Shankar had the job he had always wanted. About a year ago, he married his childhood sweetheart . Recently, he and his wife decided to buy their first home using some of their savings and taking a loan. They had a budget in mind, and they found their dream home without too much trouble. Shankar was a happy man until this moment.
He was happy that he had got a good house that ticked all their boxes within their budget. But he discovered that the price was much higher than what was advertised. There were multiple costs that weren’t mentioned and although he had done his homework, he hadn’t anticipated all of the various charges that had cropped up.
When it comes to buying a house, take a pause. Developers are also great marketers and their promises of ‘no EMIs now’ or ‘easy down payments’ almost always have a few catches. When it comes to house prices, make sure you get every detail right to stop your well-laid plans from going to nought.
Here is a handy guide to some of the hidden costs that you can use as a checklist when scouting for a new home. Budgeting these into your homebuying plans will save you from getting some unwanted surprises.
Registration and stamp duty fees
Most often, the price you see advertised will not include peripheral costs like registration and stamp duty charges. Stamp duty and registration fees differ from state to state and are paid at different stages in the buying spectrum. In most states, stamp duty and registration fees can together range between 8-10% of the total value of the property. Additionally, bear in mind that you might also need to pay a lawyer to carry out the legalities.
Maintenance and parking fees
Maintenance charges are not included in apartment prices, and developers will ask you to pay that separately and sometimes in advance. Right now, developers charge up to Rs 25 per sq ft, which means the bigger the house, the more your maintenance fees. In many apartment complexes, parking is charged additionally as well and particularly if you have more than one car.
Property taxes and GST
Taxes are easy to forget because they are added at the very end. But remember that this would be one of the heavier charges you will incur.
Brokerage fees
If you are relying on a real estate broker for your house hunting, then expect to pay anywhere between 1% to 3% as brokerage fees. The percentage is not fixed, and it can be higher at times.
Home loan processing charges
Home loan processing charges vary between 0.25% and 1%, and it is usually charged post the sanction of the loan. It covers the basic administration costs and miscellaneous expenses incurred by the lender for carrying out legal verifications and documentation checks. Ensure that you choose a lender who clearly states processing fees with all the details laid out. Take time to also do a thorough comparison to see who charges the lowest.
Location and views
Yes, you might end up paying a premium price for your location and even depending on the floor that you are in. If your home has a great view of a lake or if you are on the 14th floor then be prepared to pay Preferential Location Charges (PLC) which will bump up your prices by around 5% to 10%.
Eventually, the final price you will end up paying will be nowhere close to the price that first attracted you to the house. For example, if you were aiming for a home costing Rs 55 lakhs at the basic level, then your final bill will be close to Rs 70 lakhs or more.
