Buying a House in India: A Comprehensive Guide for Homebuyers

I bought my first home in Bangalore sometime last year, although I thought I knew what buying a house would entail, there are still a few things that I was not expecting. I wish people had told me all the bad with the good, no one gives you all the details. Here are things to consider before buying a house in India that I wish people had told me:

1. Stamp Duty & Registration Charges When Buying Houses in India

When I budgeted for a home, I kept aside money for the down payment and money and calculated how much money I would need from the lender. What I did not account for were the Stamp Duty and Registration charges. This came as a shock to me as I did not realise how expensive these charges were. Stamp Duty in Bangalore is 5% of the total market value of the property (for properties above Rs.35 lakh) and to add to that, Registration Charges are another 1%, so for a property of 50 lakhs, these charges alone are 3 lakhs! Now, I was pretty shocked to find out that I would have to come up with a few more lacks to cover these expenses at the last moment. 

And, so that you don’t have to go through the hassle of looking at stamp duty prices in other cities, here is the list – 

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• Maharashtra: stamp duty on housing is down from 5% to 2% till December 31st 2020. Registration is an additional 1%
• Delhi: stamp duty is 6% and registration is an additional 1% (for men). For women, it is 4% and 1%
• Chennai: stamp duty is 7% and registration is an additional 1%.
• Hyderabad: stamp duty is 7% and registration is an additional 1%.

2. Hidden Charges When Buying a House

While thinking of things to consider before buying a house in India, most people focus on the broad picture, and they frequently overlook the details. This means that most people only look at the whole cost of the property, but there are other things to keep in mind before buying a house that adds up to the total cost of your Flat buy. Continue reading to learn about the additional costs associated with purchasing a home in India:

Stamp Duty and Registration Charges

The home buyer must pay a set sum to the government as stamp duty and registration fees while registering the selling deed. The stamp duty is 5% of the property's guideline value (market value), plus a 1% registration fee. The registration price varies by state, and the property guidance value varies by location.

Memorandum Deposit of Title Deed

When purchasing a home with a down payment, you must pay a title deed memorandum deposit. In this case, you must pay the bank a memorandum deposit as proof that you have title deed paperwork on file with the lender. The memorandum deposit charges range from 0.1% to 0.5% of the home loan amount. This is one of the most important things to consider before buying a house.

Down Payment Fund

The most money you can borrow from a bank is 75-85% of the property's worth, with the remainder coming from your own funds.

3. Budget: How Much Does It Cost to Buy a House in India?

Given below is a detailed chart that gives a clear idea of the real estate market in particular locations and The ideal amount of money required to invest in real estate 

4. Furniture Expenses While Purchasing a House in India

 I was buying a newly constructed home. So, obviously, the house came without s scratch of furniture, and I had no idea how expensive it was going to be to furnish the whole place. When I was applying for a loan, the loan officer told me to add another couple of lakhs to the loan amount I was requesting. I had no idea what he was trying to get at, I told him I only needed money for the house, then he explained that I needed to get furniture done and the best time to get it was before you live in it, and that the cost of furniture is a couple of lakhs.

So, I thought all I needed for a Rs. 50,00,000 lakh house was fifty lakhs. I was wrong, I needed almost 7 lakhs more i.e. including furniture and registration expenses. These are hidden charges when buying a house that you don't expect. This was much more than the budget that I had planned for, but now it was too late for me to back out, I had to go ahead with this. Keep in mind the cost of the furniture will vary greatly, so get quotes from a few people. If you need good quality furniture, try NoBroker home interiors, they offer you many options at very reasonable rates. 

5. Falling for Superficial Things When Getting a House in India

When you go around looking for homes, you’ll notice that the people selling the house make even the simplest amenities and features seem really critical for you. I visited large gated communities with plenty of amenities to offer, like gyms, pools, basketball courts and more. It looked so glamourous and I could see myself lounging by the pool, the house was more expensive than I budget for, but it had a view of the swimming pool! And I could swim when I wanted to and go to the gym! I was so excited about this. 

I called a friend to brag about this great find, and she instantly burst my bubble and I am so grateful to her. She too lives in one of these opulent gated communities and she told me that she has had the chance to use the gym once and the pool twice, even though she has lived there for over 3 years. Unless you have the TIME and the motivation, you are rarely going to use these facilities. She was right, most of us work 8-10 hours a day during the week, and at the weekends we catch up on housework and chores, there is hardly any time left to enjoy any of those facilities that I will be paying so much for. Hence, I settled on a bigger, cheaper apartment with only critical amenities and facilities. 

6. Property Insurance

In the event of an unanticipated circumstance, the property insurance plan is a programme in which the insurer will settle the outstanding Home Loan amount with the lender or bank. Some extensive home loan insurance plans cover the borrower, the home, and all of its belongings. The payment of a premium for home loan insurance qualifies for tax benefits.

Lenders dislike it when their loans become bad debts. They'd want to keep their money safe. Home loan insurance is required by lenders to prevent a home loan from becoming a very bad debt. The lender will lose a significant amount of money if the borrower dies, especially if the borrower was the family's only source of income.

House loan insurance, as we all know, protects the outstanding home loan amount if the borrower defaults on his or her obligations. A circumstance like this could emerge as a result of the borrower's employment insecurity or death. You can choose between a basic plan and one with additional features and riders for more comprehensive coverage. Home loan insurance is vital for borrowers since it assures that the borrowers' dependents do not become homeless in their absence or during a crisis.

The following are the several options for insuring your house loan:

• Term insurance is obtained to cover all of your liabilities and debts.
• Separate home insurance - This policy solely covers your outstanding home loan if you are unable to pay it off.

(Keep in mind your loan eligibility highly depends on your CIBIL Score).

7. Importance of Getting a Home Inspector While Buying your own place In India

 I thought a home inspector was a very foreign concept, I didn’t know that India even had home inspectors, so obviously, I didn’t bother to get one. When the builder told me my flat was ready, I took the keys from him, walked around, flicked a few light switches, opened a few taps, and was happy to move in.

My neighbour, on the other hand, called in a home inspector before he accepted the handover from the builder. The home inspector comes with a long list of things to be checked in the house. He checks the walls, floors, pipes, doors, tiles, sanitary wear, fittings, and things that I would never dream of checking. He then made a report on what is ok, what needs to be fixed and what needs to be replaced. The builder was given the list and only once he brought things up to code, was the handover accepted. I wish that someone had told me about this, there is a lot of money that I could have saved in the long run by getting things checked and replaced before I moved in.

There are a lot of smaller things I wish people would have told me, but these were the ones I really needed to know before I bought a new home. Keep in mind, it’s always better to ask for help than to try to figure out everything on your own. Get legal assistance and loan assistance as soon as you find a home, you’re interested in.

The legal team will help you with all the complex documentation, and the home loan team will tell you just how much you need, how much you can spend on home and furnishing and how much you will need for registration. They will help you plan your finances better; you can also adjust yours wants to live within your means. All the best on your big home purchase! If you’re still looking for that perfect home, then click below. You’ll find thousands of options, and all of them come with ZERO brokerage.

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