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10 Costs to Consider While Purchasing A Property

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There are many costs associated with purchasing a property. These go above and beyond just the price declared by the builder and are usually assumed to be general knowledge. However, a first-time buyer will only focus on the basic price, which is the rate per square foot.

Additional charges can be on account of GST, maintenance charges, a deposit for electricity and water connection, registration and stamp duty, and so on. Since these charges come under other costs, banks generally don’t fund this.

A borrower should ask the builder to give the exact details of these charges so that he can arrive at the total price of the property and make arrangements for finance accordingly.

There are a few optional price components, such as car parking facilities. The list below will assist you in planning for all the charges.

List of all property-related charges:

Basic price:

Developers advertise base price, and it makes up the main cost of the property.

GST Tax:

On July 1st, 2017, the government implemented the Goods and Services Tax (GST). Any under-construction property that is purchased within India is charged with Goods and Services Tax. Like stamp duty and registration charges, GST is also paid to the government. The GST on the under-construction property is 12% while the affordable housing projects are exempted from GST. There is ZERO GST tax on the sale of complex/building and ready to move-in flats where the sale takes place after the issue of completion certificate.

External Electrification and electric connection charges:

External electrification charges are the price charged by the developer to lay down wires and cables from the electricity consumption meter to the Apartment. Developers charge an amount called EEC solely to set up the infrastructure that brings electricity to your apartment. The borrower will have to pay the actual application fees for installing the electricity meter and a connection to the electricity board of the state for actually getting electricity.

Water, sewerage and drainage charges:

The complex requires a water facility, so the candidate needs to cover the cost of setting up the water facility. You pay the charges to the government, and they will vary depending on your state.

Maintenance charges:

Builders today are asking for maintenance deposits up to 2 to 10 years in advance, as it gives them a greater capital amount to work with. Maintenance charges are subject to the locality, land value and type of home the candidate is hoping to purchase. They can also vary depending on the quality and number of amenities the builder is offering you.

Registration and stamp duty:

Stamp duty is a compulsory fee that the buyer is supposed to pay the state government to get the house registered under his/her name. These charges may differ from state to state from 5-7%, and the house won’t be registered in your name unless the stamp duty is paid. Registration is the full and final legal agreement between the buyer and seller indicating the change of ownership; and the court charges a registration fee for it, which is generally 1-2% of the agreement value.

Preferential Location Charge (PLC):

If the borrower wants to purchase a property preferred by most of the people then he should pay a higher price for that property. For e.g. a villa on the corner of the road or a flat in the first four floors of an apartment building are generally considered the preferred locations. The PLC charges are normally 4% of BSP. So, add 4% to the total cost if he wants a preferred location for himself.

Interior costs:

Buying the property is effectively purchasing just the shell. Once you buy a property, you’ll almost always need to spend money personalizing the interiors to your tastes and needs. Depending on the specific interior work you plan, this expenditure can quickly drain your wallet. Builders typically assume additional charges will add at least 1-2% to the final property cost.

External development charge:

Sometimes government authorities mandate an external development charge, calculated per square foot. The area surrounding the property site incurs this charge for its development and upkeep. It varies from location to location.

Legal charges:

Builders may request clients to shoulder the additional costs of a surveyor or solicitor if due diligence beyond registration and stamp duty fees is necessary.

Please note that, as per the RERA, all the charges are calculated on the basis of CARPET AREA. According to the RERA Act, carpet area is the total area of the floor that can be used within the walls of the apartment. This does not include areas like an open terrace, shafts, balconies, etc.

Also, a builder can ask for Parking Space charges, Club Membership Charges, Power Backup Charges, etc

Don’t be caught unawares when it is too late to turn back from a project. It is important to have all this information upfront, before committing to such a large purchase.

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HomeFirst Finance Company Housing Loan Processing Fees Schedule

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Your home loan will be processed in 2 steps:

  1. You receive the approval of your home loan.
  2. You sign the loan agreement papers and complete other necessary documentation. The loan amount is thereafter paid directly to the builder by Home First Finance Company.

Loan decisions are made in less than a week. You will receive an SMS on your registered mobile number as soon as we make a decision.

HomeFirst does not charge any prepayment fees. This applies to both partial and full repayments. In fact, we have a special Auto-Prepay feature to facilitate this process for you.

HomeFirst offers loan tenures between 1 year to 25 years. If you opt for a longer tenure, you can get the advantage of a lower EMI each month.

HomeFirst can provide finance up to 90% of the property value. The balance has to be arranged by you from other sources. Please note: 90% financing is only available for loans amounting to less than Rs. 30 lakhs.

All co-owners of the property have to be co-applicants to the loan. A person who is not a co-owner can also become a co-applicant to the loan.

During the construction phase, HomeFirst will disburse funds to the builder on your behalf. These will be based on payment requests made by the builder as per the construction schedule.

HomeFirst will charge interest only on the amount disbursed as loan during the construction phase. In this period, interest is charged only on the disbursed loan amount. For example, if you have a sanctioned loan of Rs 10 lakhs, but the property is under construction and we have disbursed only Rs 4 lakhs, you will be charged interest only on 4 lakhs. These interest payments are referred to as pre-EMI interest payments.

EMI payments will start only after completion of the project and registration of the property.

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In the event of an unfortunate incident, home loan insurance will help you or your family pay off the home loan. This ensures that the burden does not suddenly fall upon family members at a bad time.

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