Duplex House: Types, Pros, Cons, Finance, and Ownership Explained
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04 JANUARY, 2023

Humans are emotional beings who want to live with their near and dear ones. A house where one can live with their family without compromising privacy is undoubtedly a perfect definition of life. Since the family is bound to grow, privacy needs arise, and buying a house is not something we do every few years, opting for a duplex house is an ideal option for multiple families who want to stay together.

Buying a duplex is similar to purchasing a single-family house. However, buyers must know what it is and how it differs from other property types before applying for the Home Loans they need. In this article, you will clearly understand the meaning of a duplex house and how to finance one in India.

What is a Duplex House?

A duplex is a residential building with two home units attached. Depending on the design, the two units may lie next to each other or one above the other. The most common duplex designs in India feature one residential unit placed above another. However, developments and innovations in architectural trends may bring several changes to modern-style duplex homes.

Most duplex-styled residential homes have two units joined or stacked with each other in side-by-side or vertical formats. Whichever the style is, a duplex has two units joined into one. If it has three units, it is called a triplex, and those with more than three units are called multiplex homes. Most modern duplex homes in India have a living room, kitchen, and a bedroom on the ground floor and 1-2 bedrooms on the upper floor.

Types of Duplex Homes

Broadly, a duplex apartment can be of the following types:

1. Standard Duplex

This is the most common duplex house design with two floors built vertically, one above the other. It generally consists of one living room, a kitchen, a bedroom on the lower floor, and one or two bedrooms or a children's room on the upper floor.

2. Ground Duplex:

A ground duplex starts from the ground floor of an apartment building, with the lower floor facing a garden and the upper portion housing a living room and a kitchen. It is a preferred option among people who want an attached open garden to serve their pets.

3. Low-Rise Duplex

It is a modern duplex design with roomy balconies on the upper floor. The space in this design is smaller compared to other duplex styles. Making optimal use of the available space often becomes a challenge for architects in this design.

Cost of Duplex Homes in India

Generally, it costs around ₹ 1,200-1500 per sq. ft. in India. The final cost of a duplex depends on factors like construction type, land area, location, finishing choices, total construction area, time consumed for construction, the material used and their costs, and several other factors.

Hurdles in Financing a Duplex Home

Here are a few hurdles one may face while financing a duplex home:

  • Issue with Appraisal: Appraisals use comparable properties to value a house. Since duplex homes are unique property types with limited comparisons, finance companies find appraising them challenging. If they undervalue the property, the borrowers will need to invest more money from their pockets to make the down payment.
  • Determining the Rental Income: Many people buy duplex homes to rent out a portion of the property and live in the rest. For instance, small families can opt to reside on the lower floor and rent out the upper floor for an additional family income. Many owners use the strategy of house hacking to pay their Home Loan EMIs by renting out a part of the house. However, determining the rental income is challenging since appraising the property's price is prone to under-valuation.
  • Down Payment: Another potential hurdle is that duplex homes require bigger down payments than single-family homes.

Availability of Home Loans on Duplex Homes

Most financial institutions consider duplex homes as high-risk properties. That is because the idea of buying two houses on a single piece of land is not so common in India. If the borrower fails to repay the loan, the loan provider might find it challenging to sell the property and recover its money. That is why they tend to lend a smaller percentage of the property's value as a Home Loan with a lower loan-to-value (LTV) ratio. However, each lender's perspective on the associated risks differs, and they often base their decisions on the borrower's repayment history and credit behaviour. Those with a decent income and good credit score often get easier duplex home finance at reasonable interest rates.

Tips to Improve Home Loan Eligibility for Duplex Homes

Despite several challenges that home buyers face while looking for duplex home finance, here are a few tips that can improve their Home Loan eligibility:

  • Look for a Property in Prime Location: Properties in prime locations are less-risky options for housing finance companies. In the case of a default, selling such properties is relatively easy for them, and they easily get their money back. So, ensure that the duplex home you are trying to buy is situated in a major city in an easily accessible locality.
  • Showcase High Creditworthiness: Earning a good income, maintaining a high credit score, and reducing financial obligations are some ways to showcase high creditworthiness. Such loan applicants are low-risk borrowers for the loan companies, convincing them to sanction their loans without hassle. Stop switching jobs, pay off outstanding dues on loans and credit cards, and maintain a consistent repayment history to uphold responsible credit behaviour. Moreover, be ready to make a bigger down payment because that will not only make a loan easily available but also reduce your debt burden.
  • Compare Loan Providers: Since loan providers do not approve duplex home finance easily, it does not mean you must grab any loan offer coming your way. Compare loan offers based on their loan amounts, interest rates, processing charges, repayment terms, and other parameters to get the best offer suitable to your needs.

Duplex homes are good investment options for families looking for multi-family homes. However, improve eligibility to get easy Home Loans and take a final decision based on finances and research.

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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.