Real Estate Investments for Buying a Home with Your Partner

Close to 30 percent of home buyers in urban India are women, say an article published in MakaanIQ.com in January 2016. More and more women today are choosing real estate investments. If you are planning to buy a house, you can consider buying it jointly with your spouse. Buying a house jointly has its own set of advantages. Real estate mutual funds are another way to invest in this sector.

Things to Consider Before Buying Your Dream Home with Your Partner

When you co-own a house, you not only share the title but also other expenses. Women generally get home loans at a much lower interest rate, since they are considered to be more punctual in repaying bank loans. Stamp duties also tend to be lower for women. In case of joint ownership, both owners can claim tax deductions. Joint tax benefits can amount to Rs 3 lakhs per year under section 80c of the Income Tax Act and Rs 4 lakhs under Section 24. Here is a list of things that you must consider before buying property jointly:

1. Determine Your Needs and Preferences – You must list down all the criteria on which you will judge a property. Likewise, you may want a home that is near schools and public parks or have easy access to them. Similarly, you must also decide on the size you can afford to buy, whether it has parking facilities, whether there are hospitals nearby and so on.
   
   
2. Ownership – You must decide how the ownership will be divided among the two of you. There are three types of ownership: tenants in common, joint tenancy, tenancy by entirety. In case of tenants in common, there is no specifications about the division of share. Each owner has the right to use the entire property and is deemed to have an equal share. In case of joint tenancy, the property is divided among the owners in equal share. Marriage is one of the clauses for tenancy by entirety. Here, both partners own half of the property each and cannot sell it without the consent of the other.
   
   
3. Total Cost of Buying – Buying a home not only entails its purchase price but all other expenses involved, such as stamp duties, registration fees, down payment and so on. Get a clear idea of all such expenses early on to avoid a rude shock later.
   
   
4. Finances – Before you apply for a home loan, you must go through your credit report. You can apply for a joint loan too. This will increase both the loan amount and your repayment capacity. Generally, banks offer financing for up to a maximum of 80 percent of the purchase value of the property. You must also make arrangements for down payment before you finalise the deal.

If you are not in a position to invest a huge chunk of money at once, you can invest in this sector with minimal funds through real estate mutual funds or real estate investment trusts.

5 Things You Should Do Before You Decide to Buy a New Home

At least two projects must be held by an REIT, either directly or through Special Purpose Vehicles. Also, not more than 60 percent of the asset value must be invested in one project, according to the SEBI regulation, says an article published in The Economic Times in September 2014. Conventionally, people would invest in the real estate sector for long-term capital gains. But with the introduction of real estate mutual funds and Real Estate Investment Trusts (REITs), you can expect to make short-term gains as well. REITs are managed funds that invest in commercial properties. The rental income generated from such an investment is distributed as dividends and bonuses to the investors. It lets you invest without going through the hassle of finding the right property and doing all the paperwork. However, when you are buying a home of your own, you must be extra cautious about each and every aspect of the deal.

real estate mutual funds

Things to You Should Double Check Before Buying a House

You can either opt for real estate investment advisory services of an NBFC or buy a property yourself. Buying a house can be a lengthy procedure and you must be extra cautious, especially if you are a first time buyer. Here are a few things you must check before buying a house:

1.      Developer’s Profile – You must go through previously completed projects from the same developer. You must also check if the projects have been completed on time. Also check the foundation, construction and structural stability of the property.

2.      Necessary Approvals – Check whether the property has all the necessary approvals. The entire construction plan should have been cleared by the concerned authorities.

3.      Internal Work – You should get the wiring, plumbing and drainage checked before closing the deal. This is applicable both for new and used homes. Also look for ceiling or wall stains. These stains, if any, could be due to a leak. Get all such problems fixed before you close the deal.

4.      Location – It is a good idea to buy a house near public amenities, such as police stations, hospitals, public transport, schools, and more. Buying a house in a developing area will only help in significant capital appreciation in future.

5.      Budget – This is possibly the most important aspect. Your budget will help you shortlist potential properties. You can also take a home loan to finance your dream home. A bank may offer you a loan much higher than your pre-decided budget, However, you must not get lured and take a loan beyond your repayment ability.

Shop around, since this will broaden your choices and you will able to make an informed decision. You can also invest in this sector through real estate funds. These funds help diversify your portfolio and hedge risks