Buying a dream home is always a big step in one's life irrespective of gender, position and nationality. Only few terms differ which includes the duration(if you are going for refinance or mortgage or home loan).
There was a temporary rise in the price on the property in the U.S. which has seen people also investing overwhelmingly on the same without realizing their actual potential or repaying capacity which has resulted in few banks going bust as they could not collect the loan EMI from the customers who they have lent. Both the parties are to be blamed here. The banks for not verifying the credentials of the potential buyers properly and the buyers, who took the loan just because banks were willing to lend them.
Things were not the same in India. Over here, for every loan, one need to submit few documents which are duly verified by the banks before the loan is sanctioned. Before 90's, Indian banking system was not as robust as today. After 90's, all the bank's branches were centralized and connected with each other which means, if one's loan is rejected in one of the branch, it will not be sanctioned elsewhere in the same bank. We also had CRISIL(Credit Rating Information Services of India Ltd) which started capturing the data of the debtors and is shared with the banks from time to time. All these ensured that the reliable and credential debtors were given loan in no time and for others, rejection letter were sent.
What are the things one should consider while buying a property?
1. First and foremost, ne has to see whether the project is sanctioned and approved by local administration authorities. Project financed by a bank does not constitute appropriate approvals.
2. Whether the place you are buying is well connected and terms and conditions with regards to maintenance and others.
3. What would be your own, in case if you are buying an apartment.
4. EMI options and the project completion since few start charging EMI even before your property is handed over to you. Some start claiming only after the handover.
5. Whether the property is reasonably priced.
6. Quality products were used in the interiors.
7. Vaasthu compliant(If you are in India).
8. Comparison with other projects in and around the vicinity to confirm whether you are charged the correct price.
9. Insurance options - in case of unfortunate events like death, accident, loss of job, damage of property due to natural calamity etc.,
10. Whether all the necessary sanctions and approvals are obtained from all the local administration department. Otherwise, you will be liable to pay them in the future.
Many of my friends are employed across the globe and particularly in the U.S. and in the U.K. Hence I thought of introducing a beautiful site which I have come across which would be helpful specifically to my friends in the U.K.
Click for the Mortgage Calculator UK
What does it do?
This site helps you with regards to
Mortgage
Mortgage Affordability
Loan Overpayments
Amortisation and
Remortgage
Let us see a quick example:
In the above, you can make a quick calculation yourself sitting at home.
I have taken a home which is valued at GBP200,000.
With a minimum deposit of 10% which is GP20,000, you would owe GBP180,000 and at interest rate of 2.29% for a period of 25 years, the below mentioned are the monthly/total outgoings:
Your payment(all in GBP)
EMI - 788.61
Interest - 343.50
Months - 300
Total Interest paid (for the full tenure) - 56,581.78
Total Loan - 236,581.78
Amortisation schedule/calculation is given below. I am not explaining them as they are self explanatory.
Best part is all these are printable and a detailed explanation is given on the site as to how the calculations are made. The interest rates in the U.K.is really cheaper compared to India where the Home loan rates starts at 6.99% and there is also two rates - Fixed and Variable.
Some opt for Fixed rates where the rate of interest is fixed for a specific term(not for the full tenure) and some prefer Variable rates. Each has its own advantage and disadvantage. Your banker would be in a position to explain about all the aspects with regards to these terms in detail as they are certified and trained. Having worked for a leading U.K. bank in India for its BPO division, I know how difficult it is to convince a customer to go for a Mortgage which is a huge commitment but nevertheless, it is certainly worth the investment.
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