves a huge amount of money. When you put in so much money, you want to be sure that you are making the right decisions and not doing anything wrong.That is exactly what this article will help you with.

The actual process of buying a flat is not very complicated. Even if you do notunderstand it, your seller will be more than happy to explain each and every thing to you. The difficult part is, knowing that you are not being "fooled" or "conned" by someone. This guide will give you all the possible tips and tricks you

should keep in mind so that you can make your decision wisely. We hope you findit helpful.

Please Note: This guide is designed to help people who are interested in buyingflats in brand new constructions as well as already existing buildings. Some ofthe points may not be applicable to you depending on the kind of flat you are buying.

2.

Choosing your flat - Location!When choosing the location of your flat, you must consider these questions:

Is there a daily marketfrom which you can buy fruits and vegetables near-by?

Is there a doctors clinic or hospital nearby?

If you and your family relies on public transport, is there a buss stop, railwaystation etc. close-by?

If you have small children, is there a playground, park, garden etc. close-by?

What about post offices, banks etc.?

Does the area have proper drainage, sewage and water supply?

Is there a regular system for garbage disposal in your area?

What about schools, collages, offices? How far are they from the location?

What will the daily transport cost be?

What is the pollution and noise situation in the area?

How is the neighborhood? Is it a safe place to raise children?


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3.

Is the flat designed to suit your needs?

It would be best if you choose a flat that satisfies your needs and also suits your life style. You could use these questions to guide you:

What is the age of the people who will be living in the flat? If they are old, you might want to choose a flat that is on the ground floor or first floor?

If the flat is on a high floor, is there a lift service available in the building?

Does the lift service have a generator backup?

If you choose a flat on the first or ground floor, you must consider the possibility of floods affecting the area!

How are the flats in the society arranged? Is there privacy or can everyone seeinto your house?

When people are talking in the flat next to yours, can you hear it in your flat?

This would mean that your conversations too will not be private!

How are the windows of the flat arranged? Does enough sunlight come into the house?

Is there enough ventilation?

What are the amenities the society is providing?

Are there too many corridors in the apartment? You will be paying on basis of area. Corridors eat up room-area!

Ideally, there should be at lest one common toilet so that the visitors do not h

ave to enter your bedroom to use your bathroom.

The kitchen, dining room and entrance should be close to each other. This ensures easy serving of food to guests etc

Ideally, the building design should include curtain walling. It is required to protect against seepageproblems!

Check the heights of railings, distance between each railing etc. from the pointof view of safety of children.

The builder might tend to design the flat such that the bathroom is close to thekitchen. This is done to reduce plumbing costs. But this tends to clutter up th

e house and reduces the ventilation of other rooms of the house. Make sure thatthis is not the case.

Try to draw the furniture on the ground and see how much space is left free. Isthe house too cluttered?

4.

Check the quality of constuction!


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It would be a good idea to check up on the quality of construction before you goin for a particular project. Let the following points guide you:

You need to check up on the reputation of the promoter, contractorand architecte construction. Visit other projects by them. Try to find problems and faults intheir construction by talking to people.

One of the most important criteria is the cement being used in the construction.Try to check up often, though surprise visits about the type of cement being used. Ask the builder about this? Ask him to explain why he feels the particular cement being used is the best

Check up on the thickness of the external walls. If they are 6-inches walls, itis not a very stable construction. A 9-inch wall is always better.

You must ask for a 'performance guarantee' clause or at least a 'structural liability' clause in the sale agreement. This will insure that the builder remains liable for any defect in the building for at least one to three years from the day he hands over possession to you.

Having used all the above given points, let us assume that you have finally found your dream house. Now, comes the question of paying for it. Most people will go in for a home loan

5.

Things you must know about home loans!

There are many different companies that are providing home loans. There are manydifferent offers and features. How do you decide what loan you should go in for? To help you answer that, here are a few things you might want to consider.

Best way to compare offers: Go to the different institutions providing housing loans and ask them to calculate and give you the netamount of money you will haveto pay over 10-Yrs and the netamount of money you will have to pay over 20-Yrs. W

hen we say netwe mean that the money includes everything, the administration, processing and all other possible fees. Note all the different rates that all the different organizations give. This will give you the best idea about the different rates.

You will also have to choose between a 10-Yr or 20-Yr loan. A 20-Yr loan will mean lower EMI (equal monthly installments) but probably a higher interest rate. In the long run, you'll be paying more for your house because you will be makingmore interest payments.

With a 10-year loan, the EMI will be higher but the interest rate lower; thus you'll pay less for your house because it will be paid off in a shorter period oftime. You will have to decide what suites your needs.

Find out about processing fees, administration chargesand the quantum of loan. Gch institution to provide you with a written statement of all fees. Then, ask toreduce one or more of the fees. Use the lowest fees you to negotiate with otherinstitutions. (Dont be shy. Seriously!) You must negotiate.

If a sales person asks you to include false information on your home loan application to get quick approval, do not agree to this. Also dont get confused into borrowing more money than you need or can afford.


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A lot of Income Tax savings are possible with home loans. The Income Tax saved can be used to pay the EMI. So do not loose out on the income tax saving oppertunities.

Ideally, you should choose the bank which does not require a "guarantor" and offers home loans without "pre-payment penalty" (or a penalty for repaying loan before it is due). This helps you re-pay your loan as early as possible.

The following documents will be required if you approach an institution with a home loan request. Try to take these documents along with you. If you show them that you are a serious buyer, they are more likely to be open to negotiations:

If you are a Salaried Employee:

1. The latest salary slip showing statutory deductions 2. Form 16 (showing tax deducted at source by employer) 3. Proof of age (birth certificate/voter identity card/passport/school-leaving certificate/valid driving licence) 4. Proof of residence (phone bill/electricity bill/ration card)

If you are Self-employed:

1. Computation of income for the previous two years, certified by a Chartered

Accountant 2. Profit & Loss Account and Balance Sheet for the previous two years, certified by a Chartered Accountant 3. Proof of age (birth certificate/voter identity card/passport/school-leaving certificate/valid driving licence) 4. Proof of residence (phone bill/electricity bill/ration card)

Choosing "fixed" or "floating" interest rate!

Just incase you are not sure about what these mean, let us explain them first. A"fixed" rate would be a rate that would be set right at the beginning when youapply for the loan. Suppose you apply for the loan and choose a pure fixedrate, t

hen if the rate of interest is 9% at the time of application, it will remain 9%for the complete period of the loan.

This could be good if the interest rates increase during the period for which you are paying the loan. This could be bad if the interest rates reduce during theperiod for which you are paying the loan. But, if you want a safe option, thenyou should go for this.

However, there is another version of fixedinterest rates. These are semi fixed. Ths means that the interest rates remain the same for 3 or 5 years. And at the endof every 3 or 5 years, the interest rates are changed again. If you decide to go in for fixedrates, be very clear about the kind of fixedrates you are choosing.

In the case of floatinginterest rates, the interest rates change depending on basis of some other external interest rate. For example, some banks decide the floatinginterest rate on basis of their fixed deposit interest rate. And the fixed deposit interest rate generally depends on the market.

However, in some banks, the floatingrate may depend on some "internal interest rate" that is not market dependent. This is as good as a fixedinterest rate. It will just give an impression of a floatingrate. So, make sure you know what the floatingrate is dependent on, when you go for it.


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7.

Actual procedure for buying a flat!Finding out how much the flat will cost you...

Flats are generally priced on basis of area. But, how much area? What area? We shall discuss the way this area is calculated and how flats are priced here...

Saleable/ super built-up area: Carpet area is defined as "the net usable area measured from the inner faces of wall to wall". However, the trend nowadays is tocalculate area on the basis of built-up area or "super built-up/saleable area".

Built-up area is the net area of a flat, including space covered by the wall thickness. This is generally 15% more than the carpet area of a flat. This are alsoincludes the "common spaces area".

There are two types of "common spaces" area:

1. Common Spaces on each floor 2. Common spaces in the building

Common spaces on each floor:The staircases, lobby, lift, etc. on the floor are to be divided "proportionatel

y" among the flats on the particular floor. For example, a building may have four flats per floor with different built-up areas. The built-up areas of the fourflats may be 1000, 2000, 3000 and 4000 sq. ft. It means that the proportionate shares of floor space among the four flats are 10%, 20%, 30% and 40%.

Now, if the area of staircase, lobby, lift, etc., is 100 sq. ft. then it shouldbe shared among the four flats as per the proportion of floor space enjoyed by them. So, out of 100 sq. ft., 40 sq. ft. goes to the 4000 sq. ft. flat, 30 sq. ft. to the 3000 sq. ft. flat and so on. Therefore, the gross area of the four flats on a floor becomes 1010 sq. ft., 2020 sq. ft., 3030 sq. ft. and 4040 sq. ft.respectively.

If this is too complicated, just remember that if you have a bigger flat, you ha

ve to pay for more of the common space on each floor. If you have a smaller flat, you have to play for less of the common space on each floor.

Common spaces in the building:Every apartment building must have a lobby, a staircase, a pump room, an electrical room, etc., at the ground level. There must also be one or more stair-room at the terrace level and sometimes, also a lift machine room. All these areas should be proportionately divided among all the flats.

So, "Super built up area" = built up area + common spaces on each floor + commonspaces in the building all together!

Now, generally, when calculating the cost of the flat, you are charged on the ba

sis of per square feet of super built up area.

Other costs...

You will have to pay a "stamp duty" of 6% to 12% of the total cost of the sale.Besides that, you will also have to pay around 1% as registration fees. All these will increase the total cost you pay, so they must be considered.


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There will also be "maintainance costs", property taxes...and many other minor things. So, when calculating how much you can afford to spend, calculate all these things. Also when negotiating with the seller, negotiate on the basis of thesethings and ask the seller to give you a complete break up of all the prices involved.

After everything else is done....

After you find out how much the property costs you, after you negotiate over theprice, it would be a good idea to take down all your negotiations "in writing"from the seller. If the seller has promised certain things like parking, a certain rate per square foot etc., take all that down in writing. Do not rely on the"seller's promise".

The next step is to prepare the "agreement of sale". Basically it is a agreementthat covers everything you have negotiated and decided and other legal formalities...

If the seller insists on drafting the agreement, get it checked properly by yourlawyer. There may be certain loop holes in the agreement because of which you may end up in trouble. You could also draft the agreement though your lawyer. Once the agreement is ready and accepted by you and the seller, you need to officially get the flat to be transfered to your name though the "registration" of theagreement though the Govt. Sub-Registar in your city. Pay the money and the flat

is yours.

This process is a little more "long-drawn" than it seems by reading the above paragraph. However, it is not too complicated and you can easily ask your lawyer to help you with the process. What is more important is that you keep in mind thepoints discussed in the previous pages about the choice of flat, home lones etc.

Best Of Luck!

Jai Hind!

how to buy a flat

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