The thrill of buying home is unrivalled. While obtaining a home loan is a significant component of financial planning, there are other factors to consider when purchasing a property. You have various extra expenses to pay in addition to the down payment, which is your only financial responsibility. You will have plenty of time to prepare for the additional expense if you plan in advance.
But did you know that before you sign on the dotted line, there are some unforeseen fees associated with buying house that you should consider? Here is a checklist for novice purchasers.
First-time buyer’s checklist:
Registration and stamp duty:
The buyer must pay stamp duty to the state government to have the residence registered in their name. The house will only be registered in your name if the stamp duty is paid. These fees might vary from state to state from 5-7%. The court assesses a registration fee for it, which is often between one and two percent, and it serves as the complete and final legal agreement between the buyer and seller confirming the change in ownership. Although it can seem like a modest sum, it adds up to a lot.
Let’s imagine, for instance, that the house has an essential cost of 3.75 crore rupees. In this instance, the registration fees will be 3.75 lakh rupees, and the total stamp duty will be 18 lakh rupees. Therefore, the total cost for stamp duty and registration fees will be between 20 and 21 lakh rupees.
If you intend of buying home through a brokerage company or realtor, find out if they are RERA-registered before you pay any brokerage fees (Real Estate Regulatory Authority). Homebuyers can now check the legitimacy of the realtor. They can also determine whether they are legitimate members of the regulatory authority, thanks to RERA. The buyer and the project builder typically pay the realtor’s brokerage fee or commission. The industry standard for brokerage rates/commissions is two percent, split equally between the builder and the real estate agent. Depending on the brokerage or real estate agency, it can be higher or cheaper.
Builders charge an up to two-year maintenance advance or maintenance deposit; shared amenities, parks, and lightings typically cover this. Members of the society charge a deposit on existing structures as insurance against potential future damages. Similar to other property fees, this one can get rather expensive depending on the number of amenities offered or the ongoing maintenance cost. In some cases, the cost of this charge also includes membership in the clubhouse, increasing it even further. This sum varies depending on the location.
Homeowner’s insurance (HOI):
This sort of hazard insurance provides liability protection for accidents in your home and covers any losses to your property. Your lender will typically want proof of homeowner’s insurance. The average annual premium for homeowners insurance in 2017 was $1,211, according to the National Association of Insurance Commissioners, or NAIC. However, your price might vary significantly depending on factors like your home’s location, so get quotations before closing to avoid unpleasant surprises.
Regrettably, parking space is not provided while buying house due to our nation’s severe lack of space. This cost may be more or lower depending on where you reside and the size of the parking space that is readily available. This charge is a separate expense that you must pay to the vendor. The seller has the full right to sell it to different society members if you fail to pay this charge. The project’s location also determines the cost of a parking space. It typically starts at a lakh and can go as high as four or five lakhs, which adds to the list of unadvertised housing costs.
Homeowners’ insurance (MIP or PMI):
Private mortgage insurance, or PMI, is a requirement for traditional loans for homebuyers who don’t put down the 20% minimum required by the lender. Any loan sponsored by the Federal Housing Authority must include a mortgage insurance payment or MIP (FHA). MIP and PMI offer lenders protection if a borrower fails on a loan. For a home worth $250,000, PMI or MIP can add another $100 to $200 to your monthly mortgage payment.
This is the most significant and expensive expense. It is unavoidable because you cannot move in without fine interiors. This includes electric appliances, plumbing, buying new furniture or having it constructed, painting, and an unending list of other things. Even with considerable sacrifice and cost-cutting, this expense might easily reach Rs. 10 lakh. However, the cost of interiors is at least Rs. 20–25 lakhs if you alter everything and Rs. 15-20 lakhs if the fundamental interiors are already completed. You may save some money by shopping for furniture online.
Property inspection charges:
The cost of the property inspection will depend on whether you’re applying for a mortgage loan from a bank. The bank will assess the property to determine its existence and value. Also, determine the developer’s reputation and track record of project completion. The bank will undoubtedly charge you for the inspection. However, the bank may decide to waive the cost if you have been a customer for a while.
Maintaining a lawn is one of your new obligations when buying home. You can do it yourself or hire a lawn care service. You’ll need the tools if you do it yourself. In either case, lawn upkeep may cost roughly $100 per month. Some homeowner associations include lawn care in their monthly dues. However, this typically means that the HOA dues will increase.
Although your property tax is an ongoing expense that you must plan for as a homeowner, you must pay six months’ worth of taxes before the sale of your home may be finalized.
GST (goods and services tax):
In India, there is a Goods & Services Tax that you must pay on any property still under development. GST is a tax that we pay to the government, just like stamp duty and registration fees. While affordable housing projects only draw 1% of the GST, properties still under construction are subject to 5%. On ready to move into properties and on projects that have a certificate of completion, there is no GST.
While it is impossible to avoid these home costs, keeping them in mind can help one make a well-informed choice and determine the price with accuracy. So if you need any help in buying house, visit MJ Real Estate Consultants.