Tuesday, May 28, 2013

Want to Buy a house? Know the additional costs

Avinash, a software engineer, was looking at buying a house in Bangalore and had registered with one of the online portals that sent him this SMS: ‘A 2-BHK (1,000 sq. ft.) flat, with all the modern facilities; just 15-minute drive from the heart of the city at Rs 2,500 per sq. ft; Book Now.' He got tempted; he thought the house suits his budget. Before considering such offers, know the one-time, yearly and regular charges you would have to pay-these charges drive your total cost up. So it is important to consider these costs when calculating the total cost to find out whether it suits your pocket.

Infrastructure costs

  Preference location charges. Although you have to pay extra money if the society has swimming pools, gardens and playgrounds, you will have to pay even more if you want a ‘specifically placed property’, such as a ‘park view’ home. Builders do not disclose these charges upfront when promoting property.

    External development charges include charges for creation of utilities and include costs incurred in developing water and electricity supply, sewerage, roads, street lighting, community halls, etc. Builders levy these charges on basis percentage of basic costs.
    One-time parking charges are applicable if you own a car and for each space you require, you will have to pay additional charges which vary from 5 to 10 % of the basic cost of the house.
    Utility connection charges are levied one time and include water, electricity, gas and sewerage connection charges.

Social and administration charges

    Club membership charges are high for posh localities and high status properties. These are bulk payments made one time or may require renewals at regular intervals-something that is never disclosed upfront.
    Maintenance charges are billed to you and deducted from the security deposit that you make at the beginning of each year. Maintenance includes water and electricity connection maintenance, cleaning of common compounds including gardens, driveways and roads, salaries of night guards, security, gardeners and other service providers.

Paper and service provider cost

    Stamp duty and registration charges are one time payments made for a document to be considered as legal. Stamp duties vary with places-for example, for Bangalore, it is around 5% of the property value.

Other related costs that you should take into account

    If you take a home loan, you should include the interest charges and all other allied charges into account. You may opt for a fixed rate or a floating rate loan, as per your choice.  Allied charges include processing fees, valuation and title search fees, legal and documentation charges. These charges vary from bank to bank-some banks have fixed charges, while others levy a percentage of the loan amount.
    Relocation charges are a huge cost in larger cities and should be factored in. Besides that, you would also need to spend on interior designing and furniture and fixtures.
Source : moneylife

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