Have you been looking at the ads flashing the signs ‘Flats for sale in Mumbai’ and considering buying a home or investing in a township? Are you worried about the monetary implications of such a big and long commitment? Are you unsure of how the home financing schemes in India can help you? Then, you are at the right place. Here, we will discuss all the possible charges and major monetary transactions that take place when purchasing a flat.
When Should You Think of Buying a Home?
If the inflow of money is a considerable amount, and you can afford to keep a certain amount aside, you are in the perfect position to buy a new home. You should not decide on the budget of your investment based on the properties but on the amount you can comfortably save on a monthly basis.
Monetary Considerations When Buying a New Home
Following points should factor into your total cost:
1. Booking Amount: This amount has to be given upfront, even before the loan application process can be initiated.
2. Down Payment: A bulk amount will have to be given at the time of purchase of the flat.
3. Monthly Installment: This will include the time when you are paying the installment at 0% interest (until the building is being constructed), and the installment you’ll be paying with an interest percentage (once the building is complete).
4. Registration Charges: These charges are either shared between you and the builder, or are factored into the cost of the flat. It also includes stamp duty. Either way, it is necessary to pay this amount. Also, consider the time and effort taken during the registration process. Ensure that your builder will help you with this process.
5. Loan Approval Percentage: This is an important factor. Banks will look at your financial record and your tax returns and decide your eligibility for a loan. If you are eligible for a loan, the loan will be passed only on a certain amount. You have to be mentally and financially prepared that the bank might not sanction your entire loan amount.
Case Study
Let’s assume, the property costs Rs. 30 lakh applied for a loan for Rs. 30 lakh and the bank approves only 80% of the loan amount.
• Flat Cost: Rs. 30 lakh
• Loan Application: Rs. 30 lakh
• Down Payment: Rs. 9 lakhs (Approximately 30% of the loan amount)
• Loan Approval: 80% of 30 lakhs, i.e. Rs. 24 lakhs
What this means is that you will have to provide Rs. 6 lakhs to your builder. This amount may or may not be taken in installments.
• Monthly Installment:
•A fixed interest-free amount will be deducted for 14 months*
When Should You Think of Buying a Home?
If the inflow of money is a considerable amount, and you can afford to keep a certain amount aside, you are in the perfect position to buy a new home. You should not decide on the budget of your investment based on the properties but on the amount you can comfortably save on a monthly basis.
Monetary Considerations When Buying a New Home
Following points should factor into your total cost:
1. Booking Amount: This amount has to be given upfront, even before the loan application process can be initiated.
2. Down Payment: A bulk amount will have to be given at the time of purchase of the flat.
3. Monthly Installment: This will include the time when you are paying the installment at 0% interest (until the building is being constructed), and the installment you’ll be paying with an interest percentage (once the building is complete).
4. Registration Charges: These charges are either shared between you and the builder, or are factored into the cost of the flat. It also includes stamp duty. Either way, it is necessary to pay this amount. Also, consider the time and effort taken during the registration process. Ensure that your builder will help you with this process.
5. Loan Approval Percentage: This is an important factor. Banks will look at your financial record and your tax returns and decide your eligibility for a loan. If you are eligible for a loan, the loan will be passed only on a certain amount. You have to be mentally and financially prepared that the bank might not sanction your entire loan amount.
Case Study
Let’s assume, the property costs Rs. 30 lakh applied for a loan for Rs. 30 lakh and the bank approves only 80% of the loan amount.
• Flat Cost: Rs. 30 lakh
• Loan Application: Rs. 30 lakh
• Down Payment: Rs. 9 lakhs (Approximately 30% of the loan amount)
• Loan Approval: 80% of 30 lakhs, i.e. Rs. 24 lakhs
What this means is that you will have to provide Rs. 6 lakhs to your builder. This amount may or may not be taken in installments.
• Monthly Installment:
•A fixed interest-free amount will be deducted for 14 months*
•A fixed amount based on the interest rate will be deducted for 106 months**
*This is assuming the building takes 14 months to be constructed
**You have taken a 10 year (120 months) loan
These figures and calculations are bound to change depending on the individual, bank, construction company, city, and many other factors. It is always a good idea to speak to your bank and construction company about their rules and regulations. This will help you find the best fit for you and avoid hidden costs.
To get more information about the financing schemes, to schedule a meeting feel free to call on (020) 41012200 .
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