Ready to move-in flat vs under-construction: Which home is financially beneficial for you?

Ready-to-move-in vs under construction flats: An old proverb 'a bird in hand is worth two in the bush' fits those homebuyers who are caught in limbo as to whether they should buy an under-construction home or a ready-to-move-in flat. According to experts, it's always advisable to buy a ready to move in home, if your finances allow. It has been found that to avail of some relief in the interest rate and lower EMI, people go for an under-construction home, which may turn out to be a bad decision in the future.

Speaking on financial benefits in ready to move in home versus under-construction home, Balwant Jain, a Mumbai-based tax and investment expert said, "If one has the option to buy a ready to move in home, then he or she should go for that instead of under-construction home. Data from all over the country has pegged delays in projects between 12 months, going up to 24 months. A look at the real estate in the redevelopment sector too will show that unprofessional builders, who have taken on projects without adequate financial resources, have also been responsible for project delays. Largely, this is the cause of delays in projects. However, sometimes the delay may not be caused due to the lack of financial resources but by litigation related to the property though in the case of an under-construction property, the disbursements are generally linked to the stage of completion of the construction."

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Highlighting the monetary angle of the homebuyers, Jain said, "In the case of a ready-to-move-in property, you either save rental if you move in or earn rental if you let it out and thus, save or earn money to supplement your EMI payments. People who opt for an under-construction house should be aware that they are going to pay higher rates of interest and bear higher risks of delay and default. In the case of reputed builders, even if there is no risk of default in giving possession, you always carry the risk of delay due to reasons beyond the control of the developer." 

He said that an under-construction property is not as liquid as a ready flat. So, it is not easy to sell this when you want and at the price you want. This property cannot be sold without the consent of the builder, along with his own commission deducted from the sale. Both cases will result in you getting a lower net price. Finally and most importantly, the ready property ensures that you get instant gratification for the money you pay.