"Our Home". Our own
house.. For many this is a dream. Was for me though :). This isn’t as easy as
talked. We had to consider a lot of stuffs, must have patience, consult people,
take permissions and most important, must consider financials.
In this blog article I am going to
share my experience of constructing a house, which I finished in March, 2014.
It took a year for the construction, which is nothing less than an adventurous
trip. Definitely as I searched internet and consulted people for their
experiences, someone would find my experience useful.
To begin with, I’ll start with the
basic points to consider and all these in a chronological manner.
To start with or so called
initiation itself need a lot of ground work. Before starting the actual
construction, there are many things to be taken care.
1. Budget/Financials
Why budget or
finance came to the top of list is, because it drives almost all the below
factors. Based on your budget you may change plan, and in case you want to
stick to your plan, then you have to find sources to fund your plan. Definitely
once the thought of construction strike your mind, you would have contacted
some person who has got some idea about same. If not, then do it. Get a rough
estimate.
Scenarios: First consider various
sources of income where and how could you gather money for your construction.
If you have all the amount to fulfill as per your rough estimate + 30% of your
budget (might require by the end of construction), then you are good to go,
else à
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Consider loan from banks : If your construction
site is a Govt approved one, like B.D.A or one with A Khaatha (considering
Bangalore), then any bank would be happy to avail loan. However if your site is
having B Khaatha or is a revenue site then you might have to take loan at a higher
rate from private or co-operative banks. I needn’t mention the housing loan
details etc, as there are already many sites doing same. For A Khaatha bank provides
80% loan on your budget, whereas others offer only 70% and obviously rest has to
bear by owner.
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Other sources: You can get loan from other
places but at a higher interest rate (14%) compared to nationalised banks (10.25
– 12%). Gold loan from various brokers with different repayment schemes, but
still at a higher rate of interest (20-23%). (Interest rates are per annum basis)
What I suggest : Unlike marriage or
some other functions, one won’t need all the money before hand to start. At
each stage of construction step-by-step you can plan for different sources.
If you consider
bank loan, then bank provides loan stage wise. To start with, you have to
finish off basement, and later on, bank releases amount at Ground floor
Moulding, Initial Electrical, Plumbing, Plastering, Carpenter, Flooring and
Paint works.
So plan all sources
of income, consider any other person working in your family, consider any
savings such as PF, Fixed deposits etc. Always have some option ready in worst
case situation, so that the construction at any stage shouldn’t halt or get
delayed.
Everyday
construction rate increases. So the best time to start construction is today.
Because by the time the construction is end you yourself will know that it was
best in your decisions to start construction a year or a few months earlier.
My case : The cement rate which was Rs.
300 per bag at the beginning, was Rs.340 after 1 year(duration of
construction). Also, Iron, wood etc everything had a major impact.
I had bought loan
from a nationalized bank at an interest rate of 10.25% per annum. As ours was a
site with A Khaatha, so we got 80% loan on our budget. We also pledged gold
ornaments for a small amount of loan at one of the well known broker at 1.75%
interest per month.
Learnings : Do a lot of ground work
about the bank before availing loan. Few banks aren’t too much strict while
releasing amount stage wise and also consider your statement to release amount,
whereas few ask bill for every material you buy(which usually shops give a
second thought to provide as they have to pay tax for billed transactions). So
better consult a few people regarding the bank’s repayment rather than asking
bank officials.
When pledging gold
loan the interest rate is per month, which considering my scenario, I paid
1.75% per month which is in turn 23% per annum, which is way above 14% per
annum for gold loan at nationalized bank and it is safe too.
2. Construction
Plan, Duration and Management
3. Contractor
and type of contract
4. Permissions
on Legals from Civic and Govt authorities
5. Materials
6. House
warming J
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