5 points to know About Advance Payments While Buying a Home

During a property deal, a seller may ask for token money or goodwill money which is sometimes called banana, to gauge the buyer's seriousness. The buyer has to pay a certain percentage of the transaction value. Typically it is equal to 1 lakh or lesser. This token money is mandatory to initiate the process of buying, but a buyer should not pay more than this till the sale deed is registered.

Types of advance payment you should avoid during a property deal

TDS- If you are availing bank loan, the bank providing loan might insist on advance payment of TDS in a property deal. TDS is due only at the time of payment. So making an advance payment of TDS and submitting the payment receipt before disbursement from the bank's end should be avoided.

Stamp Duty and registration fee

Stamp Duty and registration fees vary from state to state, and in some states, one can buy stamp papers equivalent to the stamp duty. However, stamp papers are non-transferable and non-refundable, and their validity typically expires six months from the date of their purchase. There is a provision for paying stamp duty and registration fees in advance in some states. Some may buy stamp papers in advance, which should be avoided because if the property deal is canceled for some reason, he could lose the money.

Home loan advance payment

Advance payment of home loans might turn out risky. For example, if the seller has an ongoing home loan on the property, he may use that amount to repay his loan and procure the necessary documents from the bank and sell it to another buyer. Hence, refrain from paying the home loan in advance.

Registration date and delay

A property deal is closed within 45-60 days or 6/12 months. If the registration time is more than the said period, then there is a chance that the seller might back out due to an increase in property rates.

Avoid cash payment

Some sellers offer a cash payment mode. However, refrain from paying in cash because a cash payment of more than 20 k is illegal.

Conclusion

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