What You Really Pay for When You Buy a Home

Buying a home is a serious decision.While you may be satisfied with the fact that you are paying a monthly EMI towards your home, there are several charges that go into the purchase of your home that may not be clearly discernible in the beginning. These may catch you unawares and may derail your financial situation. A commonly known break-up of costs involves:

• Stamp duty
• Registration
• Property tax
• Service tax
• Cost of furnishing
• Miscellaneous charges related to parking, club house, maintenance, society charges and the like.

However, there are several other charges that add on to the basic value of your home that you need to be aware of:

When Buying Your Home From A Builder

Tax Deduction at Source (TDS)Many home buyers are unaware of this charge that is a part of buying a home. If the value of the property exceeds Rs 50 lakh, you are liable to pay 1% of the value of the property in the form of tax. In this case, Rs 50,000.Floor riseMost high rises charge you a premium for each floor, going all the way to the top. This gets added to your base price. It is a price that varies depending on where the apartment is located, the floor of your choice and even the direction it faces.These additions may be in 2 or 3 digits per sq foot and has to be discussed with your builder.Cost EscalationMost agreements include a cost escalation. Should the price of raw materials such as sand and cement increase, the builder reserves the right the increase base prices accordingly.This is a cost you have to look for and understand in your agreement.

When Buying your Home from an Existing Owner

Brokerage feeIf you have hired a broker or a brokerage firm to help you find your home, you will have to pay him/the company a percentage of the transaction cost. This is a cost that is negotiable.Transfer chargesEvery large apartment complex has a society which functions on the basis of certain rules. When you buy an apartment from an existing owner, the society will charge you a transfer fee.This will be decided by the general body and ranges between 2% - 5% of the total value of the property.

Fees Applicable to Both Forms of Purchase

Valuator feesIf you are planning on investing in a built-up bungalow you will need to factor in the fees of a property valuer which varies depending on your location. It generally begins around Rs 20,000 per property.Legal feesAll papers related to your property must be vetted by a lawyer, irrespective of the reputation of the builder you may be dealing with. At this point you will incur expenses for a lawyer and a notary authority.This will of course come at a price that has to be worked out in advance.Moving costsWhether you are moving from your rented home to your new one or one city to another, moving costs are going to be involved.This will depend on the service you hire, the distance you cover, the floors that you are moving too, etc. Shipping charges may be added if you are moving across different cities.Utility connection chargesUtilities such as water and electricity, as well as generator charges, etc will now be applicable to you. These are prices you will need to factor in as soon as you move in. In some cases, you may have to start paying it even before you move in.These charges are not really hidden but rather are often disregarded as miscellaneous costs. Put together, they tend to add up to quite a bit and will make a significant difference to the final amount that you will be paying for your home. Do take these into consideration when planning your finances.

Top Takeaways

• Costs often disregarded as miscellaneous tend to add up to a sizable amount. Include every expense incurred.
• Cost such as transfer charges, cost escalation and moving charges are subjective. You will know the price you are paying only on enquiry. It is best to ask.