New Delhi:
It’s the biggest investment decision of your life and will take up most of your savings. If you are planning to take a home loan, a significant chunk of your monthly salary will go into paying EMIs.
Therefore, it becomes all the more important to make sure your investment is safe.
We spoke to bank officials and property consultants on how you can avoid making a bad investment decision. Also read: Taking a home loan? Here's the homework
Super area vs carpet area
Real estate companies and property dealers always quote the super area of the flat and use this measurement for calculation of the price of the property. However, the actual surface area of the flat will be slightly lesser than the quoted figure. This is called the carpet area, which is the actual floor area of the flat. The carpet area is usually just 80 per cent of the super area. The super area includes common spaces such as staircase, lobby, elevator space, shafts, and even the thickness of the outer walls of your house. Therefore, if a particular floor has four houses, then each house owner will have to shell out 25 per cent of the value of these common spaces.
Don't go by the sample flat
A sample flat is meant to attract customers and includes several furnishings that the actual flat won’t have. The ceiling is an important thing to watch out for. Sample flats have higher ceilings, which will mean bigger wall storage spaces. Ceilings will also have plaster of Paris work, ambient lights, etc, which will give an impression of space. The use of glass doors is common, which give a sense of uniformity and, therefore, space. Glass-partitioned bathrooms, expensive tiles and bath fittings, modular kitchen, etc. may not be offered in the actual flat. And in case you do want them, you may have to pay extra. Therefore, don’t go by what you see and inquire about each and every aspect of the house, even the type of wood that will be used for doors and the depth of the cabinets.
Does builder have all permits in place?
It is important that the company has all the permits and clearances in place before starting the construction of the house or building, otherwise you may face trouble at the time of registration of the house in your name. These may include the correct land use permit, clearances from the electricity board, water board, the local registration body, and even permission from the military authorities in some cases. In case of high-rises, special clearances are required to ensure that construction standards are met.
You have the right to see the permits and get them cross-checked with a lawyer. One good way of making sure that everything is okay with the property is when you see that construction has begun and people have started to invest. Pre-approved loans from banks is also a good sign. Therefore, don't invest in a project where construction is yet to begin.
Does the developer have tie-ups with banks for home loans?
Builders often rope in banks for hassle-free financing. These banks do a thorough check of the property, and the prospective buyer does not have to go through the hassle of getting the project approved by a bank surveyor for a loan. A bank, especially a government one, will not associate itself with a risky project. Therefore, a state-owned bank on the developer’s board means the project is safe.
Clause for late possession
The timeline for the delivery of a project depends on many factors, such as shortage of funds in case units are not being sold, shortage of supply of raw material and even heavy monsoon. Therefore, most developers seek a 3-6 month grace period for final delivery of the project. This grace period should be mentioned explicitly in the contract you sign with them. In case the possession is not handed over to you within the grace period, the builder will be entitled to pay you a monthly penalty. It will be better to include this clause in a tripartite agreement, signed between the buyer, the builder and the bank.
Therefore, it becomes all the more important to make sure your investment is safe.
We spoke to bank officials and property consultants on how you can avoid making a bad investment decision. Also read: Taking a home loan? Here's the homework
Super area vs carpet area
Real estate companies and property dealers always quote the super area of the flat and use this measurement for calculation of the price of the property. However, the actual surface area of the flat will be slightly lesser than the quoted figure. This is called the carpet area, which is the actual floor area of the flat. The carpet area is usually just 80 per cent of the super area. The super area includes common spaces such as staircase, lobby, elevator space, shafts, and even the thickness of the outer walls of your house. Therefore, if a particular floor has four houses, then each house owner will have to shell out 25 per cent of the value of these common spaces.
Don't go by the sample flat
A sample flat is meant to attract customers and includes several furnishings that the actual flat won’t have. The ceiling is an important thing to watch out for. Sample flats have higher ceilings, which will mean bigger wall storage spaces. Ceilings will also have plaster of Paris work, ambient lights, etc, which will give an impression of space. The use of glass doors is common, which give a sense of uniformity and, therefore, space. Glass-partitioned bathrooms, expensive tiles and bath fittings, modular kitchen, etc. may not be offered in the actual flat. And in case you do want them, you may have to pay extra. Therefore, don’t go by what you see and inquire about each and every aspect of the house, even the type of wood that will be used for doors and the depth of the cabinets.
Does builder have all permits in place?
It is important that the company has all the permits and clearances in place before starting the construction of the house or building, otherwise you may face trouble at the time of registration of the house in your name. These may include the correct land use permit, clearances from the electricity board, water board, the local registration body, and even permission from the military authorities in some cases. In case of high-rises, special clearances are required to ensure that construction standards are met.
You have the right to see the permits and get them cross-checked with a lawyer. One good way of making sure that everything is okay with the property is when you see that construction has begun and people have started to invest. Pre-approved loans from banks is also a good sign. Therefore, don't invest in a project where construction is yet to begin.
Does the developer have tie-ups with banks for home loans?
Builders often rope in banks for hassle-free financing. These banks do a thorough check of the property, and the prospective buyer does not have to go through the hassle of getting the project approved by a bank surveyor for a loan. A bank, especially a government one, will not associate itself with a risky project. Therefore, a state-owned bank on the developer’s board means the project is safe.
Clause for late possession
The timeline for the delivery of a project depends on many factors, such as shortage of funds in case units are not being sold, shortage of supply of raw material and even heavy monsoon. Therefore, most developers seek a 3-6 month grace period for final delivery of the project. This grace period should be mentioned explicitly in the contract you sign with them. In case the possession is not handed over to you within the grace period, the builder will be entitled to pay you a monthly penalty. It will be better to include this clause in a tripartite agreement, signed between the buyer, the builder and the bank.
