Are you a homeowner looking to move into your first house? One of the biggest problems potential homeowners face when deciding to purchase their first home is deciding between buying an under construction property and a ready to move in property.
Both the choices come with their own set of advantages and shortfalls, so it’s best to weight all the factors considered before determining the best for you and your family.
We explore all these aspects of under construction vs ready to move-in properties in detail so you can make an informed decision.
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Under Construction Property: Pros And Cons
Like the name suggests, under construction properties are residential projects that are under construction and yet to be completed. Here’s some key aspects of under construction projects:
Advantages of Under Construction Property
Lower Costs:
Generally, properties that are still under construction are priced less compared to the ready-possession properties. During pre-launch, attractive prices for the apartment may be offered by the developers, and they tend to be much lower as compared to the cost of similar properties in the market.
Flexible Payment Plans: Most builders have a policy of staggered payments or payment schemes where instalments are allowed with increasing construction.
Personalization:
Prospective buyers can have a say in interior design elements like flooring and type of paint.
New Amenities and Modern Facilities: New constructions mostly come equipped with modern amenities and facilities that include smart home features, modern gymnasiums, and recreational areas.
Appreciation Value:
If the location is in a developing area, then appreciation in prices will be high between the time construction starts and the time of completion.
Compliance with RERA:
Transparency and Accountability: Under the provisions of RERA, the developer has to compulsorily get all under-construction projects registered with the regulatory body, thereby ensuring more transparency and accountability for buyers.
Grievance Redressal: RERA also provides a mechanism for the redressal of grievances where the buyer can file a complaint against the developer for non-compliance or project delays.
Disadvantages of Under Construction Property
Delays and Uncertainty:
Delay in completion is one of the biggest risks associated with under-construction property. Several factors prolong the time for handover, including but not limited to legal issues, problems in funding, or construction delays.
Quality Concerns: Assured quality may not match the delivered product.
Financing Risks:
Buyers might have to service EMIs on housing loans and continue paying the rent towards their current residence until possession of the property is granted.
Developer Bankruptcy: If a developer goes bankrupt, the project can easily be stopped indefinitely, with your investment hanging in the balance.
Tax Benefits in India:
Limited Tax Benefits: The tax benefits on the home loan interest under Section 24(b) are available only upon completion of construction. The total interest paid during the construction period can be claimed in five equal instalments from the year of possession.
Ready To Move-In Property
A ready to move in property is one that is complete and ready for occupancy. When you have all the finances or home loan secured, then you can buy a ready to move in property for you and your family.
Advantages Of Ready To Move In Property
Immediate Possession:
The most significant advantage is that you can start living in the property from the day of the purchase, which is best for those in great need of housing.
What You See Is What You Get: There are no surprises as you can inspect the property before buying and be assured of the quality and layout.
Rental Income:
If you’re not buying the property to move into it yourself, then you can easily rent out the property to generate monthly rental income.
Financing and Tax Benefits:
Immediate Tax Benefits: Homeowners can avail themselves of the tax benefits on both principal and interest repayment of the home loan right away. Both the principal repayment (up to INR 1.5 lakh under Section 80C) and interest repayment (up to INR 2 lakh under Section 24(b)) can be claimed from the year of purchase.
RERA Compliance:
While RERA relates more to under-construction properties, many ready-to-move-in properties made post-RERA nevertheless adhere to it, thereby guaranteeing that they meet specified quality standards.
Are You Looking For Buying a Ready to Move Property
Disadvantages of Ready to Move-In Property
Higher Costs:
Readymade houses are generally more costly than those constructed because they carry the promise of immediate possession.
The payment terms may be less flexible as they demand a significant sum upfront, which might be financially stressful for a new or first time homebuyer.
Limited Customization:
There will be minimal chances of any customization as the property is already completed. All the changes would prompt further renovations, further increasing already heavy costs.
Bottom Line
Whether you’re a first time homebuyer or one who already owns a few properties, the choice between an under construction vs a ready to move-in property is a difficult one.
If you’re willing to take some risks and think long term, an under-construction property might suit your needs. But if you’re in need of immediate possession and relocation, a ready to move-in property would be much more suitable despite the higher cost.
Understanding the unique pros and cons of each locality and doing an in-depth property valuation of the house you want can help prospective buyers make the right investment decisions.
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