6 Types of properties to choose from as a first-time home buyer

According to a recent report , residential property sales in India shot up by 24% in 2022 over the previous year. The same report stated that in the third quarter of 2022, total sales were 1,08,817 units, a stark rise from the 87,747 units sold in 2021. This shows that the real estate industry is bouncing back from its slump.

That being said, you shouldn't just buy any house property. Before you do, there are several key factors that you should consider, such as the different types of properties available, the market value of the property, and the amenities they offer.

Read on as we discuss the different types of properties and the factors affecting home loan eligibility, among other things. 

Six types of housing properties
 

Here is a list of six different options to consider for the type of properties that first-time home buyers can look at – 

• Builder floors

Builder floors are housing properties occupying an entire floor of a multi-storey structure. Unlike traditional apartments or flats, where there are multiple units on each floor, a builder's floor is meant to give its residents more privacy and a feeling of exclusivity. 

Builder floors are perfect for joint families that require a large space but cannot afford a huge bungalow.

• Bungalows

The term ‘bungalow’ in India comes from 'Bengali house,' a term for small homes. In fact, the bungalow was designed because thick-walled cottages didn't work in India's warm environment.

Bungalows are single-storey, modest, square houses with front porches. The elevated single level has front stairs leading up to a porch.  

• Apartments or flats

An apartment or flat is a private home in a townhouse or a residential building. It's basically a single living unit with one or multiple bedrooms, a hallway, a kitchen, and bathrooms that might be connected to the bedroom. 

If you like the concept of staying in housing societies, this may be an ideal choice for you as a first-time buyer.

• Condominiums

Condominiums (condos) are facilities made up of individually owned units. They may have the apartment’s look and vibe, but it isn't the same. Unlike apartment owners, condo owners own the interior of their house property and are increasing their equity with each mortgage payment. Typically, a homeowners association is responsible for managing the common area, and residents are charged fees to cover associated costs.

• Penthouses

Penthouses are luxurious apartments located on the top floor of a multi-storey residential building. The price of this upscale apartment is usually 5-15% higher than that of other apartments in the same building, making it comparatively more costly.

Although previously, penthouses were considered a luxury, today, most housing societies have them. 

• Studio flats

A studio apartment is a tiny apartment with an open floor layout. It has a single bedroom, a living area, a kitchen, and a bathroom, all in one space. 

Even though these properties are small, they usually have everything you might need, making them the perfect space for bachelors and students.

Now that you know the different types of properties available in the market, let's take a closer look at the eligibility criteria. 

Factors affecting home loan eligibility
 

Here are four factors affecting home loan eligibility -

• Credit score –

 Lenders frequently use credit scores to assess your creditworthiness, which is the ability to repay a home loan on time. A higher credit score shows a strong payback history and responsible financial behaviour, which might improve loan approval and interest rate options.

• Income –

Your income is critical in evaluating home loan eligibility. Lenders frequently look at your income stability, monthly cash flow, and debt-to-income ratio to see if you can pay back the loan on time.

• Loan-to-value (LTV) ratio –

The loan-to-value ratio measures how much of a property's value a lender is willing to finance with a mortgage. A lower LTV ratio suggests a lesser risk for the lender, making loan qualification easier. In general, a larger down payment lowers the LTV ratio, increasing the chances of loan approval.

• External Benchmark rates (EBR) rates –

 The External Benchmark rates (EBR) is a benchmark that determines the interest rate on home loans. With an excellent credit score, you may be eligible for lower interest rates, and it can help you negotiate for a better loan amount and lesser equated monthly instalments (EMIs). 

Things to consider before choosing a house property
 

Here are three things that you should consider before choosing a house property –

• Budget

One of the most important considerations when purchasing a housing property is to plan and estimate your budget carefully. For this, take into account various factors like location, potential hidden costs, permits, and more.

Most banks and financial institutions provide loans of up to 80-90% of the house property’s total value. If you plan to buy property, you must set aside enough money for a down payment. 

• Location

The location of your housing property, its connectivity to key stations, and the neighbourhood's safety are some important points to consider. Additionally, you should also assess the amenities and infrastructure of the property and those nearby. 

• Carpet area​

The specified area of a property is the full area, including shafts, elevator space, stairs, wall thickness, etc. Carpet area refers to the real area within the walls of the unit. This area can be 30% smaller than the built-up area or the area used to compute the property's price. In some circumstances, when a floor is owned by two owners, the cost of the common area is split between them.

The market value of the property
 

• An EMI is the amount you, as a borrower, pay to the bank or lender each month against your home loan. It's important to factor in the EMI while planning your finances.
• Knowing the market value of the property helps you figure out what it's really worth and decide if the price is reasonable. Sellers may occasionally demand higher charges stating reasons such as superior construction or extra functionality.

To prevent paying more than necessary and falling prey to scams or unethical tactics, you should know the market value of the property before closing a deal.

Home loan EMI calculator
 

The equated monthly instalment (EMI) amount includes both the principal amount and interest rates, which can be quickly determined using an online home loan EMI calculator.

Using an online EMI calculator such as the IDFC FIRST Bank Home Loan Calculator is easy - enter the loan amount, interest rate, and loan tenure in years, and the estimated EMI will be calculated and displayed. 

Summing up
 

This is everything you need to know about the different types of properties and the various aspects to consider before choosing one. Just deciding on a property isn't enough; you need to hire a trusted broker, think about a down payment plan, and apply for a home loan as soon as possible.

If you're looking for a hassle-free home loan process, IDFC FIRST Bank offers one with interest rates as low as 8.85% p.a. and a repayment duration of up to 30 years. So don’t overthink and apply for Home Loan today at IDFC FIRST Bank.