Learning about Secret Costs of Home-Buying
The purchase of a home depends not only on property price and EMI. There are various facets of costs, such as stamp duty and legal and loan processing fees, which are hidden and may add a lot of costs to you.
Stamp Duty and Registration Charges
One of the largest elements of hidden costs is stamp duty and registration charges, which are obligatory government fees, typically five to seven percent of the value of property.
Loan Processing Fees
Banks and other lenders levy processing fees on loans, normally ranging between 0.25 percent and one percent of the loan. The hidden cost is usually the add-on of these fees, which are usually non-refundable.
Legal and Technical Verification Fees
Lenders will do a check on the property and will incur legal charges on document verification and technical examination. These expenses guarantee the authenticity of the property but contribute to the silent cost of purchasing a home.
Pre-EMI Interest Charges
In the case of under-construction properties, the buyer pays pre-EMI interest on the amount disbursed. This subtle expense arises before full EMI payments begin and increases the initial financial burden.
Goods and Services Tax (GST)
Taxation in Goods and Services Tax is levied on under-construction property, typically around five percent for regular properties and one percent for affordable housing as per current Indian tax regulations.
Maintenance Deposits in the Society
Developers or builders typically collect upfront maintenance deposits at possession. These deposits typically cover one to two years of maintenance charges, which is another pitfall cost that buyers will have to prepare.
Prepayment Penalties Charges
Prepayment penalties primarily apply to fixed-rate home loans, while lenders generally waive them on floating-rate loans under RBI guidelines. Borrowers must consider this significant hidden cost before committing to a fixed-rate home loan.
Disclaimer: The information provided on this website is for general informational purposes only and should not be considered financial or legal advice. Please consult with a qualified financial advisor before making any decisions.
