Buying a home? Here are a few lesser known costs associated with house purchase

Home sales are showing buoyancy and are set to rise in the coming months as the Covid-19 scare subsides. Real estate consultancy Anarock has recently said housing sales in Q2 2021 in top 7 cities stood at around 24,570 units, which was 93 per cent more than the sales in the same period in the previous year.

However, if you are one of those who intend to scout for a property, you must factor in a number of expenses that you would have to incur other than the quoted price of the property. Hence, you must to prepare your finances for the ‘all-inclusive’ price.

Here are a few costs buyers have to pay for when buying a house outside the rack rate offered on the property.

Statutory costs

The home buyer often does not factor in payments that have to be made due to statutory or legal requirements. These include stamp duty, registration and transfer fees. Stamp duty is paid as a percentage of the price of the house. Stamp duty must be paid on the ready reckoner price (circle rate) as fixed by the government or the transaction price, whichever is higher. Cost of registration is generally a fixed sum payable to the government by the buyer.

If you are buying a property built by a housing board or a state housing corporation or on leased land by a government body, then there may be a transfer fee you have to bear. The property not only needs to be registered but the transfer needs to be recorded in the books of the authorities.

If you are buying a property built by a housing board or some such authority mentioned above, then there may also be a need for a no-objection certificate from such an authority. The costs associated with it need to be borne by home buyers.

Hidden financing costs

If you are availing a home loan, there may be a few costs associated with it which may come up later. Along with the cost of servicing the loan, there is a processing fee to be paid. It includes the cost of structural audit, legal due diligence and other costs though sometimes you can get it waived from the lender.

Along with this, the bank may insist on taking out a term life insurance cover and home insurance to secure their loan amount. The premium payments have to be borne by you. Sometimes the bank adds the premium amount to the home loan amount and calculates equated monthly installment (EMI) amount accordingly.

Brokerage & fees

Most often a property deal is finalized through a broker. If you intend to engage an intermediary to get the deal done and help you close the paperwork, you have to be prepared to pay brokerage. This is also mostly a percentage of the property price. Negotiate on it beforehand. Moreover, if you intend to hire the services of a legal firm to do the due diligence on the title, the costs too have to be borne by you.

Costs of moving in

These attendant costs are generally not factored in by most home buyers. Though these are not significant if you are moving within the same locality, it can pinch you hard if you moving to another city. It is not just the cost paid to movers and packers but you have to incur costs towards setting up utilities. If the house you are moving in is a pre-owned, then there is a need to transfer all utilities in your name. There are costs associated with it.