When you are buying a house, the cost of the property is certainly a priority. Everyone looks for a property within a fixed budget. This budget usually only covers the cost of the property itself. Every mode of financing that you choose, including a Home Loan and the down payment is planned around that. You can get the best deals and offers with lending organizations like L&T Housing Finance. However there are several additional costs that you may not be aware of or may have completely forgotten about when it comes to actually gaining possession of the property.
Some of these figures are quite high and can upset your budget entirely. Here are some hidden costs of buying a home that you should be aware of so that you can plan to get additional funds besides your current loan plan such as the L&T Housing Finance.
- The registration fee and stamp duty
If you want to have a property registered under your name, then this fee is compulsory for you to pay. This is paid to the state government and can vary from one state to another. The average stamp charged is between 5 and 7% of the value of the property. In addition to this, you will have to pay a registration fee to the court to complete the agreement between you and the seller. This is an additional 1-2%. Consider a property valued at Rs. 1 Crore and even these seemingly nominal fees will amount to quite a bit. You may spend approximately Rs. 15 Lakhs on the stamp duty and registration fee for a property valued at Rs. 1 Crore.
- The maintenance deposit
Depending upon the builder that you choose to buy your property from, a maintenance deposit up to 2 years may be payable. This is listed under common amenities maintenance and usually involves the society lights or parking. Based on the amenities provided in the property that you are investing in, these figures can be quite high. The idea behind this deposit is to provide security for any damage to the common areas mentioned above in the future. In some areas, fees such as membership to the society clubhouse or pool may also be included in this deposit. The deposit charged can also vary depending upon the area that you choose to buy your property in.
- Parking space fee
It is no longer possible to consider that a parking space will be allotted to you as soon as you purchase a property. Considering the dearth for parking space, some builders use this to make some additional money. Make sure that you ask about parking space when you invest in a property. If it is not included in the cost of the property itself, you will have to pay it separately. Failing to do this might result in your parking space being sold off to another resident. The parking fee itself can range from Rs.1 Lakh to Rs. 5 Lakhs based on the location of the property.
- Cost of interiors
This cost may or may not be covered as part of your Home Loan. However, this is one of the major costs that you must consider. Without the basic interiors at least, you will not be able to use the property that you have invested in. This includes furniture, plumbing, electrical appliances, and a lot more. The costs can be a couple of lakhs easily even when you stick to the basics and keep your budget tight. You may want to also look for a property, which offers basic interiors as part of the package.
- VAT and service tax
In today’s times, these costs are covered under GST. You will have to pay these additional costs towards the property mandatorily. This is applicable even to under construction projects. Considering the current GST of 18%, this is a large sum. Since this is a fee that you pay to the government, it is impossible to avoid it either. So, when you are buying a property make sure that you check if the property value is inclusive of the taxes mentioned or not.
- Brokerage fees
This is not really a hidden cost. However, most people tend to overlook it when planning the finances for a new property. If you are looking for properties via a broker, this is a fee that you will have to pay. Generally, this fee might be as much as 10% of the cost of the property. The more expensive the property, the higher is the amount that you will pay to the broker. Make sure that you understand the terms and conditions of the broker before you finalize any purchase. In some cases these costs may be negotiable and in others you may have to pay the price that your broker will demand.
- Preferential locality charge
Also known as the PLC, this is a cost that you will have to cover if you are looking for a certain apartment in a certain location.With most premium projects, this is a cost that you have to consider.This fee is collected when you have requirements such as the direction that a unit faces or the floor that the unit is located in. This is not a fixed cost as the ones mentioned above as you will pay it directly to the builder. Therefore it may change from one builder to the other. It may also change as per the time that you make your purchase in. For instance, you may get better offers in case of any seasonal discount or as per the market conditions. This is a fee that is not mandatory, but it is necessary for you to be aware of it when you are finalizing the deal.
Covering for these hidden costs usually means digging into your own funds. They may not be covered under the Home Loan that you apply for. So make sure that you have enough financial sources available to make the final purchase.