Raise the roof – Getting the money for your home

Raise the roof – Getting the money for your home

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Cobbling together the finances required for buying your dream home is a challenge. Here’s how you can go about it.

Buying your own home is an exciting, challenging process. However, the challenges increase manifold if you are unaware of the costs involved not just in buying the house, but also in getting a home loan. There are different stages at which you need to pay money. We explain how you can plan your home purchase:

* Break the bank. You have been saving diligently for years, and now is the time to put your savings to good use. You will need your savings to pay the booking amount for the house (normally Rs 50,000 or higher) and the first instalment on the house. Paying a booking amount to the seller opens the deal between you and them, and neither you nor them are expected to deal with other parties from this point. So if you have found a house you like, you might want to lock the deal right away.

* Estimate how much loan money you need. Now that you have selected a house, you are aware of how much it costs. So now you must make your calculations about how much money you need to borrow as a loan, over and above using your savings. You can use a home loan eligibility and home loan EMI calculator to figure out the loan money and your monthly expenses hereon. Knowing your loan eligibility also streamlines the house hunt process so that you can find homes within budget. Also find out the current home loan rates across housing finance companies to pick the lowest one.

* Estimate the pre-loan money you need. Most first time buyers believe that they can get the loan money and pay it to the seller. But you need to pay a fair bit of money from your own pocket before you get the loan. Apart from the booking amount, you also need to pay the first instalment on the house (20% of the house’s price or more) before you pay the stamp duty and registration costs of the sale agreement. Once you submit the registered sale agreement to the housing finance company, the application is approved and you get the loan money.

* Count the charges to pay the housing finance company. The housing finance company charges fees for processing your application, as also legal evaluation fees because they will study your application, the property you wish to buy, and its paperwork. You must also pay stamp duty on the loan agreement, and a pre-EMI cheque counting the days from the date of loan disbursal to the date of the first EMI.

* You need to pay money to the building, too. Once you have paid the seller/developer, you now get possession of the house. You must now pay transfer charges to the building society or developer, as well as membership fee to the building. If you are thinking of renovating the flat before moving in, the building may take a refundable security deposit from you prior to commencing the work.