7 costs attached with home-buying

Post pandemic, the one common thing that features in most people’s wish list is to buy a property of their own and preferably in a gated community with all amenities available close-by. While you may be zeroing in on one such property, do note there are added expenses during property buying that are not paid attention to while budgeting for property purchase. Check out the major expenses that you should know about before closing the home buying process.

Expense# 1: Preferential location charges (PLC)

The price of the flat depends on the configuration, the location it is present at and the brand reputation of the developer constructing it. Note that not all prices in a project may cost the same. A developer may levy an additional preferential location charges (PLC) on his projects. Costings vary depending on the floor rise and other USPs that the project may offer like the city view or the garden view. Evaluate the various options available in the same project as well to make an informed decision.

Expense# 2: Maintenance charges

While the amenities and facilities offered by gated communities are loved by all, they are maintained at a cost that is passed to the homebuyer/owner. While gated communities in which societies are formed charge the maintenance amount quarterly, in case of new building projects with the society still being managed by the developer, a lump sum money for 18 to 24 months has to be paid upfront by the homebuyer as maintenance charges while taking possession of the project.

Expense# 3: Legal fees

If you engage the services of a lawyer for due diligence of the property you are looking to invest in, then the cost attached will add to your total home buying costs. The services of a lawyer are more needed if you invest in a resale property to give you a clarity project ownership title, any litigation present, any illegal construction, any pending dues to the government like property tax etc. A lawyer will also help you with all the documentation work related to stamp duty and registration of the property.

Expense# 4: Home loan convenience charges

If you plan to avail a home loan for the property you are investing in, note that before allocating the home loan there are steps like valuation of the property, documentation, loan disbursement etc. which attract fees that may have to be paid by you.

Expense# 5: Stamp duty and registration charges

While preparing for finances for buying a house, do consider the stamp duty and registration charges that are a notable component of the home-buying activity to avoid any bad surprises later. This is important because only after paying this amount the property is legally registered under your name. Stamp duty makes up to be a significant percent of the total property cost and varies between the different Indian states. In fact, there is a difference in stamp duty between male and female owners also in some states. For instance in Maharashtra, women homebuyers have to pay a stamp duty of 5% of the total property value and men homebuyers have to pay a stamp duty of 6%.  Registration fees is for registering the property in your name in government records and is usually 1% of the total property value.

Expense# 6: Levy of Good and Services Tax (GST)

If you are investing in an under-construction property, you will have to pay a GST of 5%. Note that investments in affordable housing and ready-move-in properties/ projects which have received the completion certificate do not attract any GST.

Expense# 7: Real estate agent fees

If you have used the help of a realty agent for the buying the property, he may charge a brokerage based on the value of the property. This amount varies from place to place but cannot be ignored as it is commonly around 1-2 % of the value of the property. Do know about the agent fees and take it into consideration while budgeting for the house.