Born between 1980 and 2000, the Millennials are a force to reckon with in the Indian real estate industry. They are smart, tech-savvy, risk-takers who are on the lookout for a hassle-free, transparent process when investing in the property market. Their ease with the Internet means that they are keen on researching all options before committing their finances. Social and environmental awareness is also a key decision-making factor in this age-group and studies show that 37% of the millennials are willing to buy a product or service from companies engaged in community welfare programs.
Although buying property in India is becoming easier and the process more transparent with the introduction of legislation and GST, it can still be intimidating to a first-time Millennial buyer who is looking to invest a large amount of money on his/her dream home. Here are a 5 Questions that can help Millennials in their decision-making process.
Q: I’m in my early 30s and looking to invest my savings. Should I buy a home or invest elsewhere?
A: Although every individual’s needs and motivations are different, most Indian millennials harbour a dream of owning their own home – and the sooner the better! If you have a secure, well-paying job, buying a home is a great option. Renting may be hassle-free in terms of maintenance costs in the long-term, but buying property is a good way to build a valuable, long-term asset. Investing wisely in property can bring you good returns. However, you must consider your finances in depth before you commit to buying property.
Q: I have found a property under construction by a reputed builder online. Should I go ahead and invest?
A: Always be sure to research the builder thoroughly before you invest, even if they are reputed within the industry, especially for projects under construction. Construction delays can lead to an increased cost burden on buyers. Use the Internet to gather information on the developer’s past and present projects and their current financial status – their track record so to speak. Speak to friends who have bought property and can share their information and experience of the process. Make sure to visit the construction site yourself and tour a sample flat if available. This will give you an idea of the ground realities. Pictures can be deceptive, and it is much safer to see the actual construction site yourself to get an idea of the completion timeline but also of construction quality.
Q: I am planning to apply for a home loan. Will I get a loan? What should I look for to get the best loan for me?
A: Most banks will finance up to 80% of residential property cost. Higher income means a larger loan amount and vice versa. Speak to several banks and negotiate the best terms with regard to EMIs, fixed/floating ROI, pre-payment penalties etc. Remember that you will have to finance a 20% down payment with your own money.
Q: I’m planning to use all my savings to make a down payment on my new home? Should I go ahead or is it too risky?
A: There is always some amount of risk in every investment we make. However, buying property involves large amounts of money and so requires due diligence before investing your savings. Financial planning is key. You must make a budget and try to stick within it. This should include an emergency fund in addition to the amount set aside for your monthly expenses. If you should lose your job for example, you should have enough money set aside to tide you over until you find a new one. Improper planning can sometimes lead to distress sales due to unforeseen and unfortunate circumstances. The goal is to avoid such a situation.
Q: I’ve found the home of my dreams and I’ve applied for a home-loan. My down payment is taken care of and I’m finally ready to invest! Any last-minute advice?
A: You are almost ready to go ahead. Go over your finances one last time. Check and recheck your budget and the timeline. Remember to factor in the “Hidden Costs” associated with buying any property such as registration fees, insurance and property tax. Utility bills and maintenance costs must also be included in your budget. If moving from a smaller to a larger home, these are likely to increase. Fluctuating ROI on your home loan must also be factored in when applicable. These are expenses that can be easily planned for in your budget but can cause an added burden if you neglect to do so. Once you have everything in place, you’re finally ready! Congratulations on your new home!