Are you planning to buy a new home? Don’t forget to budget for the unexpected expenses that come with the territory. Homeowner association (HOA) fees, home inspection costs, property taxes, and closing costs are just a few of the expenses that you’ll need to consider. And that’s just the beginning. Planning for home-buying expenses requires a thorough understanding of all the costs involved. Don’t get caught off guard by unexpected home-buying costs.
Take the time to research and budget accordingly. This blog hits all the buzzwords like home-buying costs, Hidden home buying expenses, Homeowner association (HOA) fees, Budgeting for home buying expenses, Unexpected home buying costs, Planning for home buying expenses, and Understanding home buying costs. Let’s get going.
What are the Hidden Costs of Home Buying?
Before going any further, let’s understand what we mean by “unexpected home-buying costs” or “hidden home-buying expenses.”
Hidden costs are expenses that are not immediately apparent when purchasing a home. These costs can vary widely depending on a range of factors, such as the property’s location, the buyer’s financial situation, and the terms of the sale. Some of the most common hidden costs include homeowner association (HOA) fees, property taxes, appraisal fees, title insurance, and closing costs.
Importance of Being Aware of These Costs
While budgeting for home-buying expenses, knowing about the hidden costs involved in home-buying is critical because it helps you avoid financial surprises. When you are aware of these costs and equipped for understanding home-buying costs, you can budget accordingly and make informed decisions when making a purchase. Additionally, being aware of these costs can help you avoid taking on more debt than you can handle, which can lead to financial instability.
Planning for Hidden Costs
The best way to prepare planning for home-buying expenses is to budget appropriately. This includes researching the costs associated with the property’s location, getting pre-approved for a mortgage, and working with a real estate agent who can help you identify all the expenses involved in the transaction. By taking the time to plan and budget for hidden costs, you can enjoy the home-buying experience without worrying about unexpected expenses.
Top 6 hidden costs to look out for when buying a home
- Stamp Duty and Registration Fee
When planning for home-buying expenses, one of the most significant hidden costs is the stamp duty and registration fee. Stamp duty is a compulsory fee paid to the state government to register the property under the buyer’s name. The registration fee is the final legal agreement between the buyer and seller indicating the change of ownership. The total cost of stamp duty and registration fee can range from 6-9% of the property value, and it’s essential to factor this cost into the budget.
- Maintenance Fee Deposit
Builders often charge an advance maintenance deposit that can range from 1-2 years. This amount is generally for the maintenance of common amenities, parks, and lighting. For existing buildings, society members are charged a deposit in case of any damages that may occur in the future. The cost of this deposit depends on the number of amenities provided or the existing maintenance fee.
- Brokerage Cost
While not exactly a hidden cost, brokerage fees can be easily overlooked while budgeting for home-buying expenses. Brokers charge a fee of 1-2% of the total house cost, with some charging higher fees. It’s important to find out about the details and settle this with your broker at the outset.
- Parking Space
Parking space is not included in the base cost of the house and comes as a separate cost. Depending on the location and size of the available parking space, this fee can be higher or lower, ranging from one to five lakhs. It’s essential to factor this cost into the budget, or the seller has the right to sell it to another member of society.
- Interiors
Interiors are an unavoidable cost as they’re necessary for moving in. This cost includes painting, plumbing, buying new furniture, and electric appliances. The cost of interiors can go up to Rs. 10 lakhs, and it’s important to budget for this expense.
- Goods & Services Tax (GST)
Any under-construction property purchased in India is charged with Goods and Services Tax. The GST on under-construction property is 5%, while affordable housing projects attract only 1%. There is no GST on ready-to-move properties or those with a completion certificate.
- Preferential Locality Charge (PLC)
The Preferential Locality Charge (PLC) is an extra charge paid to book a unit in a better location within a layout or complex. This cost varies from one builder to another and depends on the location of the property. Premium projects tend to have higher PLCs, which can add to the hidden costs of home buying.
Conclusion
Understanding home-buying costs and being aware of hidden costs when buying a home is crucial to avoiding any surprises and financial strain in the future. These additional expenses, such as stamp duty and registration fees, maintenance deposits, brokerage fees, parking fees, interiors, GST, and PLC, can quickly add up, increasing the overall cost of your new home. Therefore, it is important to plan and budget for these expenses in advance to make the home-buying process smoother and more manageable. If you are looking for a home in a premium location with transparent pricing, Kundan Praangan is a great choice. They are known for their high-quality construction and transparent pricing policies, ensuring that there are no hidden costs.
