Your high expectations and attachment to certain property can make you buy property which is not financially suitable, warns Swapna More, co-founder, Kagaay, an AI-enabled realty sales enablement platform.
Investing in property is always supposed to be a lucrative business as it has numerous advantages like greater asset stability, tax benefits, hedge against inflation, capital gains in future, etc.
Year 2020 witnessed the slowdown of the global economy due to the pandemic.
The real estate industry was one of the worst affected industries. But 2021 will see the bounce back of real estate. As foreseen by experts investment in property is going to be high.
However, one should avoid following mistakes while investing in property:
1. Don't make an emotional decision
Your high expectations and attachment to certain property can make you buy property which is not financially suitable.
When you make an emotional decision, you are breaking the cardinal rule as you let the attachment dictate the underwritings of a purchase.
Any transaction you purposefully walk into should be predicted only on numbers.
The numbers should reflect your budget and your valid expectations from property.
Provided you have conducted the appropriate research, you should be able to have an idea how much the property in question is worth.
Never ever should your emotional connection empower you to pay more for a home than it is actually worth. At that point you get the raw end of the deal.
I recommend looking at several properties as to prevent yourself from becoming too attached.
With other properties in the equation, your mind is more likely to reason with sound judgment.
2. Don't be over influenced by the market analysis
The property market moves in cycles. There are times when it suits buyers more. And then it shifts to realtor's market when real estate prices are booming.
However, waiting for the right time or for prices to go down is like gambling with your decision and future.
At times, mixed messages in the media might confuse you, making you postpone your decision to buy property which is not wise.
If you know your requirement, your budget, have your finances organised and already thought about your current and future needs, then you should not let short term market conditions influence what will be a long term lifestyle decision.
3. Not being meticulous with budget
Set a budget before you embark on your home buying journey and make sure that you abide by it.
Big houses/properties are tempting but may not be suitable from a financial perspective.
You are well-advised to purchase a home which you can afford in the long-term without jeopardising your finances.
You will not only be paying EMIs, but there are also some hidden costs like stamp duty, registration fees, GST, etc which you should never underestimate.
You also have to bear associated charges like maintenance fees.
Focus on buying a home which you can afford according to your current repayment capacity while repaying the loan in long-term. In the long term, your income may increase, but so will your expenses.
4. Neglecting loan pre-approval before entering into transaction
Many first-time property owners make the mistake of not getting the pre-approved loan for their purchase.
A pre-approval of loan from your bank goes a long way in securing the property you want. It is the best way to find out how much you can actually afford.
This also helps you to understand you loan eligibility.
This process of getting pre-approval of loan takes just a few days and simply means that the lender has looked through your financial situation and is comfortable with the idea of lending you a certain amount of money.
