FINANCE TIP OF THE DAY
Can you afford your loan?!
Know the quantity of loan you can afford. The banks may sanction loan based on your income but you should look at your monthly expenditure and see if you can afford the maximum that banks offer. As a thumb rule, remember not to let your credit exceed 40% of your income!
Building your home? Read this!
Building your own independent home is a dream that many of us want to do. The thrill of owning your own piece of land, building a structure as per your requirements, and helping design the architecture with your architecture friend sounds very attractive. Of course it goes without saying that a lot of painstaking work needs to be accomplished to make this dream a reality.
Building your dream home consists of two major steps. The first is acquiring the land in a good locality and second is getting the contractor and building the house. Both steps require due diligence on exhaustive details and careful planning.
Buying the land
Buying land is the first step. The individual has to find out a good locality to acquire land to build his or her house. While finding the right locality is a tough task, the tougher task is clear documentation. Let’s look at some of the important points users need to focus on while buying a piece of land.
Title deed – Title deed is a document which details the owner name of the property. Make sure that you have gone through the title deed with a trusted lawyer and the deed is clear. You must get the original deed for study.
Encumbrance certificate – You should ask for encumbrance certificate preferably for the last 30 years. This certifies that the property is not under any legal dispute.
Ownership structure – You should look at the ownership structure of the property. If this is owned by 2 or more people, make sure that all of them have cleared the transaction.
Building the house
While building an independent house can be a very exciting and satisfying experience, you should keep important points in mind.
Gather information – This is the most important step. Home owner should do maximum research on the subject. The cost of building home varies widely depending on locality, raw materials, structure, and design of the house. You should also track prices of raw materials, labours, and design artefacts.
Find the fair rate of building a house – Find out the fair price for building a house. This can be in Rs per square feet. For example, in an area like Hyderabad, construction may cost anywhere between Rs 500 to Rs 1500 per square feet. Know the right cost for your type of house. Remember if you overpay Rs 200 per square feet, you are spending 6 lakhs more for building a house of 3000 square feet.
Select the contractor – Selecting a good contractor is the most important task in the whole project. A contractor is like a project manager. Take quotes from various contractors and compare the overall service. Price is just a part of the complete end to end services provided by the contractor. You should look at the past records of the contractor, some structures built by him or her, quality of materials supplied by him, any reference that you can dig out from your contacts. If the contractor is building a structure currently, visit the site and take a look around. You may get a fair idea about the quality of work, materials management, and resources utilization just by looking around the site and observing the labourers working on the site.
Be actively involved in the construction activity – For you it’s the house you are planning to reside in for a lifetime, for the builder it is just another project. So take care to be involved and ensure things like the proper size and structure of the foundation is right, all the structural components are designed properly etc. otherwise it is impossible to change them when that particular stage of construction is complete.
Supervise and track the expenses – This is extremely important. Remember that building a house takes a huge amount of money. Even a difference of 10% to 20% is going to weigh heavily on your pocket. Ask questions on amount of cement, steel, timelines, and resources required for completing the work.
Complete the work on time – The cost of delays in construction is very high. Delays cost you in two ways. It postpones the possession and hence your rental expenses continue. Second, delays always require some work to be redone before it starts again. In this situation, it is also important to understand the seasonal factor that impacts the availability of labour. Typically, during the festive season, most of the labourers head back for their home state. The labourers invariably take more leave than you want them to take. This hampers your progress. Hence you should factor this while planning for constructing your home.
Building your own home is certainly a daunting task. It requires dedication, due diligence, meticulous planning and tracking of costs, and being aware of the changing prices of raw materials. However, once you complete your work and walk into your dream home, it is worth all that effort!