FINANCE HOUSE SPECIAL .......WHEN AND HOW TO BUY YOUR DREAM HOME

FINANCE HOUSE SPECIAL WHEN AND HOW TO BUY YOUR DREAM HOME  Buyers are faced with several dilemmas when they purchase a house. Here are the answers to some of the key doubts.     Real estate, though a mainstream investment and probably a part of every financial portfolio, is also unique. It is the single largest financial commitment that most people make in their lifetimes. Buying a property also involves a lot of subjectivity and is not just a factor of the property’s price or the interest rate on the home loan. Here are some questions you are likely to face in your quest for a good property: RENT OR BUY? Becoming a house owner means not having to deal with pushy landlords, poor maintenance and annual rental hikes. Plus, there’s the feeling of having fulfilled one of life’s most important financial goals. But owning a house comes with its own worries: you get tied to a location and moving becomes difficult; you get tied to an EMI; and selling the house is not easy in case you need cash at short notice. While paying rent may look like throwing money down a sink hole, it does offer you freedom from some of these worries. SHOULD YOU INVEST? If you are looking at a property purely as an investment, the current real estate market also becomes a factor in your decision. That will determine when you recover your investment, and when you begin to earn profits (see graphs) on it. Rental income is an important lure. Most people think it will help them pay the EMI. While that may be partly true in some cases, the equation changes if you have availed of a home loan to invest in a property (see: when do you recover your cost). NEW OR RESALE? The biggest benefit of buying in the resale market is that the construction is almost complete. This can be a big relief at a time when most projects are getting delayed. Also, not all resale properties in the market are old ones; most have probably never been lived in. In some cases, such as properties that were lapped up by investors at the pre-launch stage, the price may be lower than the builder’s tag. However, in the resale market, the down payment may be higher. The seller may also ask for a portion of the price to be paid in cash, which means that you will be able to take a smaller home loan. The home work and paperwork required in case of a resale project may also be more. HIRE A BROKER? If you do decide to buy a house, you will have to negotiate for discounts, choose between payment plans and also between locations. Will you need the help of a broker or a lawyer? In most cases, with a bit of research and running around, you can take the decisions on your own. But if you do not have the time, hiring these specialists may not be a bad idea. RENOVATE OR RELOCATE? After living in their houses for some time, homeowners often discover that they need more space. Migrating to a new location may not always be a costeffective option. In most cases, you may have to sacrifice moving from a centrally located area to the suburbs. Remodelling can sometimes help expand your current house. The decision to move or modify is a critical one, because a misstep could cost you a significant sum of money and a lot of time.