We all have dreamt of buying our dream house and turning it into Home-sweet-Home where we would achieve new milestones. Well, buying a house is a milestone in itself but furthermore to achieve. What is your home going to be like? Some would want a big one around the countryside with a swimming pool or a penthouse with their own garden, and some would want a small apartment. Whatever it is going to be like, I am sure you are excited and will be happy. While everyone’s thoughts might differ while selecting a house but one thought that everyone has in common is ‘How to save money when buying a house?’
Well, from watching your children’s first footsteps to growing old with your spouse. Buying a house comes with a series of emotions attached to it and no wonder constitutes one of the biggest financial purchases of your life. And now that you have finally decided to buy your new house, congratulations to you! You are about to achieve a new milestone. In this article, we are going to cover ways for you to save money when buying a house so that you can still have money for upcoming milestones.
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House hunt to save money when buying a house
Before buying a house, explore all the alternatives available to finalize a house. If you are not very rigid about buying a particular house, chances are you end up with a substantial amount of money in your pocket and still manage to get a house. But for that, you will have to run on a house hunt and not just get stuck to that one particular house. What you can do is, be on the lookout for inexpensive areas where real estate rates are comparatively cheaper. As the real estate prices can vary as per cities and even local areas.
One of the factors for valuations of a real estate property is the geographical location of the estate. Property in a high-end posh area tends to be more expensive than for the same property in a local and not so posh area.
Use Credit Card Points for home loans
It is not hidden from anyone, that one of the amazing benefits of credit cards is the perks that come along with its reward points. If you have maintained a good credit score, you can easily get a home loan with the lowest or discounted interest rates. And sometimes credit card companies offer almost 0% interest on your loan for a specific period of time, you can save so much interest on your big purchase if you are smart enough to use the resources available.
For ex- If you shop for a home loan of 1000000 rupees carrying 8% interest p.a. without redeeming your credit score, you will have to pay the interest from 1st year itself. But with credit card associated schemes like 3% off on interest for 1st year, you can save up to 30000 rupees towards interest payment. That makes almost 3% of your principal amount. But you are not going to get these schemes on every credit card. You have to be wise while selecting your loan options and go through all the documents mentioning terms & conditions associated very carefully.
Buy a house thinking of long time horizon
Instead of buying a house in an already developed locality means buying a house at a premium. Houses in posh areas can be twice or thrice times higher than the houses in a developing locality. And there is not much scope for appreciation in such properties. As rational buyers, buy houses in a locality where you can find a cheaper property with great opportunities for appreciation and development in the future. It may take a long time for such to happen but the profits will be much amazing.
For ex- Buying a house at cheaper prices in a locality where metro routes are not yet introduced. And there are high chances for the introduction of such routes can make a great appreciation in the market value of such property as everyone would be interested in buying a house in the area close to means of commutation.
Save money on taxes when buying a house
Some of you might be aware of famous sections of the Income Tax Act, 1951 which help you save taxes on payments. By providing your deductions up to a specified amount as decided by the CBDT. The most popular sections for first-time house owners are section 80 C, section 80 EEA, and section 24.
| Sections | Tax Benefits | Components | Conditions |
| Sec 80 C | Upto 1.5 lakhs | Stamp duty charges and principal amount payment on home loan | Property has to be retained for at least 5 years of purchase |
| Sec 80 EEA | Upto 1.5 lakhs | Interest expenditure on home loan | An individual assesse should not own any other residential house property till the date of sanction of loan The loan should be sanctioned between 1 Apr. 2019 to 31st March 2022 Stamp duty value of estate shall not exceed 45 lakhs Loan shall be borrowed from a Housing Finance Company or Financial institutions like banks. |
| Sec 24 | Upto 2 lakhs | Interest expenditure on home loan | Assesse or any of its family member should be residing in house property Loan must be taken for purchase or construction of house property Purchase or Construction of house shall be completed within 5 years of loan taken Over and above the limit of Sec 80 EEA |
Negotiate at your very best to save money when buying a house
Your negotiation skills can be your agony aunt in every situation. Be it with recruiters for salary or with your mother for pocket money as a kid. Same way, negotiate with the dealer or owner for the property. Do not accept the first offer given to you. Sometimes they may exaggerate the prices of property to increase their margins, that is why always negotiate to bring the prices down of the property politely and diplomatically.
But keeping into consideration the value of all the facilities and amenities attached to it. Or you may end up upsetting the seller for quoting an unreasonable price for his property and miss out on a potentially good deal.
Buy an estate when circle rates are lower
If you are going to buy real estate, you must be familiar with the term Circle rates. Circle rates are a benchmark for measuring the value of every property, below which it can not be registered in government records. Circle rates may vary from city to city or also as per locality in India.
The government keeps on revising the circle rates. It is suggested for buyers to buy a property when circle rates are lower. You must stay updated with the government policies on circle rates and buy a house when you think circle rates are comparatively lesser.
For example- Delhi government has reduced its circle rates to 4% for female homeowners, 5% for joint male & female homeowners, and 6% for male homeowners. Along with that, every buyer has to pay 1% of the transaction value as a registration fee.
Buy an Underdeveloped house property
The joy of moving in as soon as possible in your new house might be immense. But there could be certain benefits if you wish to show patience. You can save a substantial amount of money when buying a house. How would you do so? By buying an under-construction house property which can save you an impactful amount of money. The price difference between ready-to-move-in property and underdeveloped property can range anywhere between 5%-30%. As people generally prefer to purchase a completed house.
Buying an underdeveloped house property can come with its own benefits. You will not only be saving on the actual price but the maintenance as well. You would not have to spend money on fixtures or maintenance after moving in. Not only this but there are always higher chances of appreciation with an under-construction property.
Buy an unfurnished house to save money
Real estate dealers have found a new way to make money from buyers. In the name of a fully furnished home, they are making extra money in lakhs. And according to #Rule 6726 from a nowhere published book of ‘Rules for New Home Owners’ it is not mandatory to purchase a home with furniture or buy furniture immediately after buying a house.
You may take your time and thrift the cheapest furniture from our sources. Buying furniture on your own rather than buying a fully furnished house can save you big-time money. Moreover, you can get the furniture of your choice and theme and decorate your house according to your likings.
Save money on government policies when buying a House
Government promotes affordable housing to its citizens by implementing various housing schemes. These policies can be by the state government and/or by the central government. One of the famous schemes with maximum benefits is Pradhan Mantri Awas Yojna (PMAY) which was earlier valid only till 31st March 2021 but now has been extended till 31st March 2022. In which loans are provided to the Lower Income Group, Middle-Income group, and Economically weaker section workers. Wherein interest subsidy is provided on home loans as lowest as 6.5%.
There are also state specified policies for affordable housing such as Delhi Development Authority (DDA) scheme by Delhi Government wherein targeted flats are provided in some specified area to applicants on a lottery basis. More schemes like NTR Housing Scheme by the Andhra Pradesh government and Tamil Nadu Housing Board Scheme are worth exploring for residents of the states.
