Most people consider buying their home as their life’s most significant financial goal. It’s not only meant to serve as a roof but also as financial security for the family. Home buying doesn’t come cheap and can cost anything between 10-15 times of your annual income – if not more!
The norm in India is to go for a home loan to tide over this important purchase. The amount of loan taken will depend on a number of factors, including your repayment capacity. You can stretch out repayment of the loan for a period of up to 30 years. Here are some pointers to help you figure out how much money you will actually need to buy a villa home:
Depending on the home loan amount, the down payment can be anywhere between 10-25%. For example, an Rs.30 lakh property would attract a 10% down payment, but an Rs.1 crore property would attract a 25% down payment. This means you would have to pay around Rs.25 lakhs while the bank would furnish the remaining amount.
Home loan interest rates are at an all-time low, but they still account for the biggest expense in the home buying process. The interest rate charged is dependent on factors such as the borrower’s age, gender, property value, repayment capacity, credit score, LTV (loan-to-value) ratio, etc. If the buyer is 30 years old, has a credit score of 800 and wants to buy a villa worth Rs.1 crore, then his loan would come down to Rs.75 lakh and his total repayment amount along with interest would come down to Rs.1.8 crores at an interest rate of 7% for 30 years!
Other associated charges include loan processing fees, property valuation fees and documentation charges which all come down to around 1% of the loan amount. Some banks also charge a Memorandum of Deposit of the Title Deed (MODT) fee ranging from 0.1-0.3% of the loan amount.
Stamp Duty and registration fee
Stamp duty charges vary with different states and could be anywhere between 3-6% of property value. Add to that registration fee at 1% and you could end up paying an additional Rs.7 lakhs on an Rs.1 crore property.
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