Step-by-Step Guide to Buying a New Flat from a Builder: A Detailed Financial Breakdown

Buying a new flat in Mumbai is a significant investment that involves various financial considerations. Here’s a comprehensive guide to help you navigate the process, including detailed calculations for each financial aspect:

Here’s a detailed breakdown of the financial aspects of buying a new home in Mumbai, including the market value, down payment, loan details, pending payments to the builder, and additional costs after obtaining the fit-out, no due, and OC certification:

Property Purchase Details

1. Market Value of the Flat:
   • ₹26,34,000
2. Stamp Duty and Registration Fees (7% for flats under ₹30 lakh):
   • Stamp Duty and Registration Fees=0.07×2,634,000=1,84,380
3. Total Down Payment:
   • ₹310,000 + ₹335,000 + ₹89,000 + ₹150,000
   • Total Down Payment=310,000+335,000+89,000+150,000=8,84,000
4. Loan Details:
   • Loan Amount Sanctioned: ₹17,94,000
   • Loan Amount Disbursed: ₹16,36,110
   • Remaining Loan Principal + Interest (ROI: 8.90%, EMI: ₹15,457 for the first year):
     • Principal: ₹1,636,110
     • Interest: ₹147,981.80
     • Total Loan Amount with Interest=1,636,110+147,981.80=1,784,091.80
5. Other Loan-Related Charges:
   • Loan Disbursed Charges: ₹7,425
   • Loan Admin Fees: ₹650
   • Insurance Cover for Loan: ₹44,150
6. Amount Paid to Builder At start of loan sanctioned (Suppose loan closed in 2 years and 80% work is completed):
   • ₹15,83,885
7. Pending to Builder (Suppose loan closed in 2 years and 80% work is completed)::
   • ₹1,66,115
8. Total Amount Paid to Builder: ₹ 8,84,000 + 15,83,885 + 1,66,115 = ₹26,34,000
9. Total Amount after paying to builder + Stamp Duty and Registration Fees + Loan Interest = ₹ 26,34,000 + 1,84,380 + 147,981.80 = ₹ 29,66,361

Payment to Builder and Additional Costs

• Pending to Builder: ₹166,115
  • This amount needs to be paid to obtain the fit-out, no due, and OC certification.

Costs After Fit-Out, No Due, and OC Certification

1. Maintenance Charges:
   • Maintenance Charges=2,500+(18%×2,500)=2,500+450=2,950 per month
2. Electricity Bill:
   • ₹1,500 per month (Note: Immediately transfer the electricity meter in your name after fit-out by contacting your builder)
3. Society Formation Charges:
   • ₹16,600 (One time fees paid to builder)

Summary of Financial Obligations

• Market Value of the Flat: ₹2,634,000
• Stamp Duty and Registration Fees: ₹184,380
• Total Down Payment: ₹884,000
• Loan Amount Sanctioned: ₹1,794,000
• Loan Amount Disbursed: ₹1,636,110
• Loan Principal + Interest: ₹1,784,091.80
• Other Loan-Related Charges: ₹52,225 (Loan Disbursed Charges + Loan Admin Fees + Insurance Cover)
• Amount Paid to Builder At start of Loan : ₹1,583,885
• Pending to Builder: ₹166,115

Additional Costs Post Fit-Out and OC Certification

• Maintenance Charges: ₹2,950 Per month
• Electricity Bill: ₹1,500 per month
• Society Formation Charges: ₹16,600 (one time paid to builder)

Financial Summary

• Market Value of the Flat: ₹2,634,000
• Stamp Duty and Registration Fees: ₹184,380
• Total Down Payment: ₹884,000
• Loan Amount Sanctioned: ₹1,794,000
• Loan Amount Disbursed: ₹1,636,110
• Loan Principal + Interest: ₹1,784,091.80
• Other Loan-Related Charges: ₹52,225
• Amount Paid to Builder At start of loan: ₹1,583,885
• Pending to Builder: ₹166,115
• Maintenance Charges: ₹2,950
• Electricity Bill: ₹1,500 per month
• Society Formation Charges: ₹16,600 (One Time)

Renting Out Your Flat: Income and Expenses

• Monthly Rent: ₹7,000
• Annual Rent: Annual Rent=7,000×12=₹84,000
• Security Deposit paid to owner: ₹30,000
• Brokerage Fees (First Year): ₹7,000 (paid by owner), ₹7,000 (paid by tenant)
• Brokerage Fees (Second Year): ₹3,850 (owner’s share), ₹3,850 (tenant’s share)
• Rent Increase (10% from second year):
  • New Monthly Rent: ₹7,700New Annual Rent:
  New Annual Rent=7,700×12=₹92,400
• Annual Maintenance: Annual Maintenance=2,950×12=₹35,400

Income and Expenses Summary

• First Year:
  • Income: ₹84,000 (Annual Rent) + ₹30,000 (Security Deposit)Expenses: ₹7,000 (Brokerage Fee) + ₹35,400 (Maintenance Charges)
  Net Income to owner(First Year)=84,000+30,000−7,000−35,400=₹42,600
• Second Year:
  • Income: ₹92,400 (New Annual Rent)Expenses: ₹3,500 (Brokerage Fee) + ₹35,400 (Maintenance Charges)
  Net Income to owner (Second Year)=92,400−3,500−35,400=₹53,500
  

Note: ₹30,000 needs to be returned to the tenant once they vacate the home/flat.

Note: Electricity bill need to be paid by the tenant. In our case Electricity Bill: ₹1,500 per month fixed if it is in builder’s name. Owner need to transfer Electricity meter to his name. and Maintenance ₹2,950 per month is paid by owner.

Process of Buying a Flat from a Builder in India

Research and Shortlisting:

• Identify the location and budget.
• Research and shortlist builders and projects.
• Check builder’s reputation and project approvals. (Note: Don’t go with partnership firm builders)

Site Visit and Verification:

• Visit the site.
• Verify legal approvals (Commencement Certificate, Land Title, Encumbrance Certificate).
• Check RERA registration.

Booking:

• Pay the booking amount.
• Obtain allotment letter.

Builder-Buyer Agreement:

• Sign the agreement. 1. Agreement sales deed 2. Title Clearance Report 3. Search Report
• Pay the necessary stamp duty and registration fees for example for Mumbai.

Payment Plan:

• Follow the construction-linked payment plan or other agreed terms.

Possession and Handover:

• Inspect the flat.
• Take possession and ensure all amenities are provided as promised.

By understanding these details, you can effectively manage the financial aspects of buying and renting out a flat in Mumbai. This guide ensures that you are aware of all financial commitments involved, from the initial purchase to ongoing maintenance and rental management.