Home Buyers Guide is for aware the hidden costs of buying a house. Because How to buy a house? first time is risky task. So, Don’t go by the Advertised Price for house to buy. Who desire to buying your first home in life. I would like to share some experience with those first home buyers. And guide to taken care of their money investments. First home buyers spent on their dream house buying process. While buying your first home, the home buyers must look into the hidden costs. Also, they do not go by the advertised price alone. To arrive at a more accurate costing of his first dream home.
First Home Buyers Guide And House Buying Process
Home Buyers Guide is begin with Process of Buying a House Example:
MR.007, a government employee from India. He want to buying home in a few months. He is already 55 years old. Needs to shift from his government quarters immediately after retirement.
MR.007 look through online property for sale websites. He is shortlist one property on the outskirts of the city. Which has rates within his budget and a down payment that he can manage. As per his initial calculations, for a 700 sq ft. of Super built up area at Rs 6,500 per sq ft. The amount came to Rs 50 lac, including stamp duty and registration.
Next, as a homebuyer, he is visit the property site and very happy with everything. He see from the social infrastructure to amenities and specifications of the site. However, when he actually meet the marketing representative on site for final discussions.
He found the house price had increased to Rs 7,000 per sq ft. due to floor rise, legal charges, maintenance, sinking fund, etc. The total property price increased by Rs 5 lac. Causing an increase in the down payment and leading to a considerable stretch in MR. 007’s home buying budget.
The above is the case with most aspiring home buyers across India.
What you actually need to pay is significantly higher. Than the multiplication of the ‘per sq ft’ rate and the total area. This is because all developers advertise the base price in large print, with the word ‘onwards‘ following it in small print.
This term ‘onwards’ includes costs such as floor rise, PLC, registration cost, etc., That go unaccounted for in original calculations. But get reflected in the final payment schedule. The additional property buying costs, also vary from builder to builder. And according to the facilities that the house is equipped with.
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First Home Buyers Guide:
Following are the additional house buying costs. That you need to budget for when you plan to purchase your dream home first time.
Stamp duty and registration costs:
Stamp duty is the tax paid on the market value of the house. While the house or property registration gives you legal rights to the property. Stamp duty charges are mandatory as per the government of India. That are levied as a percentage of the property value. It is different for different locations.
Service tax and vat:
An under-construction property attracts Service tax and VAT. The current service tax rate is in the range of 3-4 per cent of the property price. And it is applicable in all states. VAT (Value Added Tax) are charges by the state and vary from state to state.
Though the developers are not supposed to charge the parking space provided to customers. Most developers charge a handsome amount. which is included in the property cost. Factors like locality, type of property and parking space, are taken into consideration prior to fixing the amount under this head. it varies from Rs 2 lakh-Rs 25 lakh.
Deposit for maintenance and external development charges (edc):
Many builders take an up-front maintenance deposit. Which includes the cost of maintaining roads, parks, street lights and other common facilities in the society. The charges for water and electricity back-up are also included in this. Most developers insist on the deposit for maintenance to be paid initially as it provides them with more capital.
More Detail on Home Buyers Guide:
Preferential location charges (plc):
These charges are levied by the builder for any preference with regard to your choice of floor, size or alignment. That is, you pay a premium. if you want your home to be on a certain floor, or east-facingsea-facing and so on. The PLC varies from city-to-city, based on the climatic conditions and customer preferences.
If a customer wants to have his apartment on a higher floor, he has to pay floor rise charges. The floor-rise charges are applicable after a particular floor and will go on increasing with each additional floor.
For example, if a project charges a floor-rise of Rs 25 per sq ft as you go up, the first floor onwards in a 24-storeyed apartment, the floor-rise of first floor is Rs 25 per sq ft while that of the 25th floor, is Rs 550 per sq ft.
Infrastructure development charges (idc):
Infrastructure development charges are imposed by the government on developers. It is utilized for the development and maintenance of infrastructure around the project. “UTILITY CHARGES” For ultra-luxurious amenities, developers charge upfront for club membership. Which also accounts for a significant amount.
This may also be charged on a yearly or lifetime basis. It is always better to have clear knowledge about the hidden costs while planning your dream home. It saves you from the ugly dilemma of ‘to buy or not to buy’ once you have set your heart on your desired property. (The writer is director , CRISIL Real Estate Ratings)
Fast Fact of First Home Buyers Guide.
- The floor rise charges are applicable after a particular floor and will go on increasing with each additional floor.
- Many builders take an up-front maintenance deposit which includes the cost of maintaining roads, parks, street lights and other common facilities in the society.
So, friends this is all about that First Home Buyers, must aware the hidden costs of properties, That’s why I say – Don’t go by the Advertised Price as a fist home buyers, this list of different hidden cost factors will help for first home buyers, hope you people enjoy it.