Low on cost; high on quality

Building houses can be a costly affair, especially with raw material costs climbing steadily.K R Srikanta Prasad looks at how to build a lasting and comfortable house, and make it cost – effective.
mix and match While trying to be cost-effective, the combination of materials should be planned well. photo by the authorAs we are aware, construction costs are sky-rocketing due to various reasons. It could be due to scarcity, increasing demand, higher production cost and steep transportation costs. Under these conditions, home builders might be happy and more eager to use cost-effective material.

But one should make sure that the cost-effective material they intend to use is of good quality and durable. It should facilitate easy maintenance and not be a post-construction white elephant!

Here are a few general guidelines to aid in analysing how a particular material can be termed cost-effective.

A locally available material is always cost-effective as the transportation costs are minimum and we do not spend on middlemen. Your plans should have a good architectural layout and detail. There should be a proper combination of the materials chosen.

Modular and standardised units manufactured in factories on a large scale cost less as the production costs are low. The materials that can optimise on labour costs during construction and installation are a must as the labour costs are too high. Choose materials that do not have a high processing cost. Material that is recycled is generally not expensive unless it involves more labour to process and install.

While it is important to identify materials that are clearly less expensive, it is relevant to understand that cost-efficiency for a particular material depends on the situation as well as how it is used in a structure.

Also, if one has to achieve substantial savings while building, one has to ensure that cost-effective material is used in every part of the construction, from the foundation to the finishing, because all of it contributes to the overall cost.

We can make a list of different important materials that go into construction and save costs based on the merit of their content and the ease with which they can be implemented.

Foundation

A dump made out of boulders, brick bats, quarry waste and cement is a good alternative to conventional-size stone masonry. Even concrete waste can be recycled for this purpose.

Walls

Regular table moulded bricks used in rat trap masonry require less mortar joint and bricks; hence lower costs. Cement concrete blocks are cost-effective compared to conventional brickwork.

We have terracotta hollow blocks with different designs that are exposable in masonry. This is a good option provided they are not plastered and painted.

Conventional-sized stones that are not elaborately dressed in combination with bricks in composite masonry can work out really well.

While the stone face can be exposed, the brick face can be plastered and painted. Light-weight cement-based blocks made out of cinder contribute to economy in framed and high-rise structures.

Where suitable quality soil is available, soil stabilised blocks made in-situ are a welcome option. They are made using soil, quarry dust and cement and can be used for load-bearing walls.

They have a finish and colour that can be left without plastering. This material is not only cost-effective but also eco-friendly.

Precast concrete wall units that can be assembled on site are an option in large scale constructions. They save time and thus cost. Bamboo is renewable as well as cost cutting.

Roofs

Composite roofs made out of filler slabs can cut concrete and steel costs. Terracotta blocks that are designed for roofs can be adopted. Precast beams and roof slab elements in RCC are widely used under suitable conditions. Also, there are materials like ferrocement and fibre reinforced concretes that can be explored. These units can be thin and can take different forms. With practically adaptable design options, one can arrive at cost-effective roofing elements.

Wood

If one can recycle old wood for doors and windows, it saves a lot of money. Choosing aluminium and steel options are much cheaper than wood. Door frames made of concrete are available which are durable and involve less maintenance. In some situations, less expensive wood used for packing can be reused for panelling, railing or flooring.
Hardwood that is enamel painted is less expensive compared to polished teakwood.

Flooring

Locally available natural stones that are pre-polished are a good option. Other economical options are cement-based tiles, ceramic tiles and clay tiles. In-situ mosaics and cement floorings are also possible. Thin granite tiles made out of wasted granite works out really economical both in material and labour costs.

Others

There are so many other places where costs can be cut. Non-modular switches in electrical work, CPVC pipes and fittings in plumbing, white fittings in sanitary work, distemper in painting, kadapa slabs for storage shelves etc are options to name a few.
Thus, by a thorough market survey and an intelligent and discriminating choice and combination of material, it is possible to make a project cost-efficient. Cost-effectiveness need not always mean cheap. Good quality is a must.

Often cost-efficient material is also eco-friendly. Conversely, one that is eco-friendly can be cost effective. It costs little to be natural! The “add-ons” are what add to the cost!

Source: Deccan Herald

Before you switch your home loan

Home buyers had been facing a scenario of high interest rates which was in existence for a very long period of time. However, during the current year the scenario looks different with the Reserve Bank of India lowering key policy rates. It is widely expected that the central bank would continue to lower rates in its forthcoming announcement. Many banks, in response to the rate cuts, went ahead and announced lower interest rates on home loans, with State Bank of India taking the lead. Moreover prepayment charges on loans have also been abolished in line with RBI guidelines. With these changes happening, how can anyone not be tempted to switch to a bank with lower rate of interest?

Before you decide to take the plunge, halt, and evaluate. One should take into account key considerations before switching loans.

Interest rate variation

Check the existing rate of interest and the interest that you have been offered now. If the new lender’s rate is at least 1-1.5 per cent cheaper then it makes sense to switch.

For example, on an existing loan of Rs 75 lakh charged at 12 per cent for 20 years, your current EMI is Rs 82,582. If there is a reduction by 0.5 per cent, your EMI will change to Rs 79,982, a difference of Rs 2,600. However, if the interest rate comes down to 10.5 per cent, the savings would be substantial with your new EMI at Rs 74,879, which means savings of Rs 7,703.

Remaining tenure

It is a known fact that during the initial years of a home loan, major component of the EMI outgo is towards repayment of the interest component and a small part goes towards repayment of the principal amount, however this changes as the years increase.

For the loan of Rs 75 lakh at 12 per cent cited in the previous example, out of the EMI of Rs 82,582, the interest portion stands at Rs 75,000 and only Rs 7,581 goes towards principal reduction for the first month. So to get a better deal, it pays to switch during the initial years of the loan.

If you are servicing your loan at a very high rate of interest like 14-15 per cent (with interest rates continually being hiked), a switch towards the latter half of the tenure may still be beneficial, but you need to figure out how much interest remains to be paid to arrive at an accurate picture.

A good online loan calculator would show that the savings from switching is lowest when the remainder of the tenure is five years or less. If a switch is carried out towards the later part of the tenure, a significant proportion of the interest component would already have been repaid and the benefit from switching the loan is lost.

Processing fees for new loans

A new lender would typically charge a processing fee ranging from 0.25-1 per cent of the outstanding amount. The country’s largest lender, SBI, has currently capped the processing fee to maximum of Rs 10,000. Depending on the amount of loan outstanding, the processing fee will be a determining factor for deciding whether to switch loans or not. The processing fee should be lower than the cost saving that you would make on the interest differential.

However, here you have a catch-22 situation, as the amount of loan will be higher during the initial years of the loan and that is when the switch is more beneficial. But on a higher amount, the processing fee would also be higher. Further, some banks also charge a legal fee for property verification and such added extra costs. This also needs to be figured in the net savings available.

It is not possible to decide whether to switch or not based on a single cost. We will have to work a combination of all costs and decide prudently.

One can also try renegotiating the loan with the existing lender at lower rates to avoid processing fee. No lender would like to lose a borrower with good credit history. Hence this option could be explored before actually opting for loan switch from a different lender with its accompanying hassles.

— The author is CEO, BankBazaar.com

Source: The Indian Express