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" Tired of living in a rented house? It's time to buy your dream apartment. "

Residential Apartment

What is a residential apartment?

You purchase a residential apartment commonly called a flat as a place to reside/stay.

How do you pay for your residential apartment?

If you are purchasing an under construction flat check for the :

Down payment
Construction linked costs
Flexi payment options

You have to pay around 10-15% of the cost of the apartment at the time of the purchase. This is the down payment for the apartment.

Builders ask you to make a down payment at the time of booking of the apartment (10-15% of the cost) and another (70-75%) within a couple of months after booking the apartment.

You make the remaining payment at the time you take possession of the flat. This is a highly risky method of making the payments, as you are stuck if the builder delays the construction of your apartment.

You could opt for a construction linked plan where you pay 10-15% of the amount as a down payment and the rest of the payments are made as each level of construction is complete.

You could opt for the flexi plan where 30-40% of the payments are made as a down payment and the rest as each stage of construction is completed.

Why buy Residential Apartment
Roof over Your Head

Roof over Your Head

A roof over your head is a basic necessity. A residential apartment provides you a place to reside.

A Good Investment

A Good Investment

You can buy a second apartment as an investment. You can also use it as a vacation home.

No More Rent

No More Rent

Tired of living in a rented apartment? Tired of shifting houses? Your own apartment is the answer.

Save on Tax

Save on Tax

You save on tax, if you take a home loan to buy your apartment. You save both on the principal and the interest.

Things to remember while purchasing an apartment

Check the title of the land

The builder needs to have the title deed showing the ownership of the land. The title of the property needs to be clear and marketable. The builder then needs to get approvals from the municipal and other authorities.

This is very necessary to start construction on the land. Approvals from the water and electricity board and environmental clearances are a must. The approvals for the building structure, the floor plan and the safety audit of the structure needs to be done.

Get a written commitment from your builder

You need a written commitment (clause) from the builder, clearly stating the payments, the time when construction will be completed and when the flat will be handed to you, as well as a penalty for the late delivery of the flat.

Check the background and reputation of the builder

Check the track record of the builder. Has he been successful with his projects in the past?
Does he have the finances to complete the project?
How many projects has he delivered and in what time?
Has the builder been involved in any litigation (legal feud) in the past?

Be aware of the cost of the apartment

The cost of the apartment depends on its location. If it is in a posh area its price will be high. The builder gives you the price of the apartment as the basic selling price (BSP).Any extra amenities offered are charged separately.

The builder might offer you a discount (some builders offer gold coins) for the purchase of the apartment.

Compare rates and discounts offered by other builders as well as the cost of similar projects in the area, before going ahead with the decision to purchase the apartment.

Beware of the registration costs

When you buy a property you have to pay the stamp duty and registration costs. These could be as high as 6-7% of the cost of the property depending on the city and the location of the property.

The bank does not sanction (give you a loan) for these amounts when you avail a home loan. You have to pay it from your own pocket.

The builders state that the stamp duty, registration charges and so on are waived for their projects.

In reality the builders pay the Government on your behalf and it is necessary for you to collect the relevant receipts.

Avail Home Insurance

You need to avail a home insurance policy (Basic fire and allied perils insurance), as cover for the structure of your apartment. This is an additional cost you have to bear. In addition if you avail a home loan from a bank then you need to take home loan insurance.

Many banks do not sanction your loan unless you meet this requirement. If you (policyholder) die before making the repayment, the Insurer settles the home loan. The premiums on these insurance policies is an additional cost you have to bear.

Beware of costly delays

Your obvious loss is that you cannot take possession of your apartment. You have to stay in a rented apartment for that much longer. You also lose on the tax benefits you get when you avail a home loan for the construction of your apartment.

When you take a home loan for the construction of your apartment the loan is disbursed in stages. You have to pay interest on only the portion of the loan which is disbursed. This is the pre-EMI.

You get no tax benefits on the EMI (interest component) till your apartment is constructed. Once the apartment has been constructed the total Pre-EMI interest is available for a tax deduction within a period of 5 years.

If the construction of your apartment is delayed you cannot avail tax benefits.

Check the title of the land

The builder needs to have the title deed showing the ownership of the land. The title of the property needs to be clear and marketable. The builder then needs to get approvals from the municipal and other authorities.

This is very necessary to start construction on the land. Approvals from the water and electricity board and environmental clearances are a must. The approvals for the building structure, the floor plan and the safety audit of the structure needs to be done.

Get a written commitment from your builder

You need a written commitment (clause) from the builder, clearly stating the payments, the time when construction will be completed and when the flat will be handed to you, as well as a penalty for the late delivery of the flat.

Check the background and reputation of the builder

Check the track record of the builder. Has he been successful with his projects in the past?
Does he have the finances to complete the project?
How many projects has he delivered and in what time?
Has the builder been involved in any litigation (legal feud) in the past?

Be aware of the cost of the apartment

The cost of the apartment depends on its location. If it is in a posh area its price will be high. The builder gives you the price of the apartment as the basic selling price (BSP).Any extra amenities offered are charged separately.

The builder might offer you a discount (some builders offer gold coins) for the purchase of the apartment.

Compare rates and discounts offered by other builders as well as the cost of similar projects in the area, before going ahead with the decision to purchase the apartment.

Beware of the registration costs

When you buy a property you have to pay the stamp duty and registration costs. These could be as high as 6-7% of the cost of the property depending on the city and the location of the property.

The bank does not sanction (give you a loan) for these amounts when you avail a home loan. You have to pay it from your own pocket.

The builders state that the stamp duty, registration charges and so on are waived for their projects.

In reality the builders pay the Government on your behalf and it is necessary for you to collect the relevant receipts.

Avail Home Insurance

You need to avail a home insurance policy (Basic fire and allied perils insurance), as cover for the structure of your apartment. This is an additional cost you have to bear. In addition if you avail a home loan from a bank then you need to take home loan insurance.

Many banks do not sanction your loan unless you meet this requirement. If you (policyholder) die before making the repayment, the Insurer settles the home loan. The premiums on these insurance policies is an additional cost you have to bear.

Beware of costly delays

Your obvious loss is that you cannot take possession of your apartment. You have to stay in a rented apartment for that much longer. You also lose on the tax benefits you get when you avail a home loan for the construction of your apartment.

When you take a home loan for the construction of your apartment the loan is disbursed in stages. You have to pay interest on only the portion of the loan which is disbursed. This is the pre-EMI.

You get no tax benefits on the EMI (interest component) till your apartment is constructed. Once the apartment has been constructed the total Pre-EMI interest is available for a tax deduction within a period of 5 years.

If the construction of your apartment is delayed you cannot avail tax benefits.

Documents you need to check

Title Deed

Gives you ownership over the land and thereby the flat. It also helps you trace the past ownership of the land. You need to check for general power of attorney where the right to sell the land to others or construct an apartment is granted to the developer by the owner of the land.

Sale deed

You need to check the sale deed of the developer which contains the buyers name, location and number of the property and any other details deemed necessary.

Khatha

Check the khatha of the developer which reveals the owners name, size of the property, location of the property as well as the tax paid on the property.

Encumbrance certificate

You need to check the encumbrance certificate which states that the property is free from any outstanding loans or a loan liability.

Layout

You have the layout which has the plot size, park or a road and is sent for Government approval to see if it matches set standards.

Occupancy certificate

You need to check if the developer has an occupancy certificate issued by the Government which states that the building is fit for occupancy. The developer gets this certificate if the constructions conform to the submitted layout and the building is deemed safe as per the inspections of the fire service department.

Flat allotment letter

The flat allotment letter gives you the buyer the right over the flat/apartment.

It includes:

Building plan and details of the size of the apartment.
Schedule of construction (When what will be constructed).
Payment installments.(As each stage of construction is completed the payment is made)
If additional facilities are provided such as marble flooring or a glass partitioning then an extra amount is charged.
If the builder provides a gym facility or a swimming pool (amenities), you have to pay more for this.
Delivery date of the apartment (Date on which you would get possession of your flat).

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