Buying a home in Mumbai is like venturing into the unknown, especially for first-time buyers. Buying a home is more than just finding a suitable locality or amenities. First-time home buyers in Mumbai must know and understand the legal frameworks and processes before finalising a deal. This is essential for making your process significantly easier and safer.
Learning about the legal framework and documentation can help you make better decisions and avoid any suspicious properties. Doing the necessary due diligence can help you save your hard-earned money and provide peace of mind. In this blog, we will explain the three big things you need to do when buying a new home in Mumbai and the documents you need to check.
A] Here’s The Three Essential Steps in the Home Buying Process
1. Do Your Research About The Property
Extensive research about the property you want to buy should be the first step of your buying process. The Mumbai real estate market is vast and complex; hence, finding the right property may take time. You need to consider various factors like the locality and community, surrounding infrastructure like road and railway connectivity and water supply, and the amenities and facilities available. You must also look into the previous projects developed by the builder and assess their construction quality, selling price, and amenities.
2. Conduct Legal Due Diligence
The next essential step in the new home buying process is to conduct the necessary legal due diligence. This process involves checking all the necessary documents and agreements to ensure the property is being developed through legal means. You must also be aware of the laws and acts related to real estate buying and selling, such as the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963. This act allows the heritable transfer of individual apartments in a building to your legal heir. Knowing about acts like these helps you insure yourself from making the wrong decisions.
3. Financial Planning And Budgeting
And finally, once you have shortlisted a few different properties that you would like to buy, you need to move on to start planning how you are going to finance your new home. Mumbai’s residential real estate is often on the expensive side; hence, you must plan accordingly. You need to consider how much you can pay for the down payment, what loan amount you are eligible for, and how much the stamp duty and registration fees will be. The cost of buying a new house is not limited to its selling value, and you need to consider that while budgeting.
B] Documents To Ask For Before Buying Your First Home In Mumbai
1. Site/Building Plan
The site plan, also known as the building plan is a design document that shows what the building is supposed to look like from the outside. This includes the building, surrounding garden, roadways leading to the property, and any other features that the developer may add. This will help you understand how the property is going to be built and how much area it will cover.
2. Encumbrance Certificate
The encumbrance certificate (EC) is a legal document that showcases if the property has any outstanding legal liabilities. It provides information on land details and ownership of the property. An EC tells a buyer that the property is free of any preexisting tax liabilities or loans. This assures that the buyer will not face any legal trouble once the property is purchased.
3. Mutation Certificate
A mutation certificate also known as a registration certificate is proof of property transfer. A mutation certificate is received once the property ownership has been updated in the government record. It may not be legally required, but as a homeowner, you can benefit from having it while reselling the property. It may also be required while applying for a home loan.
4. Completion Certificate & Occupancy Certificate
The completion certificate is the proof that the construction of the building is completed as per the approved plan. The occupancy certificate indicates that the building is ready for occupancy and safe to live in. Usually, the local municipal corporation issues these certificates, which in the case of Mumbai is the Brihanmumbai Municipal Corporation (BMC).
5. A Sales Deed
The sales deed, also known as conveyance deed or property sale deed, is the evidence of the transfer of the property from the seller to the buyer. It is a legal document that is crucial for creating proof of identity such as an Aadhaar card, PAN card, or passport. A sales deed outlines the terms and conditions of the transaction that need to be met to complete the sale.
Conclusion
Purchasing your first home in Mumbai often feels like a milestone achievement. However, knowing the legalities surrounding purchasing your new home can make your journey much easier. When buying a residential property in Mumbai, make sure to learn about the property and do your due diligence.
Make sure to have all the legal documents required for you to purchase the property, apply for a loan, and create a new proof of address. If you are still confused or unsure about anything, contact us today. We are happy to help you find the right home with legal due diligence.
FAQs
Q) What legal documents are essential for first-time home buyers in Mumbai?
Ans: When buying residential properties in Mumbai, you need to have an encumbrance certificate, mutation certificate, sales deed, completion certificate, and occupancy certificate. Having these documents can save you a lot of trouble in the future. Additionally, make sure you have your tax receipts to prove all your taxes are paid.
Q) How does property registration work for first-time buyers in Mumbai?
Ans: Property registration in Mumbai requires the buyer to verify various documents like the sale deed, title deed, and encumbrance certificate. The buyer needs to draft the sale deed with the assistance of lawyers and pay registration fees and stamp duty based on the property’s value.
Q) What legal fees should Mumbai’s first-time homebuyers be aware of?
Ans: As a first-time homebuyer, you need to account for stamp duty, registration fees, and legal fees (if you are hiring a lawyer) when setting a budget.
Q) What are the benefits of first-time home buyers in Mumbai?
Ans: First-time home buyers benefit from several tax deductions that are available. If you are buying a house on loan, you can deduct up to Rs. 1.5 lakh from your payable income tax on the principal repayment. You can also deduct interest paid up to Rs. 2 lakh under Section 24 (b).
