Now Reading: Check total cost and legal status before buying old home
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Check total cost and legal status before buying old home
Buyers of older homes must assess not just the asking price but the total cost of ownership, including repairs and renovations. A ₹70 lakh property needing ₹8 lakh in immediate work effectively…
Buyers of older homes must assess not just the asking price but the total cost of ownership, including repairs and renovations. A ₹70 lakh property needing ₹8 lakh in immediate work effectively costs ₹78 lakh, altering down payment and loan requirements. Lenders also evaluate age, condition, registration and legal status before approving financing.
A common error is treating registration as final proof of compliance. Buyers must verify title, encumbrances, property tax records and ensure the structure matches approved plans. Under RBI norms, banks require an architect compliance certificate before disbursement for constructed properties, and housing loans are barred for unauthorised colonies unless regularised.
Properties like Lal Dora land or those in unauthorised colonies need extra scrutiny. Even a completed sale agreement offers no guarantee of loan approval. Buyers should confirm documentation and legal status before making financial commitments.
Indian Opinion Analysis
Older properties often hide costs that new buyers overlook, such as structural repairs and missing completion certificates. The Reserve Bank of India's 2017 master circular on housing finance already requires banks to obtain architect compliance certificates for constructed properties. Yet many buyers confuse registration with full clearance, unaware that an unapproved balcony or extra floor can block a loan. A 40-year-old property in a prime Delhi colony may fetch a high price but need a structural stability certificate from an empanelled engineer, adding months to the process. The real bind for a buyer is the timeline: the bank appraisal happens only after the sale agreement, and a loan rejection at that stage means losing the earnest money. The next figure to watch is whether the aggregate of purchase price plus renovation cost stays within the lender's loan-to-value ratio of 75-80% for older homes, beyond which the buyer must bring more cash upfront.
Source: livemint.com
This brief was synthesised by AI from the source linked above.
