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By Dhruv Agarwala & Kartik Varma: There is no substitute for the joy that one experiences in buying the first house.

Most Indians have never bought a home before; and are actually first-time buyers. Buying a home is going to be the biggest investment that you will make in your life. Here are some tips to give you a lasting experience

Don't budge from your budget

There is too much choice in the market; you must understand what your budget is so that you can narrow your search into a manageable process. Otherwise , your real estate broker will spin you around. Give the broker your budget and tell them that it's not movable. Don't believe them when they say your budget is too low. There are properties of all types available in India today.

The budget is not just the cost of the property it must include numerous non-obvious costs such as broker fees, lawyers fees, stamp duty, registration fees and home insurance premium. If you are buying a new home, you will also need furniture, fittings and gadgets for the home. Alternatively , if you are getting an old home, there might be renovation or redecoration costs involved.


There is no point in searching for the house of your dreams if you cannot afford to live there, you must also think about whether you have enough cash flow to support your lifestyle, after you have paid for the property.

Do not stretch yourself and take a personal loan to fund the down payment towards the property. This will only increase your risk exposure. Ensure that you can naturally afford the down payment through your savings. Additionally, don't stretch your budget to get a more expensive home because that will mean stretching your EMI payments. Remember to keep your EMI manageable so that you can continue to afford the lifestyle you are accustomed


This is the key that will affect the quality of life that you have in and around your home. Additionally, a better located property will get a much better resale value if you decide to sell.

Before you put in your life's saving into a property , you might want to consider renting in your desired location for a few months. It will give you a good flavour of what life could be like in the area. When thinking of a location, you must consider the following: proximity of schools, your commuting time to and from work, modes of transport around the property, local amenities and shopping convenience.

Finally, the traffic and noise situation might often be very different from weekdays, so do check the desirability of the location at different days and times of day.

Define your specifications

Prioritise what is important to you. Otherwise, smooth-talking real estate salesmen will take advantage of you by showing you too many different properties on criteria that will not be important to you.

Is a large kitchen important to you? Do you need an attached bathroom for every room? Do you want lots of storage capacity? Do you need a study for your home office? Do you want to buy an old construction and aged plumbing, or will you only look at new modern homes that will come at a premium?

Be patient

The home-buying process can be time-consuming and complicated. If something can go wrong, it will. But, if you are mentally prepared for it, then you will not be surprised when delays happen. Budget at least 3-6 months for the process, especially keeping in mind the timing of when you absolutely need to move into the new home.

Do not get frustrated if you do not feel fully in control of the process. Remember, that you are going to be at the mercy of real estate brokers, the developer, home loan lenders, lawyers and other intermediaries . Money, documents, contracts and agreements need to move around all these different players in the process. Things will not always move at your pace, but at the pace that these intermediaries choose.
View it twice if you like it

Of course you are not going to buy the property without seeing it. But, don't make the mistake of taking your entire family with you the first time around. If they get over excited, the real estate broker is going to sense this, and then will exploit this to his advantage.

You must also visit the property at least a few times. Note how you instinctively feel about the property. Why do you feel this way? Can you really call this place home? Maybe at your second or third visit you can take the extended family with you to get their reactions as well.

Maintain a viewing checklist, on which you can rank the different properties you are visiting on the criteria that you have prioritised. Remember, you do not want to regret that you were forced into a decision to buy under pressure from a real estate broker or because you had very little time to view the property.

Learn how square footage can magically disappear

Get familiar with the language and conventions used in real estate. When some one gives you an area for the property, always ask them what definition of area they are using. Here is why this is important:

Typically, the area that you pay for is higher than the area that you actually get. For instance, you will pay for a 2,000 square feet flat, but your usable area might only be 1,500 square feet. You will face a reduction in the area. In this example its 25%, but it could even be more in actual cases.

The square footage that you have lost is your share of the floor space of common facilities like walls, corridors, lifts, etc.). But, you will have to pay for the entire area, including the area that is lost.

Always ask what is the carpet area that you will get, i.e., the area over which you can actually spread carpet across the entire floor if you so wanted to do it. This, effectively , is the area that you will have for your end use.

Review your financing options simultaneously

Just finding the right home is of no use to you if the deal falls through because you have not organised your funding. Often you will need to demonstrate that you have access to the funds to finance your purchase. Therefore, organise the money before you need them.

If you are self-funding your purchase, ensure that you have enough funds that you can access at short notice if your deal comes through and you are required to pay immediately.

If you need a loan, file an application with your chosen lender and get it approved. You can get approved even if you have not yet identified the property . This will save you time and emotional hassles later on in the process. Typically, such approvals last for six months which should give you sufficient time to identify a property.

Buying directly from the developer versus the investor

These are boom times for real estate development in India. Developers are coming up with new projects all the time. Many investors have bought properties for investing purposes. You need to understand that there is a difference in buying directly from the builder versus from the investor in a property.

If you buy property directly from a developer in a project, it is likely that you will not have to pay any cash component and the entire payment can be in cheque.

On the other hand, if you buy from an existing owner of the property (even if its under-construction ), the owner will expect to earn a return on his/her investment , and might expect a large part of the payment in cash. You need to be aware whether you are capable of making cash payments. This is a reality in India and in many cases

Your current buy doesn't mean game over

As you and your family grow, so will your needs. You might get married, have kids, your parents might move in with you. Some unplanned events might also occur; for instance, you might get transferred to a new city. Don't see your current purchase as a dead end.

You can upgrade to a different property in a few years. Maximise what you need to fulfil over the next few years. Remember, you can always sell this property and use the sale proceeds to get another property.

Finally, with a little bit of attention to detail and awareness, you can become more confident even before you start the process. There is absolutely no substitute for the joy and pride that you will experience at your first home purchase.

(The authors are co-founders of iTrust, a financial advisory )
( Courtesy:



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