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IBTimes.com

Real Estate

April 15, 2011 12:02 PM IST

Cost of buying a house is not just its purchase price - additional costs you will incur

Purchasing a house is not just about paying the purchase price to the seller. There are numerous other costs associated with buying a house that you must also factor into your budget. Taken together, these costs can add quite a lot to your final expenditure. So, its best to be aware of them and plan for the in advance so that you have adequate funds available to buy and comfortably move into your dream home. Here we familiarize you with some of these costs.

ING Direct is reducing the variable interest rate on its 100 per cent offset home loan product, Orange Advantage, by 0.10 per cent p.a. from today 30 May 2011 amid toughening competition among Australian lenders.

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Brokerage charges: If you go through a real estate broker or agent to buy your house, you will have to pay a brokerage charge. This can typically range from 1% to 2% of the purchase price of the property. Best to clarify who will pay the broker, the buyer or the seller, and what the fees are going to be, rather than leave things ambiguous.

Stamp duty and registration charges: Once you have bought the house, you need to get the property legally transferred into your name to establish your rightful ownership of the property. Registration can cost you up to 1% of the purchase price and the stamp duty could be up to 5% of the purchase price depending upon the state you live in. These costs cannot be avoided as in the absence of registration any third party can come and dispute whether the property legitimately belongs to you by claiming that they have an interest in the property.

Repair and renovation costs: If you are buying a pre-existing property then you might be required to spend some money in sprucing up the property before its ready for your occupancy. Whether it's a superficial coat of paint, or some major structural repair, these are all costs that can add up to a substantial amount by the time you are ready to shift to this property.

Shifting charges: Buying a property means you will be shifting from the place you are currently living in. This will involve moving costs for all your domestic belongings from one place to another. Depending upon the value and fragility of the items, you might also want to get insurance for this move. Renting a truck and labour to move goods around will cost you money that you will have to pay almost instantaneously at the time of the move.

Society charges: There are certain costs that you will have to incur towards maintenance of the society or locality such as payments toward the guard and sweepers, and additional charges for maintenance of the public amenities in your building/colony. Some of these payments might be due in a lump sum at the time of your move, or you might even have to make a security deposit towards these services.

Interior decoration costs: Properties are usually sold in a bare form, without furnishings and carpets. Moving into a new place would mean that you need to spend money on doing up the interiors of the house on curtains, carpets, furniture and furnishings. These expenses are purely discretionary and depend upon your taste. You can of course choose to defer these expenses to a later date, or even make do with your old furniture till you are ready to purchase new furniture.