Evaluate Hidden costs before buying a house
Posted by paragjani on December 29, 2009
Before buying a house, buyers usually consider factors like proximity to work, school, view, water supply and facilities within the apartment complex amongst others. But, besides this, you should also ensure that you are not being trapped. You can approach a home loan provider to find out if it has provided loan for any other apartment in the same complex. It is better to pay a loan processing fee to the Housing Finance Company (HFC) to carry out a due diligence before you book a house. Once it is confirmed that the property is genuine, you need to pay attention to other factors like:
Hidden costs
Apart from the purchase price of the property, there are additional costs that add up to the amount you pay for buying the house. Stamp duty and registration fee are only the beginning. These are mandatory fees that need to paid and are around 5% of the value of the property.
Mrunal Duggar, vice-president, Home bay residential, says, “In India, the first additional cost a home buyer will incur is stamp duty. Since most homes in India are bought through home loans, one has to consider the cost of an insurance policy to cover the home loan.”
In case it is a resale standalone property, the valuation of the property is a must for most public banks and that involves charges by a registered valuation agency.
If you purchase a property with the help of a real estate broker you will have to pay a brokerage charge based on the purchase price of the property. These charges vary across different cities but usually range from 1% to 4%.
You may have to pay conveyancing costs to the lawyers. These are costs involved in transfer of title of property from one person to another.
In addition to this there are society maintenance charges and a yearly property tax that many buyers do not pay attention to before buying a house. Facilities like swimming pools, gymnasium and garden along with the house also add to the cost.
Only look at finished properties
It is essential to carry out a due diligence since there have been cases of non-conveyance of occupied land in some projects. Since the present market conditions do not guarantee the timely completion, buyers should only consider ready properties. According to Duggar, if one is planning to buy an under-construction property, one should check with the developers’ bonafides and market standing.
In case of used flats, you may be tricked into paying the first installment without a proper agreement in place. This usually happens when there are many buyers for the same property.
Outstanding dues
Mostly, houses that are very old do not have registration. In such a situation, you should pay off the stamp duty and file for registration. You should also ensure that the seller pays off the registration fee before you purchase the property. Telephone utilities also refuse new connections in places where the previous bills have not been paid. When you own such a house, some liabilities like electricity and property tax dues pass on to you.
Source:http://www.rupeetimes.com/article/home_loans/evaluate_hidden_costs_before_buying_a_house_3158_P2.html
