Purchasing a home marks a significant milestone in life, but it can also come with substantial expenses. Apart from standard costs, additional fees and insurance charges can sneak up on you during the home loan process.
Sujit Bangar, the founder of Taxbuddy, recently shared insights on LinkedIn on how homebuyers can navigate these hidden costs wisely and make informed borrowing choices.
CONCEALED FEES POST LOAN APPROVAL
Many borrowers find themselves surprised by additional charges even after their loan gets sanctioned. “Banks often do not reveal all expenses upfront,” mentioned Bangar. “Processing, legal, technical, valuation, and documentation fees emerge post-approval.”
He recommends that every borrower requests a detailed breakdown of costs. “If they are unwilling to provide a breakdown, remember — as per an RBI circular, they are obligated to disclose it,” he added.
THE MYTH OF ‘MANDATORY’ INSURANCE
According to Bangar, a common tactic is to push for the purchase of expensive insurance policies just before loan disbursement. “It is not obligatory to buy insurance equivalent to 4% of the home loan,” he clarified.
He further elaborated that many relationship managers (RMs) introduce this clause shortly before registration. “The home loan process spans around 20–30 days, and by then, most borrowers prefer not to restart the process with another bank,” he noted.
His advice? Apply simultaneously with two or three banks to retain control and avoid such pressures.
UTILIZING JOINT LOANS FOR TAX SAVINGS
Bangar also highlighted a strategic approach to maximizing tax benefits. “By opting for a joint home loan — for example, with a spouse or parent — both parties can claim deductions,” he explained.
Each borrower is entitled to claim Rs 1.5 lakh under Section 80C for the principal amount and Rs 2 lakh under Section 24 for the interest paid, allowing for a combined deduction of up to Rs 7 lakh annually.
REDUCED STAMP DUTY FOR WOMEN
In cases where the property is registered in a woman’s name, several states like Delhi and Haryana provide discounted stamp duty rates. “A property worth Rs 1 crore can save almost Rs 2 lakh in registration expenses,” highlighted Bangar. However, he cautioned buyers to consider inheritance-related risks in such scenarios.
ALWAYS VERIFY THROUGH THE RERA PORTAL
Bangar urged buyers to validate project details on the state’s RERA website before making any payments. “Neglecting the RERA search could result in overlooking crucial warning signs — such as pending approvals, legal disputes, or delays,” he emphasized.
Scrutinizing a builder’s performance on RERA can avert potential long-term issues.
AVOID TAKING POSSESSION WITHOUT AN OC
According to Bangar, a critical error is taking possession without an Occupancy Certificate (OC). “Occupying the property without an OC may lead to fines or even eviction notices,” he cautioned. “Always demand the OC before taking possession. If it is not provided, escalate the matter through RERA.”
In essence, navigating home loans can be complex, but being informed can make a significant difference. As Bangar concluded, “Banks seldom share these insights — however, understanding your rights and staying informed can potentially save you substantial amounts and undue stress.”
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