When Do Buyers Start Treading The Wrong Path?
No one goes out to buy a home without doing one's homework. This is done to ensure no rookie mistakes are made that amount to losses of any kind. However, most buyers would still not be satisfied if you asked them. They would be of the opinion that they could have done it better had they not succumbed under pressure.
In this article, let us discuss about those pressure points where a buyer is not left with much choice but to give in, all his previous homework and knowledge leaving him alone at the time of his need.
The quest for better
In case Rs 50 lakh is your budget, chances are you are going to buy a property that would cost you must more. No matter how diligent and precise you are, you will end up spending more than you accounted for when you go home shopping. This has nothing to do with the unavailability of property in your budget range; this has more to do with human psychology. When you are able to afford something, you will aim for something better, something not really within your budget. In such a scenario, you will start stretching your limits to be able to get what you perceive as better.
The eligibility factor
It is quite easy to find out your loan eligibility. Because you know you could get Rs 40 lakh in loan, you start looking for a home that should not cost you over Rs 60 lakh. You find one property that fits the bill and proceed with the purchase. Before the bank really gives you the money, it is going to ascertain the fair market value of the property. In case the worth of the property in bank's assessment is only Rs 45 lakh, it would not sanction you the loan you are seeking, your own eligibility notwithstanding. This would be one of those drastic times that would call for drastic measures. Everything that you previously learnt about financial prudence will be tested at this stage.
In all earnest
It must be made sure that the deal is closed within a period specified in the agreement of sale after a buyer has deposited the earnest amount – which is often 10 per cent of the total deal value. Typically, one has one month's time to seal the deal. Any failure to do so would amount to the buyer forfeiting the money which is half of the down-payment he plans to make in most cases. This is also one point where a buyer is quite susceptible to making mistakes. In a situation in which the earnest amount would be taken away, buyers often resort to extreme measures that could be monetarily unwise. Many of them would apply for a personal loan, for instance, when they find out that the bank is not willing to sanction the money they have been expecting so far. Rates of interest on personal loan are much higher when compared to home loans. Servicing these two categories of loans simultaneously would be nothing but financially draining, not to mention risky.