Since buying a home is a long-term commitment and a crucial decision, you will surely want to make the right financial move. However, homebuyers are likely to be in a fix when choosing between an under-construction property and a ready-to-move-in property.
When it comes to property in Mumbai and other metro cities, under-construction properties cost up to 25% lower than the completed properties. However, in this case, you may face delays in the construction and not find the finished construction as per your liking.
While both options have their own merits and demerits, it is up to you to decide the right one on based your individual buying needs. Here’s a brief guide to help you compare a ready-to-move-in property with an under-construction property.
1. Access to enough funds
Before you start looking for a home, ask yourself where you stand financially. If you have access to funds that you can invest right away, choose to buy a ready-to-move-in property. This way there is no risk of delay and not liking the finished construction. However, if you don’t have a great financial standing currently, you can avail a home loan for an under-construction property to comfortably pay off EMIs when the work is completed.
2. Customization in interiors
A dream home is not a dream home until it matches what you had imagined. If you don’t wish to compromise on any aspect of the home, be it the look, the colour, the interiors, and the fittings, you should invest in an under-construction property. This way, you can request small changes during the construction stages itself. Also, you can keep an eye on facilities such as the sink, faucet, electric system and more, and get it repaired at the builder’s cost if needed. However, if you like the way the property looks and don’t plan on making significant changes, go ahead and invest in a ready-to-move-in home. Here, you yourself have to bear all the repair and improvisation costs yourself.
3. Tax benefits
In case of an under-construction property, you have to wait for 5 years till the construction is completed or you take the possession to start claiming tax benefits. While you can still claim the interest amount pertaining to pre-construction period in 5 equal instalments after the construction is completed, you cannot claim any tax deduction towards principal repayment. In case of delays beyond 5 years, you will only be allowed to claim an interest of up to Rs.30,000 as against Rs.2 lakh. So, if you wish to enjoy tax benefits immediately and in full, investing in a ready-to-move-in property makes sense.
4. Property appreciation
Under-construction properties cost lower than ready-to-move-in spaces. Therefore, there is a lot of scope for property value appreciation for under-construction spaces. However, ready-to-move-in spaces can also appreciate in value, but they will cost you more. This means you may enjoy lesser gains in case you decide to sell. Nevertheless, don’t forget to keep tax benefits in perspective too. Do an overall cost-benefit analysis to decide.
5. Goods and Service Tax
Under-construction properties attract as much as 12% Goods and Service Tax (GST) as of now, though this number is expected to come down to 5-6% by next year. In the current scenario, if you are buying a property worth Rs.30 lakh, you’ll have to shell out Rs.3.6 as GST. In contrast, ready-to-move-in properties are not subject to GST if the completion certificate is issued at the time of sale. So, you can make tax savings up to Rs.3.6 lakh and put the funds to better use.
With this resourceful guide, you can evaluate your needs and make the right decision. Whether you fancy a smart luxury apartment in Lodha Palava or want to invest in a holiday villa in Goa, get the funds and other value-added services by availing a home loan offered by Bajaj Finserv Homes and Loans. This way, you can not only enjoy significant home loan amounts of up to Rs.3.5 crore at affordable interest rates, but also property search services and documentation assistance. Get started and check out your pre-approved offer today to benefit from your customised home loan deal and enjoy quick approval via a hassle-free application.