- Kishor Pate, CMD – Amit Enterprises Housing Ltd
March 07 2016, 12.17 PM IST || Pocket News Alert
A decade ago, an Indian woman independent and capable enough to buy her own home was a rare case. However, things have changed today. The contemporary Indian woman tends to be very well educated, has a good job with excellent career growth prospects, and even holds important government or corporate leadership posts.
In any case, today's Indian women certainly have the ability and confidence to craft their own lives, and are very much able to fulfill their dream of owning a home regardless of whether they are married or not. In fact, buying a home is fast beginning to figure as a bigger priority for many Indian women than marriage. This is not surprising, since a self-owned home is correctly seen as the #1 security anchor in India – and the best foundation from which to make long-term life decisions.
In fact, even married Indian women today are more often than not active financial partners in their families. Apart from being earning members, they also have a complete grasp of the family's current and future financial abilities. Developers are very aware that the woman plays a leading role in a family's home purchase decisions. Also, Homes are made by women, not men. Every man knows this, and will defer to the judgment of the woman in his life in matters of buying a home. Women have a genetically encoded gift for homemaking, and much better perspective about what should be included or excluded. A man depends on the woman to make his home comfortable and suitable for family life.
Still, buying a home is not just a matter of instincts and good taste, but also one for adequate planning and foresight. For women who investigating the market for suitable properties, either for themselves or for their family, here are some points to consider:
- Prepare For The Initial Costs: First-time home buyers tend to save a considerable while to get a sizable down payment together. However, keep in mind that property purchase involves several other initial expenses such as stamp duty and registration costs, utilities connection charges and insurance and taxes. Apart from your down payment on a home (or your contribution towards a home loan) you need to have an additional fund of at least 6-7% of the base cost of the property available. If a broker's services are used, even a negotatiated fee will amount to a significant sum.
Not having the required capital to cover all of the initial costs can prove to be a dampener on home purchase plans. It is not necessary to have the entire corpus in one’s savings account, since personal loans are always an option. However, women who are just starting out in their careers should not allow themselves to fall too deep into a credit trap. If they avail of a personal loan to cover the initial costs of home purchase, it should be to the minimum possible extent so that repayment does not become an issue on top of servicing the home loan. It is always best to use free and clear capital as far as possible.
- Be Confident About Monthly Outgoings: Anyone eyeing a property purchase should first figure out the monthly mortgage and whether they will be able to afford it. Online mortgage calculators can be helpful, but they will only tell you the value of the principal and associated interests. There are other monthly expenses involved in home ownership, and these include insurances, taxes, maintenance charges, utilities charges, etc.
For working single women, it is important that all these amounts put together do not exceed 35-40% of their net income. Do not neglect to figure out your overall cost of living before deciding on how big a home loan you can safely service, and keep in mind that property is not the only investment you should make towards your ongoing financial security. You should also put at least 10% of your monthly income into a retirement plan.
Often, the full implications of having over-committed on a home loan do not dawn on the borrower until the home loan has been serviced for a few months. By then, it is too late to modify the financial plan. When it comes to home purchase, every financial angle must be examined well in advance. It is very advisable to use the services of an experienced financial planner, or rely on the informed advice of a family member, friend or colleague who is experienced in such matters. The process of buying a dream home should not turn into an unexpected nightmare at any point.
- Be Realistic And Maintain Forward Focus: Home ownership is a great step ahead in a woman's life, and towards independence in your retirement age. But your first home is not necessarily the only home you will ever buy. Remember that you can always upgrade in the future if required or desired, so there is absolutely no need to buy the biggest-possible flat now. Never compromise your current financial viability by buying a needlessly expensive home.
The home you live in today does by no means have to be the one you will be living in when you retire. When it comes to real estate, it is always a good thing to upgrade as financial ability improves, but this process can and should be planned out over the entire course of one’s working life. For a woman who is at the outset of her career, nothing is more important than financial stability on every front.
To plan for upgrading to a bigger and better home further down the line, it is very advisable to invest (and stay invested) in good mutual funds which deliver more returns than savings accounts. Direct stock market speculation into single company stocks and bonds as a potential source of real estate funding should be avoided, as such investments are not sufficiently diversified to offer a safety net in case a company experiences a downturn.
- Shop Around Extensively For Home Loans: When it comes to choosing the right lender, do not go by the recommendations of friends or relatives alone. Do extensive research on the several different lending institutions available to you. Ideally, you should get pre-approved for a home loan the interest rate should be the most competitive. Remember that as an Indian woman, you are entitled to ask for a lower rate of interest on a home loan – be sure to insist on this benefit.
The home loan market in India is currently very competitive, and banks are falling over themselves to attract customers. This is a fact that can and must be taken advantage of. A woman who is shopping around for a home loan should make specific inquiries about special interest rates and other incentives that a bank is offering to women borrowers. Asking the right kinds of questions will also establish you as an informed borrower and encourage the bank to offer you the best possible structuring.
Never take the first thing that is offered to you – most banks have a considerable margin of flexibility to accommodate borrowers who know what they want and are determined to get it. If you are married, the ideal scenario is to take a joint loan with your spouse. This is also the arrangement that banks prefer most, since it reduces their risk.
- Be Sure Of The Developer's Credibility: Every day brings new stories about buyers who have been hoodwinked by unreliable developers. Either the project has been unreasonably delayed, has never even taken off or the delivered property (or amenities and facilities) are grossly different from what was initially promised. Do not fall into such a trap - no woman looking for the security of home ownership should have to deal with such a setback. Make sure the developer has a strong reputation on the market by doing multiple checks with reliable agents, the home loan company and also on the Internet. It is highly advisable to patronize only established developers with a readily verifiable track record for timely completions and 100% adherence to the agreements they make with their customers.
About The Author
Kishor Pate, Chairman & Managing Director of Amit Enterprises Housing Ltd. is the driving force behind one of the most successful real estate development firms in Pune and beyond. Apart from its signature luxury homes towers and premium gated townships, AEHL has also launched highly successful affordable housing projects like Astonia Classic and Colori in Undri and the Mediterranean-style township Astonia Royale in Ambegaon.
