Home Loans and other expenditures- Addition to the sale value of the properties.

The values quoted hereunder are approximate and for practical study.

Salaried personal and mid level businessmen usually opt for home loans to avail loans at competitive interest rates and also to save tax.

The general bank condition is that the minimum investment from the buyers must be 20% to 25% and the remaining sale value will be financed by the financial institutions.

The home loan interest rates vary from one Bank to the other only 0.10% to 1% P.A.

The situation is ripe now to avail it at highly competitive rates and also look for a decent accommodation or apartment or site or house for the purchase.

It is strongly suggested that the EMI or monthly repayment of home loans must not EXCEED 20% TO 25% of the NET INCOME OR SALARY. If the take home salary, after all the cuts and deductions is around Rs.50,000/- per month, then the EMI or Home loan repayment must not exceed Rs.10,000 to Rs.12,500/-.

The property buyer must also additionally buy or insure himself for the entire home loan extended for the full term. It is also suggested that the property buyer must cover himself for all kinds of risks with the insurance company through a TERM POLICY, the premium payable, quarterly or half yearly, so that the burden of payment of premium is not felt.

It is noticed that in the awe of acquiring a property, the proposed buyer, borrows amounts at exorbitant interest rates (Personal Loan from the banks) from friends and relatives, endangering their social status, apart from paying abnormal interests, to make the initial investment of 20% to 25% of the sale consideration. It is advised, not to borrow at exorbitant rates as personal loan.

The most important factor, after the purchase of the property is the INTERIORS. The google throws up 100s of designers, architects and companies with wide range of offers. Beware, all of them are in the market to make profits. All the fake/bogus discounts and offers are just an eye wash to trap the potential customers. The budget must be within the reach with basic requirements, which must be comfortable and easy to maintain. The interiors or furniture budget must not exceed 3% to 6%.

The buyers must take into account the total (Property Value) sale consideration, GST, Power and Water deposit and charges, club house charges, Car parking charges ( if any) insurance premium, loan processing charges, interiors expenditure, registration charges (stamp duty, cess and Registration Fee) and Katha Transfer fee and expenditure.

In fact, the GST alone is a major addition, Power and Water (BESCOM & BWSSB- Bangalore) deposits and registration fees are almost fixed, works out around 18%, 3%, 3% and 5.60% respectively. In total, 29.60% or 30% is the standard or static addition, apart from other expenditure to the quoted price of the property.

But, in case of individual sites or houses or villas, GST of 18% is not applicable, but, the BESCOM & BWSSB deposits and related expenditures must be met. All other expenditure remain the same.

Standard fixed expenditure of 30% + 6% interiors + 4% (insurance-loan processing-katha-Misc) thus 40% additional expenditure adds up to the sale value of the apartment.

Therefore, prepare a good budget, within your reach and means, buy the property, become the proud owner and ENJOY it.