5 Ways to save money when buying your new home!

Home is the ultimate place we return to, not only for our daily needs of rest and recuperation but also for that elusive Peace, Happiness and Love we can’t find anywhere else. We also return to our home simply to feel “at home”.

Fortunately, with the real estate boom and easy availability of bank finance, it is far easier now to own your home than it used to be some 25 years ago. There is now a residential option available everywhere to suit every budget.

Many things matter when it comes to buying a home. Firstly, the cost of home you wish to buy has to be within your means. Secondly, the size of your home has to be apt to accommodate all your loved ones. Thirdly, the bare necessities of life such as grocery and health care facilities have to be within reach. The list may go on and on!

Apart from identifying of the most suitable option from amongst a plethora of choices of now available, the most important challenge that one faces is how to strike the best possible deal and keep the cost of acquisition to bare minimum.


Ways in which you may attempt to minimise your cost of acquiring a house property:

1. Buy at the launch

Whenever a developer launches a new residential project, his endeavour is to sell – as fast and as much, as possible – so that his cost construction is largely met upfront from such sales. This reduces the developer’s dependence on bank finance to undertake construction of the project and consequently reduces his interest costs. With reduced cost of funds, the developer tends to make higher profit. Part of this profit, the developer doesn’t mind passing on to the early buyers in the form of bargain prices. To further sweeten the deal for early buyers, the developer also dishes out freebies such as ACs, TVs, Modular Kitchen, white goods and so on.

Thus buying at the time of launch is a good idea to get the best deal. Some developers bring in the EOI(Expression of Interest) option with assured benefits in terms of lower price of the apartment and wider choice of inventory which deserves to be explored as, in some cases, the benefits are substantial.

But while buying at the time of the launch, please do check the antecedents of the developer carefully. Some of the developers do not have a good reputation or good track record of delivering the projects on time. Shun such developers how so ever tempting may be the deal offered by them!



2. Avail of services of a competent professional realtor

A realtor does not charge you anything if you buy through him from a developer. So don’t hesitate to route your purchase through a realtor. A competent realtor knows the scope of negotiation with the developer and will help you negotiate the price of the property to the bottom. Thus you end up buying your home at the rock bottom price with the help of a realtor without paying any brokerage! However, here is a caution. Choose your realtor carefully!

3. Explore similar options in resale

It has been observed that the developer usually charges a higher price for an apartment compared to the price at which similar options are available in resale in the same project. That being so, prefer resale option to developer inventory. However, such a possibility will be there only in such projects where OC has been received and possession has happened.

4. Look for OC Ready Projects with Stamp Duty burden taken off

After a project has been completed and OC received, GST @5%, ceases to apply. For a house property of Rs.5.00 Cr., this would mean a great saving of Rs.25 lakh.

Similarly, some developers offer to bear the SDR(Stamp Duty & Registration) cost @6%, as a monetary incentive to the buyer. Such option, wherever available, also helps you to reduce your cost of acquiring a house property. In absolute terms, if the price of house property is say Rs.5.00 Cr., you end up saving a substantial amount of Rs.30 Lakh. If both these conditions are met, you end up saving a whopping Rs.55 Lakh on a property of Rs.5.00 Cr which a significant saving of 11%.

5. Choose your home loan provider carefully

Most often different banks charge different rates of interest on home loans. As home loans are for a very long period of time – 20 to 30 years – even a minor variation in interest rate can yield a substantial saving of interest cost over time. So choose the home loan that bears the lowest rate of interest.

Also, avail a home loan, not as a terms loan but as an overdraft. An overdraft gives you the flexibility to deposit surplus extra cash whenever you have it and to withdraw it whenever you need it. This will help you lower your interest cost. This facility is not available in a term loan. While you can deposit your extra cash in a term loan also and it will help you reduce your interest cost, you cannot withdraw such extra cash if and when you need it.

House properties can also be bought at lower prices in distress sale and through bank auctions. But such sales are isolated, uncertain and would require extra ordinary care and more than due diligence if you want to avoid complications post-sale.

Happy home buying!


Sudhir S.


Yellow Oak Realty

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