Planning and budgeting for buying a new home is no easy task. If you are a first time home buyer then it becomes even more challenging. The majority of the population think that the cost of the house quoted by the seller or builder is the amount of money required to buy the home. This is completely wrong. Buying a house involves many expenses which are not transparent upfront. This article will dive deep into each and every expense that you should plan for before buying a home.
This is easily the single largest payment you have to make when you are buying a home with a bank loan. This is the initial amount that you need to pay the builder upfront and the balance amount will be disbursed by your bank at various stages. This could be anywhere around 10-20% of the total cost. This varies based on builders, banks/housing finance agencies, states, etc. You need to have this amount ready with you before buying the property.
Eg: If the total cost of the property is Rs.50 Lakhs, then the down payment will be around Rs.5-10 Lakhs.
These are some of the extra fittings and customizations that you have requested the builder to implement. Some of the examples of utility cost are
- Additional Bath Fittings
- Additional Electrical points
- Customized Window glasses
- Additional Tiles both for flooring and bathroom
- Invertor Facility
- Concealed Facility for Sound system
- Different Painting needs
The total cost of the utilities will vary based on your level of customizations. If you are not interested in customization then this cost will be almost negligible. Whatever be the cost, be prepared for this. You need to furnish this amount at the later stages of construction.
When you a buy new home, you should register it with Government and also with various tax agencies. Some of the tax related costs include but not limited to are:
- Property Tax Registration
- Water Tax Registration
- Drainage Connection
- Electricity Connection
You have to register your newly bought property in the local sub-registrar office without any delay or it will attract penalty. The basic cost of registration is 1% of the total value in addition to 7% valued stamp paper for the registration Process. You also need to hire a professional to write the sale deed and to do due diligence on the property. Please consider these costs to when you’re budgeting for the purchase.
These are some of the misc expenses that you need to pay when you buy a home. Some of them are brokerage commission, Survey fees, Loan Processing fees, Appraisal fees, Inspection fees, insurance premiums, etc.
You can’t blindly invest all your cash into the home purchase, instead have some money for contingencies. You need to maintain a cash reserve of around 5% of the total cost of the property. There could be some unpredicted expenses arising during the course of the construction which you need to pay.
Listed above are some of the important costs that you should consider while planning the budget for your new home. You might as well consider the budget for house warming function optionally.