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Buying a house is the biggest decision of life, but the biggest mistake people make in this decision is when they decide the budget only by looking at the basic price of the house. The real expense is much more than the price of the home and includes many hidden costs that buyers typically do not anticipate. Often after setting the EMI, these additional expenses become heavy on the pocket and the entire financial plan gets spoiled.
1. Registration and Stamp Duty: This is the biggest additional expense of buying a house. In many states, stamp duty ranges from 5 to 7 percent and registration fee also has to be paid separately. Many times buyers only look at the basic price of the property and this huge amount suddenly shakes their budget. Therefore, always decide the budget after including stamp duty and registration in the final cost.
2. Home Loan Processing Fee: The bank gives you a loan, but in return charges a processing fee which is usually 0.25 to 1 percent of the loan amount. Many times this fee is non-refundable, that is, even if the loan is not received, the money is not returned. Many banks and NBFCs also add hidden charges like documentation fees and technical assessment charges.
3. Legal and Verification Charges: Before purchasing a property, it is necessary to have its legal checking, agreement drafting and document verification done so that there is no fraud. Lawyers and agents charge fees for this. People often ignore it, but this step is most important for your property security.
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4. Society Maintenance Deposit: In new societies, builders ask for upfront maintenance deposit which is often for 1 to 2 years. This includes common area electricity security, lift maintenance and club house expenses. This is a lump sum amount and is not expected by buyers, hence it is considered a hidden cost.
5. Interior and Furnishing Cost: After buying a house, the actual expense is on the interior, be it modular kitchen, wardrobe, lights or false ceiling. Many buyers think that just by purchasing a house, everything will be set, but the interior expenses can easily reach lakhs and are often more than the EMI of the house.
6. Parking Charges: Developers charge separately for covered parking, open parking or extra parking slots. This cost ranges from Rs 1 to 5 lakh in many cities. If there is less parking in the society then its premium may be even higher.
7. Property Tax: After purchasing a house, one has to pay property tax to the Municipal Corporation every year. Many people do not include this expense in their EMI plan and later this annual amount starts feeling heavy.
8. Home Insurance Cost: It is wise to take insurance to protect the house and its contents. Although it is considered optional, in the long term its annual premium cost also becomes a part of the budget.
9. Brokerage fee: If you have bought the house through a broker, then you will have to pay 1 to 2 percent brokerage. This is also a huge amount to be paid at one go which buyers often forget.
10. Shifting and setup cost: During house shifting, additional expenses are incurred on movers and packers, transport, DTH installation, WiFi setup, gas connection, minor repairs and basic setup. All this adds up to a big bill that buyers often don’t anticipate.
