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February 20, 2006

How to buy an apartment in Bangalore.

Filed under: Opinions — Manish Bansal @ 6:56 am

Even though this post is specific to Bangalore, the general principles should apply everywhere. I have not included everything related to buying an apartment here like location, security etc. Just those things which are not so obvious to new house-hunters.

Size: Do not buy a smaller unit thinking that you can always buy a bigger one later. Banish the thought forever. If you can’t afford a bigger house now, you won’t be able to do so after 5 years either. Property rates are doubling every two years whereas the salary is not. And once you get settled in a house, it is almost impossible to shift.
Looking ahead 10 years, you’d have kids who would need a room of their own. Your parents might come to stay with you. You might acquire a ton of household stuff which you’d have to put somewhere. So buy the biggest house you can afford. Look for one with atleast 3 bedrooms with a total area of about 2000 sqft. It might pinch a little now but will sure come in handy later.

Built-up area: The area of the apartment quoted by the builder is called super built-up area. This is the area for which you are paying the money. This super built-up area includes the area reserved for corridors, playgrounds, gardens and lift etc. The area in which you actually get to live in is called built-up area which is typically 80% of super built-up area. So if you are buying a 2000 sqft apartment, you get only 1600 sqft out of that. Some builders claim to give 85% but that is the limit.

Loan: This is the one thing that causes most anxiety to new homebuyers. There are many things to be taken care of while taking a loan.

  1. Pre-EMI: In a typical payment schedule, the bank releases a part of loan, say 10%, at each stage of construction. By the time you take possession, the bank would have paid the entire loan amount to the builder. If the construction takes 18 months, you have to pay the interest for 18 months on the money the bank has released. As and when the bank releases money, the amount on which you have to pay interest goes up. This interest amount is called Pre-EMI.
    The alternative to Pre-EMI is to ask the bank to release the full loan to the builder in the beginning itself. Then you can start paying full EMIs to the bank instead of paying Pre-EMIs. Even though paying full EMIs sounds bad when you can get away with paying much less Pre-EMIs, it is actually better and will save you as much as 5 lakhs!
    When you pay full money to the builder up-front, you get a discount of 4-5%. This works out to be 1.5-2 lakhs, depending upon the cost of the apartment.
    The Pre-EMIs that you pay do not count towards your loan. I.e. they do not bring your loan down. You are just paying a convenience fee to the bank. Most people go for this option ’cause they can’t pay full EMI and the rent at the same time.
  2. Interest rate: You can go for either fixed or floating rate of interest. Floating rates generally change every quarter but it is up to the bank. Fixed rates are of two types – fixed for a term and fixed for full tenure. The fixed term is typically 3 years after which there is a revision to the rate, depending on the market condition at that time. There are very few banks which offer fixed rate for full tenure. ICICI is one such bank. Some banks like Kotak offer loan with interest rate linked to the Fixed Deposit rate.
    You can change your loan from fixed to floating rate later and vice-versa but banks typically charge 0.5% of outstanding principle amount for this. There is one hidden cost though here. Your interest and principle components for EMI would be calculated again and you might end up paying more.
    As of Feb 2006, the floating rate is 7.75%, three year fixed is 8.25%, and fixed for full tenure is 8.75%.
  3. Pre-closure: Most loans last for about 6-7 years even though they were originally taken for 15-20 years. If you get some extra money and want to close off your loan, banks typically charge you 2% of the remaining loan amount. Some banks do not allow you to do this at all. In ICICI, you don’t have to pay any penalty for this if you leave 12 EMIs.
    Also check if you can pay more than your EMI once in a while. Banks typically allow you to make excess payments once in a quarter or once in 6 months.
  4. Insurance: Banks typically fund up to 85% of the apartment cost. Some banks fund up to 90% if you take loan insurance but 90% is the upper limit. The loan insurance premium is typically 8-10k per year. It covers things like disability, unemployment, death, or loss of property due to fire and theft etc. Unlike life insurance, you won’t get anything back at the end of coverage term. You might be better off taking simple life insurance if you are not concerned about job security etc.
  5. Tax exemption: You get tax benefits on pre-EMI and EMI only in the year in which you are taking possession. See more details here.
  6. Loan disbursement: All the builders have home loan tie-ups with various banks and they also have loan agents who deal with those particular banks. After your loan has been sanctioned, it takes a lot of co-ordination between the builder and the bank to disburse the money. All this becomes much easier if you take the loan through these builder appointed agents.

Cost: Like there is an ex-showroom price for cars, apartments have an ex-builder price (I just made up that term). A typical price of, say, 2000/- per sqft quoted by the builder does not include charges for Water supply, Electricity, Car parking, Service tax, VAT, Registration, and legal expenses etc. You won’t get any wardrobes or kitchen shelves either. Add 30% of the base cost for these things (total cost now = 2600/-). The builder should be able to tell you exactly how much would these things cost. Your loan eligibility is calculated on the sum total of all the above costs.

Premiums: Some builders, or rather all of them, ask for a premium for corner units or upper floors. In other cities, lower level floors cost more than the higher ones but in Bangalore it’s the other way around. This premium rate is typically 20/- to 50/- per sqft per floor. There is no problem in paying it except that it is not shown in any of the documents. Your house would still be registered at a rate of 2000/- only. See if your builder can waive it off or reduce it; most do.

Amenities: All the apartment complexes are advertised to have a club house, swimming pool, gym, garden, and playground etc. It would be a shame to call that pit a swimming pool but the point here is that you are made to pay for these things. If you are going to buy a house in one of these projects, there is nothing you can do to avoid paying for them. But what you can do is to buy a house in a much smaller apartment complex. These complexes typically have only 12-20 units and don’t have any of the above “luxuries”. You can see these kind of complexes everywhere in residential areas like Koramangala. The prices are about same as big complexes but then you get to live in the city and in a much better locality.

Salespeople: Do NOT trust the marketing executives who take you to the site and give you a tour. They would promise anything just to sell you the damn apartment. Always call up the customer care department and verify it with them. Better still, go to their office and have a look at the papers yourself.

When to buy: This one is simple. Buy it as soon as possible. Buy it now. Don’t worry about leaving Bangalore and going back to your hometown. you can always sell it later. And at a profit too. The best time to buy an apartment is during the pre-launch offer. These offers run for about 2 months and the rates are up to 200/- per sqft lower. As soon as the builder gets the plans approved from the govt authorities (and the project is officially launched), the rates shoot up (and keep on shooting up). The number of units on offer during pre-launch is very less though.
Another thing to note is that builders do not release (put up for sale) all the units once they launch the project. They keep some units for selling them later at a higher price.

Links:

  1. BDA Sites – A highly useful and relevant discussion group on MSN. Do not trust everything you read there though.
  2. Official website of BDA
  3. Official website of BMRDA
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February 16, 2006

How to make your blog popular?

Filed under: Opinions — Manish Bansal @ 1:53 pm

65% of new blogs created are abandoned within a month of the first post. And less than 20% of the blogs are updated regularly, if at all. One of the reason people abandon their blog is low number of hits. How can you motivate yourself to write when no one other than you is going to read it? Another common reason is lack of time or work pressure. Some people quit because they don’t see any point in blogging once the novelty wears off. Well, assuming that you have decided to go ahead and keep at it, here are some points to help you along.

  1. Know why you blog: Some people blog ’cause they just want to rant and get the load off their chest. Some blog to create a repository of their knowledge which they can refer to later. Some write about their experiences from which others can hopefully learn and avoid making those same mistakes. For some it’s a weapon to fight boredom. So before you start blogging, know your type. I started blogging to learn new things. I have to do a lot of research before I can post “How to” type of posts.
  2. Write from the heart: People come to your blog to read about a real person. They want to get to know the raw you, not some stuff PR laundered stuff. Be direct and write in first person. People want to see your emotional core, the person they would see if all the gurads were down.
  3. Be original: Give others a reason to come to your blog. Make their time and effort worthwhile. Don’t just link to others’ posts and don’t say what has been said thousand times before. If you don’t have anything to say, keep quiet.
  4. Give and take: If you want others to come to your blog, you have to go to their blog! And let them know that you’d been there. Best way to do that is to leave a comment. Don’t just say ‘nice blog’ etc. Write something creative so that other person feels like checking out your blog. Leaving a good comment can make any blogger’s day.
  5. It takes time: You are not going to become Robert Scoble in a day. Be patient. It takes time and a lot of it. Just keep writing. It took me about 6 months before my site was the first hit on Google for my name.
  6. Be consistent: I like blogs which get updated regularly. You don’t have to bang out a post everyday but maintain a consistent frequency. Strive for atleast 2-3 posts a week. See #3.

Popular or not, writing a blog is its own reward. Atleast you can tell yourself that till you start getting a million hits a day.

February 14, 2006

A really sweet plugin for Yahoo Music Engine.

Filed under: Audio,Software — Manish Bansal @ 6:55 am

I am a big fan of Magnatune record label. They allow you to stream/download all of their catalog in 128 kbps DRM free MP3 files. It used to be a pain to browse the site and download though ’cause they didn’t give a direct link to the download page. You had to google it and then click on each and every file on that page. Not anymore.

Enter Web Media Browser plugin for Yahoo Music Engine by YMediaShare. It allows you to browse, queue, and download the Magnatune music directly from YME. No more hunting on Google. You can even queue up all the files you want and it will keep on downloading them in the background. And after downloading, the new music automatically gets added to your media library. Sweet! I was just about to swear off YME for good but this plugin has made me change my mind.

This plugin lets you do some more things also like Browse WebJay playlists directly from YME, download music from lots of different sources, rate them etc. But I am keeping it for the Magnatune thing.

February 13, 2006

Why I don’t like speed reading.

Filed under: Opinions — Manish Bansal @ 2:08 pm

Speed reading is a method of reading wherein you can achieve really high reading speeds using techniques like word assimilation, skimming, removing subvocalization and controlling eye movement etc. Some people even claim to achieve reading speed of 1000 words per minutes, with 100% comprehension!

I am not a slow reader but, hell, who can resist 1000 wpm reading speeds? So I tried this speed reading thing but couldn’t really see any real gains. My brain would hurt and I was not able to sleep at night after a speed reading session.

Here is why this thing doesn’t work. What we call reading is actually made up of two parts – words in-take + processing. What speed reading gives you is a really high speed of word in-take. It doesn’t make the processing of those words any faster. It’s like connecting a huge data pipe to a 486 processor. The processor works at its own pace while the data sits there waiting to be processed. And that buffer storage space is limited. As long as the old data is there, you can’t do any more reading.

Speed reading doesn’t work for kinds of reading anyway. You can’t read physics faster and you don’t want to read novels faster. Kind of a lose-lose situation.

So you can either read slowly and process the data at the same time or cram in huge chunks of data into your buffer and let the brain do its thing at its own pace. I prefer the former method, atleast for the joy of reading that it gives me.

February 10, 2006

How to rescan a folder in iTunes and keep song ratings.

Filed under: Apple,Audio — Manish Bansal @ 11:13 am

How to update/rescan your iTunes library if you have:-

Added new songs:
This was one of the most frustrating thing about iTunes. I would add a few songs to a folder which had already been added to iTunes but there was no way to tell iTunes to rescan that folder and pick only the updated songs. Every other jukebox software I know has this feature. Winamp even lets you schedule when you want to rescan the folder!
What did I know. This is actually simpler in iTunes. Just add the folder again to iTunes. If you have not moved the existing files from their previous location, have not renamed them, or done anything else to them, they would be ignored and only the new files would be added. All the old songs would maintain their playcount and rating etc. I regularly point iTunes to my top-level song folder and they get added just fine.

Updated tags outside iTunes:
I use GodFather to edit ID3 tags for my mp3s but since iTunes maintains its own database, the changes are not visible in iTunes. You can clean your iTunes library and add those songs again but you’d lose playcount and rating. The correct way to make those changes visible in iTunes is to select all files (using ‘Ctrl-A’), click on ‘Get Info’, and click ‘Ok’. iTunes will pick up all the tag changes without losing playcounts or ratings. Do NOT check any of the checkboxes for any of the tag fields. You’d nuke all your tags. Just click ‘Ok’ and it’d be done.

Get WinBackup for free.

Filed under: Marketing — Manish Bansal @ 8:45 am

Found via Download Squad.

WinBackup is offering the version 1.86 of its software for free whereas the latest version 2.0 costs $49.95. This is a great move. This shows the great confidence they have in their product. They are standing up to the their claim that version 2.0 is actually worth $49.95 over the free product even though version 1.86 itself is pretty good. I wish more companies would do the same.

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