Buying a house is generally the biggest purchase of one’s lifetime which can’t be done without detailed financial planning. Understanding and evaluating the actual cost of ownership of the house is the first and vital step while purchasing a house. The actual price of the house will be contrary to expectations, it could be different from the cost projected by the builders and sellers.
This is because the property always includes hidden charges and additional expenses that should be checked and considered while buying. Here are some of the factors that necessitate being considered while buying a property.
Registration fee and Stamp Duty
A registration fee is mandatory and a buyer is supposed to pay the state government to register a house under his/her name. These charges may differ from state ranging from 5-7 percent. Registration is the final agreement between the seller and buyer indicating the transfer of ownership. The court charges a 1-2 percent registration fee for it.
This fee is charged in addition to the stamp duty. The property priced above 32 Lakh would charge a cess of 10 percent surcharge in urban areas and three percent in rural areas.
Goods and Service tax (GST)
GST is paid to the government like stamp duty and registration charges for under construction. The GST on the under-construction property is 5% while affordable housing projects attract only 1%. The GST is not applicable on ready-to-move properties or on those projects which have got the compilation certificate.
Advance Maintenance Deposit
Builders can charge advance maintenance or security charges, and this may be for up to 2 years which usually comes in common amenities, parks, and lighting. It is charged as a deposit for any future damages to the property. Deposit sum could vary with the number of amenities in society and include membership like clubhouse, gymnasium, etc. The charges depend on locations and societies to societies. For instance the high localities like Bandra and Cuffe Parade and lower places like Borivali and Mahim in Mumbai.
The seller has all rights to sell the parking place to another member of society if the parking fee is not paid. The charges apply depending on the size and number of spaces provided to you. The spaces can be varied depending on the location and societies in which the property is.
The interiors include any lighting, paints, carpets, furniture, and electric appliances. Fully furnished interiors can be charged up to Rs. 10 lakhs. The fee comes separately and has to be paid by the buyer. It is an important and unavoidable cost, and moving in with a proper interior is a good option that can save your budget and further interior costs.
PROPERTY INSPECTION CHARGES
Obtaining a house loan from a bank will require an inspection of the property to ascertain its existence and worth as well. Investigate the developer’s credibility. The bank did not charge for any inspection, but the inspection agent can ask for a fee.
Preferential location charge
Few builders do charge depending on the environment and the view surrounding the society or house. Living in apartments that are overlooking the sea will come with an extra charge for the higher floors. So one must aware of this aspect before looking for a home with preferred surroundings.
In addition to this, in case of resale, you may have to pay Transfer Memorandum (TM) charge to the local body or a transfer charge to the the association for transfer of property ownership.
Home and Contents Insurance
It is common for homeowners to protect their homes and include contents such as expensive appliances with home insurance and continents policies.
Property insurance and charges vary on multiple factors such as property type, location, the value of contents, and so much more, so it is a good idea to compare different quotes.
A Lawyer or Conveyancer fee
The legal process of buying a property includes complexations like managing the documentation and settlement of your property sale. Therefore, an expert is needed for a smooth process and property settlements, which could be charged accordingly to their standards.
These extra costs put together can push up your house’s actual cost by 10-15%. While it is noteworthy fact that, the bank or lender will not include these costs while finalizing the loan amount. The sanctioned amount will be based only on the worth of the property valued on inspection. Thus, you must account for all these additional expenses while estimating the overall cost of the house and ensure their arrangements for them from the time you start planning.
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