The Hidden Costs of Buying a Home

The many costs beyond the property price - stamp duty, registration, brokerage, deposits, interiors and maintenance - that buyers often underestimate.

The price in an advertisement is rarely what you actually pay. Buyers should budget for many extra costs.

Government charges

Stamp duty: typically around 5 to 7 percent of the property value, varying by state, with concessions for women in many states.
Registration fees: often around 1 percent.
GST on under-construction homes.

Developer and society charges

Parking charges.
Preferred location charges, for higher floors or garden views.
Club membership.
Maintenance deposit: advance payments for one to two years of maintenance.
Electricity and water connection fees.

Processing fees.
Legal and valuation charges.
Insurance that lenders may encourage.

Other costs

Brokerage, often around 1 to 2 percent.
Interiors: kitchens, wardrobes, furniture, lighting.
Moving costs.

Ongoing costs

Monthly maintenance.
Property tax.
Repairs.

Adding it up

On a 60 lakh rupee flat, extra costs can easily add 5 to 10 lakh rupees or more. Buyers who budget only for the price and down payment may be forced to borrow more or stretch themselves.

Tips

Ask for a detailed cost sheet from the developer.
Budget 10 to 15 percent above the property price.
Keep an emergency fund after the purchase.

The surprise bill

A couple budgets for a 50 lakh flat and a 10 lakh down payment. Then they learn about 3.5 lakh in stamp duty, 50,000 in registration, 2 lakh in parking and club charges, and 4 lakh for interiors. They must take a personal loan to cover the gap.

Thinking the listed price is the total cost

Stamp duty, registration, charges and interiors can add 10 percent or more.

Key takeaways

Stamp duty and registration add several percent to the price.
Developer charges, brokerage and interiors add more.
Ongoing maintenance and property taxes continue after purchase.
Budget 10 to 15 percent above the property price.