New property Buy or Resale Purchase: Which one is better and why?
When it comes to buying a property, there are a number of considerations and choices to be made but one of the foremost and one of the most important debates is the choice between a new property and a resale property. Since the list of pros and cons of the primary (new property) and the secondary market (resale property) is long and diversified. Some common grounds of comparison between the two and their respective effect on the buyer have been listed below.
• Home loan approval amount and tenure: when it comes to acquiring a property, it is easier to get finance in case of purchase of a new property. Since the prospects of a new property are likely to be favorable, the lending institutions find the loan amount secured and therefore provide financing easily, whereas in case of resale property, the loan is hard to attain since the property does not have such bright prospects in future. Also in case of the tenure granted for loan, the tenure for loan on new property can even be up to 20 years whereas in case of resale properties if the building is old, the tenure granted will be less and incase of the buildings older than 50 years, it is next to impossible to get a home loan approved, as it is against policies for many banks. even if the property is less than 50 years old the tenure of the loan will be less making the EMIs more expensive in case of the resale properties.
• Documentation: when it comes to the purchase of a new property the meticulous documentation is way less than in case of purchase of the resale property. When it comes to purchase of resale property all the previous documents need to be liked into the sale agreement making the process a herculean task. Furthermore if the property is being bought on loan, the process of documentation is more complicated.
• Discounts on price: when it comes to the resale properties, there is good chance of buyer being able to grab an enticing discount if the real estate market is undergoing a slump, whereas, when it comes to the new properties such discounts aren’t available even in slump periods also.
• Movability: in case of new property, if the property is in the construction phase, it is not ready to be moved in. Whereas incase of resale property, the property is ready and can be moved in instantaneously. Therefore,if the need of the house is urgent, a resale property is preferred
which has crossed its construction phase than a new property which is still under construction.
• Availability of ready cash: when itcomes to paying for the property, it is easy to find financing for a new property as lending institutions are willing and tenure is also long enough for repayment of the loan, making the EMIs cheaper and diminishing the urgency of requirement of ready
cash bythe buyer. In a contrast when it comes to buying resale properties, the buyer might have to pay the entire amount upfront of in a few installments over a short period of time. Therefore, if the cash is easily and readily available for financing the property only then should a
resale property be considered.
• Maintenance charges: when it comes to thinking about the charges which the buyer would have to pay over and above the actual price of the property like maintenance charges, most of the new properties have a long list of features which add on heftily to the maintenance charges like parking charges, society bills, annual maintenance charges etc. whereas incase of resale properties such charges are usually absent making them more economical, but then again the charges of maintenance of old buildings also need to be brought under consideration. Recurring costs like structural repairs, canadd substantially to the financial burden on the buyer in case of resale properties. A comparison should be made among the properties to
judge which property seems more economical before making the right choice.
• Resale prospects: if the property being bought is for investment purposes then a new property should be preferred as there are better chances of elevation of property costs, whereas in case of the old properties or resale properties, the prospects aren’t as bright with regard to a further resale.
The choice between the two properties is tough and yet it should be made by taking into consideration the conditions of the buyer and accordingly the better property purchase should be finalized.