Top 10 Ways to Save Money on Buying a Home
Who does not long for a space they can call their own? Homeownership is considered one of the most significant milestones of any person’s life. But for many, this is just wishful thinking as they lack the knowledge to buy a home. Buying a home for oneself is not as easy as it seems. There are several parameters that one needs to consider before getting oneself involved in this investment.
Significance of research before buying a home
Many people invest their lifelong savings into building a house of their own. One’s hard-earned money, accumulated over the years, goes into this chore. So, it is evident that one needs to do a good amount of research before buying a home. Proper knowledge can help one make informed decisions and streamline the process.
But it is also true that not everyone can afford a home. Many end up living their entire lives in a rented space. But as mentioned above, a guided approach towards acquiring or buying a home can help one save money on buying a home. Even people with enough capital to buy a house make mistakes. They can get tricked into paying extra and cause various other problems.
10 Ways to save money while buying a home
So, let us explore ways by which one can end up saving money on buying a home. This may seem too good to be accurate, but it is achievable. If only one keeps these pointers in mind, they will save loads of money when buying a house.
- Patience is the key
- Compare prices both online and offline
- Decide on the property type
- Curate your buying strategy
- Making a hefty down payment
- Compare home loan interest rates
- Save on taxes
- Pay for carpet area only
- Avoid freebies
- Bypass unnecessary amenities
1. Patience is the key
When buying a home, waiting for the right time is essential. Having some patience, in the beginning can come in handy. Any buyer must not pounce on the first opportunity but wait for the market to align with their needs. Real estate prices come down during the recession period.
So, do not invest in any property when the market is at its highest. The prices of homes & other properties come down over 10% to 15% during a recession. So, it is always wise to wait for this cyclical market change.
But not everyone has proper knowledge about market trends. So, in such a situation, one can take the help of an agent and acquire the required knowledge. It is always good to do your research before jumping into buying anything. One can also look for distressed sellers desperate to sell their homes. In such a case, the possibility of getting a house at a comparatively lower rate is highly probable.
So, it can be handy to wait for the market to be at its low and acquire the prerequisite knowledge about market trends when buying a home.
2. Compare prices both online and offline
With the advent of the internet, we have been blessed with a plethora of information about anything and everything. The internet can come in handy when looking for the best prices for any given property. One can also get information about the current market trends and future trends as well.
Those who do not like relying on information online can compare prices via offline and online media. It is always wise to take the help of both online and offline media to make a fruitful decision.
3. Decide on the property type
The real estate market has two property types: ready-to-buy and under construction. Going for an under-construction property is always advisable as it costs over 25% less than a ready-to-buy property.
Also, one must always compare the taxes levied on these property types. But these types have their pros and cons. The finished property comes at higher prices as they are handed to the buyers faster. So, gauge your priorities and then choose the best-suited property of your liking.
4. Curate your buying strategy
Curating your buying strategy is very important. There are two buying strategies: a construction-linked plan and a subvention plan. In a construction-linked approach, the buyer pays over 5% to 10% of the property’s price at the time of booking, followed by producing over 10% in the next three months. Then the buyer pays 20% in the coming six months. The remaining 60% to 70% is produced as the construction progresses.
While in the subvention plan, the buyer takes a loan for 60% to 70% of the amount and keeps paying installments till getting possession.
5. Making a hefty down payment
Making a hefty down payment when buying a property is always advisable. Try paying over 40% of the amount in the down payment. This can be followed by taking a loan for the remaining amount. This will save a buyer from paying extra money in the form of interest on the loan amount. This is one of the most ingenious tricks in the book.
6. Compare home loan interest rates
Most of us go for a home loan before buying a house. Earlier, people used to wait for their retirement to build a house, as taking a loan was not that prevalent. But now, this trend has changed, and getting a home loan has become easy. There are several private and public banks out there that are more than eager to give home loans. But home loans charge hefty interest rates. So, buyers must always compare home loan interest rates before picking the bank. This calls for proper research.
Often, a builder has a tie-up with a particular bank, and he insists on taking a loan from that bank. In such a case, be cautious, as you may send a lot of interest. But it is always great to choose your bank. Another point to be noted here is that one must always take a loan at the current interest rate.
7. Save on taxes
Buying a property has got several advantages. One of the prime benefits of buying a property on loan is that the buyer can save loads on taxes. Getting tax rebates on home loans is a prevalent practice, and many people deliberately take home loans to save on taxes. If a person has one home, they are exempted from paying taxes. But if one boy has more than one house, taxes are levied. But one can always claim deductions on municipal taxes.
8. Pay for carpet area only
With the prerequisite knowledge of the carpet area, a buyer can save up to 5% on the carpet area. In several instances, builders cheat on buyers on the promised carpet area. So, knowing beforehand where a buyer can be cheated on is very important.
The carpet area promised by builders is often converted into increasing the balcony space rather than the carpet area itself. One must beware of this little trick and ensure that the carpet area promised exists.
9. Avoid freebies
Buyers must also not get into the web of getting freebies. Freebies might seem lucrative on the surface, but they may be cutting big holes in your pocket. It is advisable always to get hold of cash rebates. A cash discount can be an excellent respite for home buyers out there. So, convince your builder to give you a cash discount instead.
10. Bypass unnecessary amenities
Avoid buying a house with unnecessary amenities like in-house restaurants, gyms, swimming pools, a garden, a clubhouse, etc. These things can lead to a significant hike in the overall property price. Branded developers also tend to charge a higher fee than non-branded ones. So, try to search for developers that offer suitable quality property. We do not need all those extra burdens in our pockets. So, look for a property that is not very pompous yet decent.
This read gives a deep insight into the dos and don’ts of buying a home. If one follows these steps, then one will make a wise buy without spending unnecessarily on things that do not hold much importance.
This process may seem very complicated initially, but with proper research and a meticulous approach, one can save loads. This article has information related to searching for your ideal home to following the steps needed to save on taxes. So, delve into these pointers and get critical insight into this matter.
Buying a home is every person’s dream; achieving this calls for much hard work and knowledge accumulation. These steps will curtail the possibility of spending excess money when buying a home. Keep these pointers in mind and head and make your big purchase a reality.