Concealed costs of home ownership you need to know
Finding your dream home is a heady feeling. When you’ve found The One, mundane details can tend to fade into the background when compared to the excitement. However, every homeowner will attest to the fact there are always some details that spring up as a surprise while in the midst of a purchase or after the fact.
A very common not-so-pleasant surprise includes the hidden costs of owning a home. Those who wish to buy new homes mistakenly believe that the price quoted by the builder or seller is all there is to consider. Consequently, when the hidden costs arise, the realization hits that the total funds outflow was more than anticipated.
The best way to avoid such shocks is by arming yourself with information ahead of time. Here’s a list of additional costs you can expect when you’re buying a new home.
Registration fee and stamp duty
Every home buyer needs to pay stamp duty to the state government. The amount changes from one state to another but this is over and above the actual price paid to the seller of the home.
When apartments are sold, the builder (new apartments) or the society (in the case of resale) collects advance deposit on maintenance charges. Maintenance charges usually include the amount required for the upkeep of amenities such as the gym, swimming pools, clubhouse and so on provided within the complex. There are also the monthly maintenance charges to be considered.
Sales tax and VAT
If you plan to purchase an apartment during the construction stage, you will have to pay sales tax and value added tax to the government. Together, they could cost up to 10% of the cost of the apartment.
Municipal authorities levy property tax on homes for the upkeep of civic amenities such as roads, parks, infrastructure facilities and so on. This needs to be included in your calculations while purchasing a home as well.
Interior setup and relocation
Making a new home habitable takes a significant investment. From wardrobes to kitchen utensils, it would be prudent to budget for at least Rs 2 lakhs.
Preferential location cost (PLC)
If you want that brilliantly located home within the complex you like, chances are it will come at an additional cost called the preferential location cost charged by the seller. The exact amount is dependent on the builder and the type of project (premium projects would charge more).
Parking space usually does not come with the home, so it needs to be paid for separately. If not paid for, the seller can sell the parking space to someone else. The actual amount would depend on the location of the project.
In case you found the house through a broker, you owe the middleman a fee that could amount to 2% of the total property cost.
Home inspection costs
When home loans are applied for, banks hire third party inspectors to value the property. Their fee is usually billed to the home buyers.