Best time to buy a house: market timing or your own readiness

Buyers ask us when the right time to buy is, and they usually mean the market: will prices dip next year, should they wait for a correction. We think that is the less useful half of the question. Whether your own finances are ready decides far more about how the purchase turns out.

Why timing the market rarely works

Property moves slowly. Even after you have chosen a flat, the loan, the agreement and registration take weeks or months, so you cannot jump in at a low point the way you might with a share.

Prices are also local. Hyderabad is a collection of micro-markets, and one can be flat while another a few kilometres away is rising. A headline about "the Hyderabad market" tells you little about the street you want to live on.

Then there is what nobody can predict: interest rate changes, policy decisions, an infrastructure announcement. And there is the buyer's own nerve. People who wait for a correction often keep waiting, because no price ever feels low enough.

If you are buying a home to live in for a decade, a slightly high or slightly low entry price matters less than buying the right location and layout with clean title.

Signs that you are ready

Your income is steady

Lenders typically like your EMIs to stay within about 30 to 40 percent of your net monthly income. If your income has been stable for a year or two and the EMI fits inside that band, you are on firm ground.

You have the down payment

Banks do not fund the whole price. RBI rules cap a home loan at 75 to 90 percent of the property's value depending on the loan size, so the balance has to come from you. A common target is 20 to 30 percent of the price, which also keeps the loan and its interest smaller. This should not be your emergency money.

Little high-interest debt

Credit card balances and personal loans eat into what you can borrow and what you can comfortably repay. Clear them first if you can.

An emergency fund

Keep 6 to 12 months of living expenses aside after the down payment. Repairs, a gap between jobs or a medical bill should not put the EMI at risk.

A loan you can get at a rate you can live with

Check your credit score and find out what you are eligible for before you shortlist. A somewhat higher price is manageable if the EMI is comfortable. A bargain is not, if the EMI is a stretch.

You plan to stay

Buying makes sense when you expect to hold the home for 5 to 10 years. Sell sooner and the stamp duty, registration and other transaction costs are hard to recover.

Where the market does matter

Once you are ready, a few market factors can tip the timing by some months:

• Interest rates. A lower rate means a lower EMI on the same loan.
• Launch and festive offers. Builders do discount at these times. Worth using if you were going to buy anyway.
• Infrastructure. A metro line, flyover or new office cluster can lift an area over the long run, though announced and built are different things.

None of these is a reason to buy before your finances are in place.

Getting ready, step by step

1. Work out the full budget: price, GST if the flat is under construction, stamp duty and registration, interiors, and maintenance deposits. Our guide to GST, stamp duty and registration charges has the current rates.
2. Check your credit score.
3. Ask a lender what you are eligible for, so you know your ceiling.
4. Decide the area and the type of home, apartment or villa, based on work, schools and how long you will stay.
5. Visit several projects. Compare layouts, amenities and how the community is run.
6. Get legal and financial advice before you pay anything substantial.

If you want a second opinion on whether you are ready, or on which projects fit your budget, talk to a relai advisor; it costs you nothing, since the builder pays our fee when you buy.