Construction Diary - Story of a middle class family constructing an house

[Vinay23aug]

Hello everyone,

30th Dec, 2020

Home is a safe haven, a happy place where you laugh, live and grow. We all have our dream house in our head. But making it a reality is almost always a struggle for any middle class family.

I am trying to fulfill this dream of my parents and I thought of jotting everything down like a diary. Hopefully this helps at least a single soul out there. And maybe I can resonate with the struggles of many out there.

We already have a 2BHK house in Hosakerehalli spread on a 30x40 Sq Ft land. My father used to run a car garage so building this small house itself was a huge thing for him. Being close to retirement, he doesn't have any spare money and rental income seems like the best option these days.

So we are planning to construct a duplex house in the 1st and 2nd Floor and let out the ground floor for rent.

1st Stage: Saving Money
This is the longest phase for a middle class family. We don't eat in fancy restaurants, we don't splurge on clothes and we definitely can't spend like our rich friends. After doing this for many years on my parents' part and with my savings from past 3 years of office work, we have finally saved up 15 lakhs. We decided to start with the construction by taking some home loan.

2nd Stage: Floor Plan
Am handing over the construction to a childhood friend who is a builder. We all sat down together and came up with a floor plan helping me save money on Architect's fees. This isn't difficult if you have basic knowledge about construction and vastu. Online sources are very helpful in this regard. But make sure that the mestry is experienced.

House plan will cost from as low as 3k and go in lakhs. This is one easy area you can save money. So be careful.

3rd Stage: BBMP Plan approval
This has been the most difficult phase so far. BBMP plan approval is mandatory for applying a home loan along with cost estimation. Through a friend of my dad's, we got in touch with a guy who works for the BBMP. Initially, we asked him about the fees but he did not say anything. This is a trick. Be wary.

We gave him a copy of the following documents
1. Property deed
2. Mother deed
3. Khata Extract/ Certificate
4. Encumbrance Certificate (costed about Rs 1.5k)
5. Property Tax challans

The guy, said it would take around 21 days for the plan approval. After 15 days, we called him and found out that he had not touched our file. When asked, he said he needs money.

He said the BBMP fees would cost around 1 Lakh and Rs 30k would be his fees. Without any other option, I agreed. I paid him Rs 5k as advance and he immediately started working. Took our signature on all relevant application forms the next day, asked us to pay Rs 1031 as Scrutiny fees online.

After few days his superior visited our house for inspection. They measured the property and left. After 4 more days, the superior's boss came and visited our place for another inspection.

Finally 2 days back, the guy called me up and sent me a demand notice of Rs 1.56 lakh + Rs 31K for plan sanction.

Break up of the fees is as below
Sl No. Particulars Amount
1 Scrutiny Fees 1,995
2 License Fees 19,278
3 Fee U/s 18(1) Betterment Levy For Building 3,400
4 Fee U/s 18(1) Betterment Levy For Site 35,280
5 Lake Rejuvenation Cess 2,800
6 Administration Charges 11,344
7 Ground Rent 11,374
8 Water Supply Scheme 14,112
9 Ring Road 7,056
10 Improving Slums 35,280
11 Mass Rapid Transport System 14,112
Total (A) 156,031

Labour Cess (B) 31,000

Grand Total (A+B) 187,031

I was shocked. Government is looting us. I remember in year 2000s when the plan sanction was cheaper than this. Lake rejuvenation? Ring road development? Bloody hell. We all know where this money is going. Plus we need to hear harsh words from these money eating monsters. As if we are their slaves. Pathetic. BBMP is one of the worst and most corrupted organisation in this country.

Anyway, I took a DD for Rs 1.56 Lakh in the name of Commissioner BBMP. And make an NEFT payment of Rs 31K to Karnataka State Building and Other Construction Workers' account.

In addition I paid the remaining bribe to the guy (Total bribe Rs 30K)

So in total I have spent Rs 2.18 Lakhs for getting BBMP Plan approval.

Plan approval is not needed if we are going for a mortgage loan. But interest rates on mortgage loans are costlier (3 to 4% more). It will cost more than the amount spent on the plan sanction so I thought its better to go this way and get a housing loan.

I will be getting the plan sanction in next few days. Will update you guys on what happens next.


18th April 2021

Finally I have found some time to update this diary I started 4 months ago.

We did bhoomi pooja and started construction from 05th Feb 2021. I have had good and bad experiences and I will list them all in points.

1. Housing Loan: As mentioned earlier, we have agreed for a total construction cost (Material + Labour) of Rs 38 Lakhs for a built up area of 22 chadras (@ 1.75 lakhs per chadra) Adding up BBMP approval fees and other ancillary costs (Water, electricity, Solar, house warming ceremony) we are expecting the total cost to go up till Rs 42 to 43 lakhs.

We have savings of Rs 15 lakhs so I need a loan of Rs 28 lakhs. I have had a terrific experience here.

Union Bank experience

Union Bank offers the lowest rate of interest and bank charges associated with the loan is always less in PSU banks so I chose to apply for a loan at Union Bank. This was a big mistake.

I spoke directly to the branch manager about the process who seemed eager to take me on board. Gave him all the documents. He kept asking me for more and more documents. Some of which did not make any sense to me. For eg. I have a total work experience of 4 years and he wanted to know when I completed my studies, when I started working and wanted payslips of all the companies I worked in. He was checking if the numbers calculated in payslip is correct. I mean I work in an MNC which is the number 1 company in entire world in Insurance sector. I had submitted HR letter digitally signed by AVP HR and he still doesnt believe the documents. I had got bonus based on my performance and he was questioning me why they paid me bonus. Dude it's my earnings! I have struggled for it. It's irritating to explain such things.

Anyway, the manager took 43 days to process my request and still the loan was not sanctioned. Everyday he would give me the same old reply "it will happen soon"

I got so pissed off at the unprofessional behaviour from the manager that I got into a fight and told him to cancel the loan immediately. I had spent around 11k for the entire process.

1. Background verification: Rs 1230
2. Lawyer Fees: Rs 5000
3. Valuation certificate: Rs 4000

I had to create an account in Union Bank for the loan. And after creation branch manager directly asked me to keep around 1 to 2 lakh money in the bank account (to promote the branch's deposits ofcourse) I strictly told him that I use HDFC bank and I wont be keeping more money than is necessary in Union Bank account. He got pissed off at this. But how can a manager force me to keep money? There were so many other problems but I dont want to make this all about home loan. Absolutely horrible experience. Never go to a PSU bank as they are least bothered about their customers. I wasted 43 to 45 days waiting for the loan.

HDFC bank experience
After this horrible experience I decided to go for HDFC bank as I have been using HDFC bank for 8 years now. I applied for the loan online on a friday night. The portal asks for all documents to be scanned and submitted online. And then you need to pay processing fees of Rs 5900 (including GST) (It is 3900 for renovation or extension loans) It takes around 20 mins to complete this entire process online.

After this you will be assigned an RM who will contact you for any further clarifications/ documents. Everything will be taken online though. And the following Thursday, my loan was approved in principle.

RM will tell you that the loan will be approved within 11 workings days, but my loan was approved within 6 days. So what HDFC does, is that it checks all the documents online, does an income check and based on your eligibility HDFC gives you an approval in principle.

After this you will be assigned a lawyer to whom you need to show all original documents and if the lawyer's opinion is good, the entire sanction process is over. In this stage, if the lawyer's opinion about the property is not as expected, the bank has every right to reject your loan.

After the lawyer's opinion, you need to hand over the original documents to the bank sign the agreement and your loan amount will be disbursed in stages.

I am waiting for the agreement letter to be printed on e-stamp papers. The entire process has gone on smoothly at HDFC bank. Address verification, job verification was done so quickly that I was surprised. I have spent Rs 13400 so far at HDFC bank.

1. Processing Fees Rs 5900
2. Lawyer Fees: Rs 2500
3. Architect's certificate: Rs 5000

2. Constuction work: Meanwhile we had already started the construction work. My friend told me that he would need only around 10 lakhs for the first 3 months so we decided to start the construction even before the loan was sanctioned.

This is stupid. Please don't make this mistake. Get your loan sanctioned first.

We have given both material and labour contract as we dont have the time to go buying the materials. But you need to be extra careful in this type of contracts.

Initially the contractor had bought all high quality materials.

Cement
Initially the contractor has bought 53 grade Zuari OPC cement. I checked the manufactured date and it was of the same month. So it was all good. But after 2 weeks he changed to 43 grade cement thinking I wont notice. 43 grade should be used for plastering work. Always use only 53 grade in construction. Brand depends on your budget but do not compromised on the grade of cement.

I told the contractor to change the grade immediately. A neighbor is also constructing their house and I saw that they were using Coromandel. I decided to give it a try for the pillar of first floor and it was quite good. So we are using Coromandel 53 grade cement now.

So decide on the brand of cement based on your budget, but make sure its 53 grade for construction and 43 for plastering. And always check the manufacture date on the cement which is written in WW MM YYYY format (week month year eg: W05, M02, Y2021 means 5th week of the year. February month of 2021)

TMT Bars
We are using Kamadhenu TMT Bars which are of moderate quality. This was suggested by the contractor (ofcourse to save money)

Tata steel are the best bars for construction. But I decided to compromise here considering the steep increase in steel prices after lockdown and Union budget.

I found Kamadhenu to be of decent quality. It rusts sooner if even a little bit of water falls on the bar which is normal because of the oxidation process. But I found these bars to rust sooner than average time. So better go for Tata steel. If not, go for Jindal or Indus. But always keep in mind the measurement of the bars.

For pillars, always use 16mm Ferrous 550 TMT bars. For pillars in ground floor the contractor used 8 bars of 16 mm placed in 4x4 manner. But in the first floor contractor used 4 bars of 16 MM and 4 bars of 12 MM to save on cost.

His explanation "as we go higher we can use lesser size in between and there wont be any issue" I got pissed at this and scolded him. Told him to use 16MM for all the floors. Do not compromise here.

Jelly and M sand
Quality of jelly has always been good so I have no complaints here. However, the quality of M sand has been changing with every load.

The first few load of M sand was very good. But the contractor got into an argument with the M sand seller and decided to buy from a different party. And this was a mistake. The next load looked like it was waste sand that you get while drilling a borewell. This affected our lintel construction. I told him the contractor that I dont care about his fights but I need better quality of M sand.

He sorted his issues and went back to the first seller for the mold.

Bricks
We are using hollow blocks instead of Red bricks keeping cost in mind. 6 inches for outer walls and 4 inches for inner walls. We are getting hollow blocks from a mutual friend who was our college classmate.

The quality is top notch. Only once, in one load he had sent non curated hollow blocks. The contractor himself sent it back. Again the two had a fight. But they soon resolved the issues. The next load was better.

Make sure the blocks are well curated. The brick should be strong and should not break if you let it fall from your chest height.

Workers
This has been a real headache. As they get money from the contractor, they mostly listen only to him and even help him in scheming to save cost. Few are lazy. One guy was so lazy that he did not use vibrator for 2 of the pillars in ground floor. Needless to say, those 2 pillars did not come out well.

I have scolded them a lot for mixing the cement in wrong ratio. They add too much of m sand to save cement. And considering the colour of M sand being similar to cement it is a bit tricky to keep a track of the ratio.

We will be completing mold of second floor this wednesday (21st April) I have had to scold the workers few times to make them work properly. But no one said constructing a house would be easy right? Its a challenge. If we aren't smart, we will get cheated at every point.

I would say labour contract is best if you have time and know where to buy materials. So far, except for few hiccups, the journey has been good.

But I still feel middle class life is pitiful. We haven't spent money on anything else in last 3 months. We don't eat outside. We haven't bought any new clothes. Not even for festival (Ugadi). I am trying to save up every penny I can. While my friends are splurging money on new gadgets, travel, booze and what not, I am wearing the same 2 year old worn out sweatpants as I'm typing all this.

In addition to agreed contract price, I am spending money on water every month. We have stopped Cauvery water. Im paying Rs 600 per tanker of water. Rs 800 per month for temporary electric meter charges. It costed me Rs 20,000 to get temporary electric meter.

As on date, I have spent 12,95,000 as below.

1. Contractor Rs 10,00,000 (28 lakhs left to be paid)
2. BBMP Plan approval Rs 2,18,000
3. Misc 77,000 (Bank Fees twice. Legal opinion twice. Valuation and architect's certificate twice. EC for 30 years, Certified Copy of Property Title deed, Rent, Water, electricity, temporary electricity meter, food for labourers for first floor mold, tea, coffee, etc)

Someone has rightly said "Maduve madi nodu. Mane katti nodu" It is a real challenge to build a house.

I hope everything goes well and as planned.

There are so many things to share. I will try to update this post on a regular basis from here on.


Thanks and cheers!
Vinay

[Kiran Kumar K]

Namaskaram thanks for expressing u r experience & good luck.

[akarthik]

All the best, since you are constructing a house on top of the existing one, do you still need to pay betterment tax for the site? Point no 4

[badari]

Hello,

Thanks for expressing the your experience. Keep posted so it will help others.

Thanks
Joshi

[gautham]

thanks Vinay23aug. Very useful. I agree with you. Its a bit too much. Please keep updating this thread.
Couple of questions.
1. Can they randomly quote any value for approval or it depends plot area, built-up area, plot cost etc?
2. Did you mean to say approval is not required if we are *not* going for home loan?.

[envsiddhu0312]

Thank you for sharing your experience. Really its very tough, what is the total construction area?

[srinihome]

thanks Vinay23aug. Very useful. I agree with you. Its a bit too much. Please keep updating this thread.
Couple of questions.
1. Can they randomly quote any value for approval or it depends plot area, built-up area, plot cost etc?
2. Did you mean to say approval is not required if we are *not* going for home loan?.

1. Approval fees from the Gov are based on Guidance Value of the site, No of floors being constructed, Type of Drain, Road width, etc.. You would get the receipts for these and the payments are done online or through DD
Bribe depends on how your approach, usually the middlemen would charge their fees and the unofficial charges.
2. Approval is required from BBMP if it has BBMP Khata without which BESCOM and BWSSB connection is not possible.

[gautham]

Thank you sir