5 Costs You Should Not Overlook While Buying Your Home
People in every profession have certain words or expressions which they use freely amongst themselves but which may be difficult to be understood by others.Real estate business too has its jargon and if you are new to this world, a first time buyer maybe, you will face difficulty in understanding its literature which will be a hindrance for you to do your research in finding your dream property.In this article, I will describe the terms involved in a home loan. Talk with anyone involved in the property business dealing with home loans and these terms will crop up every now and then.
1.Down payment
Your home loan won’t cover 100 per cent of the house’s cost. You will have to pay at least 15 per cent from your own savings. This amount is known as the down payment.You should start saving for it several years before you intend to buy your house. That will help you not to tamper with other goals like saving for your daughter’s marriage.
2.Home loan costs
Interest payout is the most crucial cost of home ownership.Also, there are other loan related expenses like loan processing and administration costs that add to the net total.Usually they are charged as a percentage of the total home loan like 0.5 per cent or so.
3.Closing costs
Normally they include stamp duty, registration, builder transfer charges and legal costs. Stamp duty costs the most in this category around 6-8 per cent. It will help if you keep a budget aside for these expenses.The home loan providers usually provide loans for up to 85 per cent of registration and stamp duty costs, over and above the property loan. But you still have to pay the price for the remaining 15 per cent costs.
4.Insurance and taxes
If in an unfortunate incident you die while the home loan is still unpaid, imagine what your family members will have to go through.To make sure they remain safe and continue to live in the house you should buy a declining liability term cover which is actually a life insurance policy where your life is insured for the outstanding value of the loan. The coverage keeps on decreasing as you keep on repaying the loan.Besides this you will also have to account for taxes and other charges that you will have to pay after moving in to your house.
5.Operating and maintenance expenses
Buying a house does not just mean buying a collection of bricks and mortar. You need your walls to be painted, floors to be carpeted, cracks to be repaired, and also set in basic infrastructural facilities like electric wiring, water pipes, etc.I hope this article would have broadened your understanding of the costs involved in paying for your house.