All you need to know about advance payments while buying a home

All you need to know about advance payments while buying a home

Fundamentals Of Home Buying | Apr 8, 2022 | 10 min read

Bayana, goodwill deposit, token money, and booking amount, are all different names of advance payments when buying a home. There are multiple forms of advance payments. Let’s learn more about the concept below.

Planning to purchase your new home? Don’t be surprised if you have to make an advance payment in different forms. One of the commonest advance payments is the booking or the token amount that you pay to the developer. Just as you need a commitment from the developer, they too need a commitment from you that you are serious about purchasing the property and as a result, he should go ahead with the formalities or even the construction of the property.

Not every bit of advance payment money is to be given to the developer although, if the developer is also helping you with legal documentation, you shall be paying a major amount of advance money to the developer.

You pay some smaller amounts for different reasons, and they may also be considered to be forms of advance payment although they may not be included in the final amount that you pay to the seller or the builder.

Token money for the booking

Every property seller – whether a house owner or a builder – wants to validate the buyer’s intention before going ahead with legalities and documentation. Payment of a certain amount validates a buyer’s intention. Many builders don’t even talk about terms and conditions before they have received the token amount. This token amount may be around Rs. 50,000-Rs. 2 lakh and it is adjusted to the total money the buyer pays eventually.

The stamp duty

Stamp duty is paid to get the legal ownership of the property you are buying. When you get the property registered, you will also be paying stamp duty. This may not seem like an advance payment, but this is definitely an additional payment that you need to bear. The stamp duty is a form of government tax levied on all property transactions. How much stamp duty you pay depends on the region in which you buy the property or get registered in your name.

Advanced TDS payment

Any property that costs over Rs. 50,00,000 attracts this mandatory tax of 1% that must be deducted from the total sale price the buyer pays to the seller. This money needs to be deposited separately along with the PAN details of both the buyer and the seller. In order to make a TDS payment, Form 26QB must also be submitted.

Home loan advance payment

You can choose to make such a payment, or you can deny and explore other property options in the market. What is a home loan advance payment? Sometimes when you are buying a property there is an ongoing mortgage on the property. The property owner may ask the buyer to arrange for the advance payments before the sale can be successfully executed. Sometimes the property is difficult to sell unless the lender has provided a “No Objection Certificate” or an equivalent document stating that the loan has been paid off and there are no pending charges against the property being sold. Again, it is up to you whether you want to make the home loan advance payment or not.


Why is it important to know about all the major and sundry advance payments that you need to make when buying a property or a home? You can arrange for finances accordingly. These advance payments may not be a part of the loan that you get approved from the lender to purchase the property and you may need to make extra arrangements. Having an idea of all the advance payments that are required before you can own the property can help you make the arrangements or save your own money before proceeding to buy a property.

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