Introduction to Property Buying

A beginner’s guide to buying a home in a pandemic

A beginner’s guide to buying a home in a pandemic

The pandemic has been marked by a lot of uncertainty in various areas of the economy. Many industries and economic sectors have found it difficult to cope with the restrictions imposed, and areas like aviation, travel and tourism and even entertainment have taken a hit. However, despite the limitations that the pandemic brought in, the real estate industry in the country is quickly bouncing back. Many potential homebuyers, who were on the fence about buying a house before the pandemic, are now getting back into the market and looking to invest in property.

The demand for residential houses is quickly recovering, with homes priced between ₹25 lakh and ₹75 lakh gaining the most traction in suburban areas. Given this climate, it’s likely that you too, may be considering buying a house during the pandemic. In that case, you may benefit from some ideas and pointers to help guide you through this decision.

Tips to guide you about buying a house during the pandemic :

If you’re a beginner to the real estate market, you’re no doubt excited to buy your first home. But shopping around for a residential property during the pandemic is quite a deviation from the usual. So, here are some things to keep in mind.

  1. Take the help of a real estate agent

    Given that the pandemic has not died down yet, and since there’s no vaccine out in the market, you can never be too careful. If you’re apprehensive about house hunting in person during these uncertain times, a real estate agent can prove to be indispensable to you. With years of expertise in the field of real estate, these experts can help you shortlist possible choices once you communicate your needs to them.

    You can then check out only those options in person, thereby making the process of buying a house during the pandemic both faster as well as safer. Additionally, you also get to benefit from the experience these agents bring along with them, particularly if you’re a beginner.

  2. Make a plan for financing your purchase

    Aside from zeroing in on a house, getting the funds ready to make that purchase is the next big challenge that you’ll likely face. Some people resort to using the money they’ve saved up to pay a huge portion of the cost, while others may disinvest some investments to fund their purchase. But if you do not wish to break into your investments or tap into your savings, you could consider external financing.

    There are many lending institutions that offer home loans to finance home purchases. You can resort to borrowing a housing loan, so your savings and investments remain intact. However, you’ll still need to plan the details, such as the amount of down payment you’re going to make, the amount you’ll need to borrow, and the lender you wish to borrow from. Since the pandemic has made contactless solutions the need of the hour, many home loan lenders now offer easy online application and approval processes too. Look for these options when you’re shopping for a housing loan.

  3. Follow the 30/30/3 rule

    Finance experts recommend following the 30/30/3 rule when you’re buying a house during the pandemic. Here’s what the essence of this rule looks like.

    • Spend only up to 30% of your monthly income on EMIs.
    • Have 30% of the value of the house saved up as cash or liquid assets.
    • Ensure that your budget does not exceed 3x your gross annual income.

    For example, say you earn Rs. 70,000 a month. This brings your gross annual income up to Rs. 8,40,000. In that case, here’s how the rule applies.

    • Keep your EMIs within Rs. 21,000 per month (30% of Rs. 70,000).
    • Look for homes that cost around Rs. 25 lakhs (3 X Rs. 8,40,000).
    • Have around Rs. 7,50,000 (30% of Rs. 25 lakh) saved up in cash and cash equivalents, so you can meet down payment needs easily.

    This rule is particularly relevant during the pandemic, since there’s a lot of uncertainty in the workforce, with pay cuts and losses of income being reported. So, it’s important not to overshoot your budget.

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  4. Check your home loan eligibility before making a purchase

    You can make use of online home loan EMI calculators and eligibility calculators to plan your finances better. Before you begin shopping for a house during the pandemic, it’s always a good idea to check your eligibility and get a fair idea of the maximum amount of loan that you can borrow. Many banks and lending institutions have this feature on their online portals. You simply need to fill in basic details like your age, nature of employment, annual income, etc. and you’ll receive a quote in return. That should give you a fair idea of the budget that you need to shop within.

  5. Do your research online

    There is a lot of useful data available online through which you can filter out potential houses and make better decisions. You can make use of online platforms to shortlist areas of interest, look at reviews, get in touch with real estate agents and much more. This will help you get some clarity and save time in the house-hunting process.

Conclusion :

All things considered, buying a house during the pandemic is mostly the same as buying a house pre-COVID. The key difference is that you need to plan your finances a bit more carefully, since these are uncertain times we’re in. With a dependable housing loan backing you up, you can make your dream of becoming a homeowner come true. Housing loans from Hero Housing Finance can help you here. With repayment tenures as long as 20 years and loan amounts up to Rs. 3 crore in non-metro areas and Rs. 5 crore in metro areas, these home loans make it easier for you to buy a home during the pandemic. You can also check out the easy-to-use eligibility calculator to figure out your eligibility beforehand.

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