Questions to Ask a Builder Before Purchasing a House | Kotak Mahindra Bank - Home Loan Stories

22 OCTOBER, 2021

Buying a house is a significant financial commitment. Naturally, one small mistake while making the purchase can prove to be very expensive in the long run. Often buyers are caught up in finding the cheapest deal possible, ignoring the other crucial aspects like the reliability of the builder or the development of the location. Therefore, before you buy your house, you must research all the different aspects by asking questions to the buyer and loan lender. 

Here are some questions that you can ask your builder.

What is the total cost of the house?

Apart from the price of the house, there are various costs involved in the final amount that you pay to the builder for the property. You must know about these different charges before signing the sale agreement papers. Inquire about all the other costs like maintenance charges, parking charges, etc.

Will you provide all the required documents?

Documentation is a crucial part of the home buying process. You must ensure that the builder hands over the various documents required for home loan once you get possession of the house. Ask the builder for documents, like the title deed, encumbrance certificate, property tax receipts, building completion certificate, building approved plan, occupancy certificate etc.

What is the final area of the property?

Often builders include the area of amenities (parking, utility area) in the build-up/carpet area, which can create confusion. It would be best to ask them about the super built-up area while you buy the property. Also, as per the Real Estate (Regulation and Development) (RERA) guideline, the builder should price the developments as per the carpet area. Ensure that the builder follows all the RERA guidelines.   

What are the amenities that you will provide?

Often there are discrepancies in the amenities promised on the brochure and actual property. You must ask the builder what amenities they will provide in the final house on delivery. You can visit the site to know this and can ask the builder if the crucial amenities like an elevator, garbage system, car parking, inverter, etc., are available.  

What is the quality of the raw materials used?

You must ask the builder about the construction material used including furnishing like doors, windows and fittings. You can take a tour while the house is being built to get an idea of the products used.

What is the payment schedule?

Usually the builders have specific payment schedules, which you must know. It could be as per the construction progress, or in different instalments. The most common payment schedule is a down payment plan, which is usually followed in the ratio of 10-20-70. In this, you need to pay 10% of the total cost at the time of booking, 20% after a few months based on construction and the rest 70% at the time of possession. It is important to know about the builder’s payment schedule to ensure it is aligned with your financial comfort. If they have a tight schedule, you might face difficulty paying the instalments allowing them to impose fines. It would be best to know about the payment schedule and negotiate if needed.

Have you completed any projects in the past?

It is crucial to know more about the builder to determine their reliability. You must ask if the builder has completed any projects before. How much time did they take to complete previous projects? You might also want to check the details of completed projects to ensure there were no red flags.

Asking these questions can give you much-needed clarity while buying your dream house. Apply for home loan only when you are sure of the builder’s credibility and your affordability.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.