Hidden costs to look out for while investing in a home
Buying a home puts a great amount of financial stress on ones finances and when some unknown charge crops up it makes matters even more worse. To avoid such a situation we have listed some hidden costs one has to pay apart from property cost while buying a home.
It is better you check and get below listed charges clarified with your builder and lender.
1.Registration and stamp duty: Stamp duty to be paid on property value varies from 3% to 8% depending on the state in which the property is located. Additionally 1% is charged as registration fee.
2.Service tax: Service tax of 14.5% on 25% of property value is applicable for under construction property. If property value is greater than 1 crore or having area more than 2000 sq feet, service tax will be applicable on 30% of property value.
Service tax is not applicable for constructed property which has got completion certificate.
3.VAT: Value added tax of approximately 1% is applicable on under construction property. It may vary depending on the state in which the property is located.
In Maharashtra 1% of VAT is applicable on under construction property from April 1 2010.For property sold before April 2010 applicable VAT is 5%.Similar to service tax ,VAT is not applicable for constructed property which has got completion certificate.
4.Sinking Fund, Club charges and maintenance charges: Builder may charge you initial deposit for sinking fund, club charges and maintenance charges for one year while purchasing flat.
5.Processing charges on home loan : Lender will generally charge 0.25% to 1% of loan amount as processing charges your home loan application. This charges are generally non-refundable.
6.Parking charges: Builder may charge you separately for parking.
7.Transfer charges: If you are buying resale flat then the apartment cooperative housing society will charge you transfer fee. Transfer fee is fixed by the cooperative housing society.
8.Franking charges on loan agreement: Stamp charges of 0.1%-0.2% of home loan value will be applicable on loan agreement with bank.
9.Home insurance : Home loan lenders may require that you buy a home/life insurance as a perquisite to disburse your home loan.