There is no confusion that everyone wants to buy home. However, when you start your home search you will be faced with the dilemma – whether to go for an Under Construction or Ready to Move property. Buying a home is a long term commitment, so it is in your own interest that you spend some time researching and know what is good for your situation.
When you compare, under construction properties will score over ready to move in properties on some points while ready to move properties will have an edge on other points. We have done this base work of comparison for you. Let’s have a look.
Under Construction or Ready to Move Property – A Comparison
S.No. |
Under Construction
|
Ready to Move
|
| Points where Under Construction Property Scores over Ready to Move Property | ||
| 1 | Payment Flexibility In an Under Construction property, you are not burdened with high EMI immediately. You can book your home by paying just 10-15% of the basic cost. For balance amount, builders will give you option of downpayment plan or construction linked plan. Some builders also offer subvention schemes where you have to pay just 20% upfront and balance on possession. While, the payment flexibility may not necessarily mean that you are getting the best deal but it gives a lot of convenience. Your salaries can go up in 2-3 years while installments would remain same. |
Upfront Payment In a Ready to Move in property, the seller would want upfront payment. After you pay the initial 10-15% booking amount, you get 2-3 months to pay the balance amount. So, in case you are taking a home loan, your full EMI will also start immediately. |
| 2 | Wider Choice When you book an underconstruction property, the developer’s executive will show you all the available units. You can pick and choose the floor and location of your choice. If you want an East facing, park facing flat on 10th floor, yes you can get it. |
Limited Choice When you search for a ready to move in flat, only few units are available for sale in a locality. You have to choose from those ones only. You may not get everything that you want. |
| 3 | Cheaper Property with High Returns Under Construction properties are generally sold at a discount of 20-40% as compared to a Ready to Move property in a nearby locality. Moreover, if you have a group, you can get additional discount from the builder. Also, since new properties come up in developing areas, they get much higher appreciation as the area gets developed over time. |
Costlier Property with Average Returns Ready to Move properties are generally located in already developed areas. So, the appreciation of such properties is in line with the overall economy. Since, there is no risk involved, you cannot expect any discount on ready to move properties. |
| 4 | Lesser Paperwork When you book an under construction property, you have to just fill an application form and handover your booking amount cheque. Later when you take a home loan, you have to complete home loan documentation. Registration of property will happen only at the time of possession. |
Complete Documentation When you buy a Ready to Move in property, you will have to undertake complete documentation like Agreement to Sell at the time of booking and then Sale Deed Registration etc. If you do not know the process, you should hire a property consultant who will guide you through the complete transaction. Since, home buying is the biggest transaction for most people, you should not take risks especially in documentation. |
| 5 | Easy Modification Another advantage of under construction property is that you get a brand new flat and you can renovate it as per your taste. You can have latest modular kitchen and paint your walls yellow if you want. If you want to make the store room as your pooja room, yes you can do it easily. |
Limited Scope of Modification There is limited scope of modification in a ready to move in property unless it is a raw flat with no interiors done. Changing existing interiors can be a costly affair. Hence, most people avoid modifying completely. If you do not like a particular thing, you can always change it. |
| Points where Ready to Move Property Scores over Under Construction Property | ||
| 1 | Wait for Finished Product If you invest in an Under-Construction Property, you have to wait for your dream home for 3-5 years. |
Instant Gratification In case of Ready to Move property you get immediate possession. You get your house keys on the day of sale deed registration. |
| 2 | High Risk – Delays & Disputes This is the biggest disadvantage of Under-Construction properties. Your house is at the mercy of Builder. Indian courts are full of property related disputes. Most of them are related to delays by Builders in handing over possession. You should check track record of Builder and ensure that the Builder has all approvals. |
Lower Risk There is no delay in possession of ready to move in properties. However, you must check all original papers before buying. You can engage services of a property consultant and lawyer. There have been cases where same property has been sold twice. |
| 3 | Difference between What You See & What You Get This is another point where many investors are cheated. You buy a house looking at the prospectus and sample flat. However, when you look at the actual flat after completion, you may get disappointed. The actual carpet area that you get can be much lesser than promised. You can get surprised with the poor quality of doors, windows, electrical, bathroom and kitchen fittings. You can see cost cutting in gymnasium, swimming pool and children’s play area. The list goes on. |
What You See is What you Get In a ready to move in property, you can check complete property before purchasing. You should ensure that work done inside the house and in common areas is of good quality. Also, take a round of all common facilities in the premises. Once, you are satisfied, only then make an offer for the property. |
| 4 | Tax Benefits after possession Many people book an under construction property taking a home loan, thinking that they can claim tax benefits. However, you cannot claim any tax benefits until you get possession certificate. But you can claim benefits for previous years once you get possession certificate. |
Tax Benefits start immediately In case of Ready to Move in property, you can avail tax benefits immediately under section 80C (Principal Amount), under section 24 (Interest Amount) and under section 80EE (additional benefit for first time buyers). |
| 5 | High financial burden of EMI and Rent Till the time you get possession of your house, you will have to stay on rent. During this period, you will have to bear both EMI and House Rent, which can become hard sometimes. |
Immediate relief from Rent In this case, you can immediately occupy your property and start saving on rent. One mistake people commit here is that they overstretch themselves and start paying really high EMI. The trick here is to buy a house you can afford so that you don’t expose yourself to high risk. |
| 6 | Don’t know Neighbors When you book a house, you don’t know who your future neighbors will be. Even if you know a couple of people, these people may sell the property till possession. |
Can get to know your Neighbors In Ready to Move properties you can get to know profiles of people living in the community, their income levels, types of occupation etc. For some people, type of neighbors can be a deciding factor. |
Final Word
There is no right or wrong answer here. Choosing between an under construction property and ready to move in property is a matter of choice and your situation.
Under Construction Property is better, if:
- You are buying property from an investment point of view,
- You want to buy a slightly bigger house in your budget and you can wait for it,
- You want better choice in terms of location and the way you design your house.
Ready to Move in Property is better, if:
- You are looking for immediate possession and want to shift in your own house,
- You don’t want to take high risk and get into any disputes,
- You want to get rid of house rent and start paying towards building your own asset.
Do your math before you take a final call on Under Construction or Ready to Move Property.
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