Consider festive offers that lower your cost of house acquisition

Don't let freebies blind you to key considerations like location, infrastructure, and the developer's record

If you are planning to buy a house, the festive season is a good time for a deal. Developers are all set to woo homebuyers with offers such as stamp duty waiver, convenient payment plans, and other freebies. Prudent buyers can get a good deal around this time.

“Schemes from developers during the festive season make their offers more compelling,” says Vikas Wadhawan, group chief financial officer, Housing.com, PropTiger.com & Makaan.com.

At the outset, ask yourself whether you need a house. “Don’t get swayed by the glitter of the offer. See if it suits you or addresses some specific need you have. You also need to ascertain if you really need to buy a home, whether for self-use or as an investment. Long-term financial commitments should not be made on an impulse but should be driven by need,” says Gaurav Mohta, chief marketing officer, Home First Finance Company.

Optimise acquisition cost

Many developers may offer freebies such as a gold coin, car or bike with the home as a ‘free gift’. But most of these free goods are priced in. If you don’t need them, then negotiate for a better price instead. For example, if you already have a bike, then an additional bike makes no sense. Instead, if the developer agrees to reduce the price of the apartment by Rs 50,000 to Rs 75,000, that will lower your acquisition cost.

“It is easy to get lured by festive offers which don’t result in actual savings but only address some non-property-related aspirations. For instance, a free paid holiday or a car adds nothing of substance to a property purchase. Buyers should focus squarely on optimising the overall cost of this acquisition,” says Santhosh Kumar, vice chairman, ANAROCK Group.

He adds that outright discounts and offers are the safest options for buyers as everything is on the table and there is little scope for bad judgement or impropriety.

Scrutinise payment offers

While considering a lenient payment plan from the builder, study the impact of the offer carefully on your future finances, or take an expert’s help.

“When evaluating payment plans, be vigilant and consider only those developers with good previous track records. The earlier ban on subvention schemes due to the unscrupulous activities of a few developers make it even more important for homebuyers to verify these schemes properly,” says Kumar.

Interest rate matters

Often developers approach lenders, get their projects approved for home financing, and offer home loans without processing fees. While going for such a deal, do check the interest rate on offer. Don’t agree to pay a higher rate of interest just because this one-time charge is being waived. Even if the interest rate is higher by a few basis points, it could mean that you will keep paying a higher rate throughout the tenure.

Other considerations

While offers can make the purchase appear more attractive, one shouldn’t overlook other larger issues while buying a house. “The prime considerations should be the property’s location, quality of construction, amenities, developer’s track record in making timely delivery, project approvals, and financing options for funding the purchase,” says Wadhawan.

The surrounding infrastructure and connectivity are also important. “Besides the offers, check the available social and physical infrastructure in and around the project and its connectivity with other major areas of the city. Also, it is best to opt for a listed and leading developer when buying a newly-launched property even if it is slightly higher priced compared to one by a smaller developer in the same locality. This provides you with some assurance of timely completion and better quality of construction,” says Kumar.

How to evaluate home loan offers

• Between lower interest rate and waiver of processing fee, prefer the former as the benefit of it is likely to last for longer
• Check your credit score and then verify whether you are eligible for the best interest rate on offer
• Lenders charge two types of fees: processing fee and legal and technical evaluation fee. Check if one is being waived or both
• Enquire whether the special loan offer will be available to you only if you buy insurance from the lender
• Since you are likely to have a relationship with the lender for at least seven to nine years, go with one that has a reputation for high service