In our previous article, we had discussed the options for home-buyers who are faced with handover delays from builders. We will now get into the nitty gritty of whether it makes sense to buy a house at all in these pandemic times. Real estate prices are down and developers are trying hard to sell their inventory. Given the wage cuts and job losses prevalent now, should you jump in right away or wait it out a little longer before economic conditions stabilise? Once you start, here is how you should scout for good deals.
‘Lockdown’ schemes: Buyer beware
Desperate to sell homes, builders are offering innovative schemes to lure customers. The buyer is expected to watch a video of the property, completed or under-construction. Payment terms are explained and the customer is expected to pay a token amount as an expression of interest.
Instead of reducing property prices, developers are comfortable offering relaxed payment plans to attract buyers. Some builders ask buyers to pay just 10 percent of the property price at the time of booking and the rest on possession.
If you have money ready and are the end user, you are better off negotiating with the builder after the lockdown and getting a better price.
Ensure that the developer agrees on zero cancellation fee.
Under construction homes are risky buys
In the relief package announced last week, real estate developers were given a six months extension for completion. Further, the RERA in individual states can offer three additional months’ extension. So, the handover of under-construction projects may be delayed even more.
Labour shortage, restrictions on construction activities in lockdown and cash crunch are serious challenges in front of the developers. “Developers are more likely to offer good deals on ready-to-move-in houses, as their cashflows improve quickly compared to an under-construction one,” says Ritesh Mehta, Senior Director & Head - West India, Residential Services, JLL India.
Can you afford to take a home loan now?
Banks do ask for the latest salary slips and income documents when you seek disbursement of loan. Assess your income, surplus, job stability and eligibility before applying for the loan.
“The loan eligibility letter in your hand comes with many conditions and does not bind the bank to lend to you,” says Sukanya Kumar, founder and CEO of RetailLending.com. Getting the right loan amount of home loan at attractive interest rates can be a tough ask.
“While buying a ready-to-move-in property on home loan, do purchase adequate insurance for life, accident, critical illness and unemployment risks,” advises Kumar.
If you have made up your mind to buy a house for self-consumption, then try to negotiate. Developers will offer deals if you are a serious buyer – with down payment ready and a home loan sanction letter from a bank.
For new projects, the RERA website gives information. Be careful with resale flats. A physical examination is crucial, which can be done only after the lockdown is lifted. Check the ownership rights.
The Finance Minister has announced the extension of the interest subsidy scheme for middle-income home buyers. If you earn less than Rs 18 lakh per year, you can take the subsidy on interest. This move is aimed at boosting demand for affordable housing.
Investing or buying for self-consumption?Avoid investing in commercial real estate such as shops. If the situation worsens, you may get better deals in residential real estate. If you want to buy a house for your living, you can now start looking around, of course, only if your job and income are secure.