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Buying Your Dream Home – Do’s and Don’ts
Buying a home is once in a lifetime decision for many of us with the increasing property prices. Choosing the right property for home becomes much more important. Do take a minute to read key precautions while buying a home and taking a home loan.
Buying a New Builder Property (Ready or Under Construction)
- Project Approval with RERA – Check that the project is registered with RERA authority of the state that the project is located in. You can check the project approvals, sanction plans and other statutory documents on the website of state RERA authority.
RERA (Real Estate Regulatory Authority) is an act that aims to protect home buyers. Under this act, builders are accountable for the timely delivery of the projects and to protect buyers from fraudulent builders. Each state in India has set up its RERA authority for the regulation of real estate development and speedy dispute redressal. All builders must register their project with state RERA and disclose every information related to the project on the website of the authority.
Do not buy property in a project that is not approved by RERA or whose details are not available on the state RERA website.
- Builder Reputation – Check the reputation of the builder in the market and see if its past projects have been handed over on time and if the construction quality is fine. A reputed builder will typically be a member of associations like the Confederation of Real Estate Developers Association of India (CREDAI), or Builder’s Association of India. Check the builder is an ISO certified builder and rates under the National Developers Rating List of Crest (Crisil Real Estate Star Ratings).
In case you are buying an affordable home and plan to avail interest subsidy under the Pradhan Mantri Awas Yojana scheme (PMAY), check if the projects meet the PMAY guidelines.
If eligible, you can apply for a home loan online at MyLoanCare, and we will send your loan application to the bank with a recommendation to consider you under the PMAY scheme.
Buying a Resale Property
- Title Deed and Chain – Check the entire Title deed chain of the property from the time of first allotment (or conveyance) till date and Chain of the property should be clear. The title chain runs from the first owner to the current owner of the property, especially in case of real estate property. The current owner needs to must have all documents of ownership; otherwise, the bank will not fund the home loan. Check the property ownership is updated with the respective municipal authority (for this check the name of property tax receipts), housing society, and RWA.
- Property Approval by Authority – Property approval is one of the most critical functions of development authorities and municipal corporations. Different organizations are authorized to give property approval, such as City Development Authority, State Housing Boards, Municipal Corporations, State Industrial Development Corporations, etc. These authorities approve different types of land, such as society land, farmhouse and agricultural land, land owned by a trust, regularized colony, and developed colony. If the authorities do not approve of your property, then the chances of getting a home loan over that property are very less.
- Approved Map Plan – To build or renovate a house, a builder or land owner has to approach the concerned civic authority to get approval for the plan. The construction on a property can be made only after the approval of the plan. Make sure that the building plan is sanctioned as many banks do not fund a home loan to properties when the map plan is not approved.
- Latest Tax and Utility Payments – Ensure that the current and past owners have made upto date payments of property tax, electricity, society charges, water/ sewer charges bill and any other utility payments.
Avoid buying these types of property
- Property on Power of Attorney (POA) or Notary – Power of attorney is a document that transfers all the legal rights of a property to an individual as an attorney as opposed to the owner. Banks typically don’t approve home loans on property where the property transaction is done on power of attorney or where the past chain has a power of attorney anywhere in the past.
- Gram Panchayat Property – If you are planning to take a home loan for gram panchayat property, keep this in mind that most banks do not give loans for this property unless it is regularized by the town planning department.
- Lal Dora or Abadi area Property – Lal Dora or Abadi property is part of the village land. Banks do not approve a home loan for such property even if the registry is done.
- Disputed Property – Banks do not fund a home loan for a property that goes under some legal dispute. In such cases, the title deed is not clear, which can be risky for both owner and lender.
- Extra Coverage – In such cases, construction exceeds the sanctioned area. Most banks may fund properties with extra coverage within compoundable norms as per local authority. However, banks will typically not fund properties where the extra coverage is non-compoundable or if the setback is violated or the extension extends onto public places like road or rasta.
- Unauthorized Builder Projects – Do not buy a property from unauthorized builders. Builders with no license or the builders who make construction on agricultural land are considered unauthorized builders.
- Flats less than Minimum Size – Most of the banks do not lend home loans where the saleable area of the property is less than 450 square feet or 50 square yards or 40 square meters.
- Regularized Colony by Local Builder – Only some and not all properties in regularized areas may be funded by banks. In case you are buying a property in a regularized colony, please obtain a copy of the entire property chain, map plan, and latest property tax bill and get the same checked from a bank or your lawyer before proceeding.
- B Khata / E Khata Property – This type of property in Bangalore is funded by banks for a home loan only if it has DC conversion certificate. Note that even if the current owners have paid the property tax or civic charges for the property, many banks may not fund these properties without DC conversion.