Did you know that there are quite a few hidden costs of owning a home? Chances are, you may not have given them a thought. Fret not; most home buyers in the country do not venture to purchase property while mapping out additional costs of buying a home. Agreed, buying a home is a lifetime decision and one that you should go ahead with by all means. However, it is important to keep a tab on the out of pocket cost for buying a house in order to keep your finances in order throughout the entire process.
11 Hidden Costs for buying property in India
Here’s taking a look at 11 hidden costs which cover all fees associated with buying a house. If you’re looking to buy a home anytime soon, these are the things that you should carefully consider.
1. Costs of Home Inspection-
Whenever you get down to the brass tacks, you’ll find that you’re required to fork out the money for home inspections which are basically background checks conducted by banks. These inspections are done to figure out whether the proposed value of the property is accurate or not. You’ll be paying these charges irrespective of the final report submitted by the inspector to your bank. In fact, the payment for this service may be tacked onto the monthly interest that you’ll pay on your home loan.
2. Relocation/Shifting Costs
If you’re thinking of going with a true cost of buying a home calculator, this is another aspect that you’ll have to factor in. Shifting into a new home means that you’ll have to transfer all your furniture and other items to the same from your old residence. This is mostly executed via packers and movers or other relocation specialists. The charges for the same should be factored into the total costs of buying a new home without a doubt.
3. Advance Deposit for Maintenance
Again, you may have to shell out advance maintenance deposits for periods ranging between 2 and 10 years. This is something that many developers ask for in order to raise more capital for project development. Maintenance charges are dependent on factors like the locality, value of the land and type of house that you are going to buy. Other factors include the amenities that you will be provided by the developer. The maintenance deposit does not come cheap most of the time so you should include it in your total budget.
4. Legal fees for buying a house
There are two non-negotiable fees that you have to legally pay in order to buy a home. Firstly, you have to pay stamp duty or registration fees which vary from State to State. For example, in the State of Tamil Nadu, the fixed fees are 8% of the property market value which includes 7% by way of stamp duty and 1% by way of registration fees. In most cases, 1-2% of the property value has to be paid as registration fees and 7-8% of the property value has to be paid as stamp duty to the court. There are other legal fees for the lawyer/notary who will be taking care of the paperwork and verification of the approvals obtained by the developer. You may also have to pay smaller amounts towards property taxes if required.
5. Parking Space
Of course, parking space is a modern-day necessity whenever you’re buying a home but it does not come free most of the time. You may have to shell out an additional sum of money to the developer to get your preferred parking space within the project. The cost of the parking space will naturally vary, depending on the area that you’re going to live in.
6. Interiors & Furnishings
Apartments which are fully furnished are always a boon but there’s a price to be paid for the same. Things like tiles, fixtures, painting, plumbing and interior décor can set you back by a good amount. You should always have the cost of interiors included in your total home budget, covering furniture, fixtures, fittings, painting, plumbing, electricals, design and even gadgets if you’re going to install them right away.
PLC equates to Preferential Locality Charge which has to be paid to the developer. You may have to pay this charge for apartments with special views or on particular floors. There are floor rise charges included in this category as well. PLC usually leads to the price of the property going up by anywhere between 5-10% so factor it into your budget.
If you’ve purchased your home via a brokerage or independent real estate agent/broker, you’ll have to set some amount aside as the commission amount and other fees. Online brokerages have comparatively lower charges in this regard and you get more information in the bargain. Whatever be it, this is another hidden cost that you’d do well to factor in.
9. Home Insurance
While this is optional, you may want to opt for the same in the current scenario. Do not end up underestimating home insurance costs. You may have to pay an initial sum of money for home insurance and the premiums have to be added to your monthly outgo in terms of payments for your new home.
All taxes have been subsumed into GST (Goods & Services Tax) at present and this finally works out to 12% on under-construction properties as the effective rate for buyers. GST is not payable on projects which have been completed, received their occupation certificates or those were registration has been completed. However, if you’re buying an under-construction property, you’ll have to factor in the GST amount as well.
11. Club House/Society Membership
Most housing complexes offer swanky club houses these days, complete with all necessary fitness, recreational and leisure amenities. However, in some cases, you may have to allocate some money for the membership of the club/society in question. This is a one-time cost that will add to the overall cost of buying the property.
To sum it up, if one makes a cost of buying spreadsheet, these are the hidden costs that should be worked into the same, so that you’re on the right foot financially while buying your dream home.