What is the Cost of buying a House in India?

1. Property Price:

This is the elephant in the room that everyone is well aware of. It is the most substantial amount of the cost of buying a house. The Price of the Property is different in every area. You can have a great idea about the property's price in an area to check if it is overpriced by comparing it with the official Circle rate that authorities assign. Various factors decide the cost of a property, the major factors being location size, amenities, demand, and distance from transport services. In Urban areas and metropolitan cities like Mumbai, Delhi, and Bangalore, the prices of property have skyrocketed, so if you want to live in top cities, then you have to pay top money as well; otherwise, you can house at comparatively lower prices in rural or suburban areas.

While looking to buy a house, the property cost should be the first and foremost cost you should keep in mind. So you will have to deeply research property prices in your desired location and set a budget to calculate the majority cost of the house.

2. Down Payment:

In the past few years, property prices have increased so much that it has become nearly impossible for an ordinary person to pay the complete payment in a lump sum. So, most people resort to securing a home loan to have their own house. To finance your house, you need to make a down payment. The down payment is a percent of the property's total cost. Down Payment is usually around 10% to 20% of the property cost, but it is highly recommended to have at least 20% down payment ready because the lesser the down payment, the higher you will be in debt and the more you will have to pay interest. The exact amount of the down payment depends on the lender's policies and the loan you qualify for.

3. Home Loan Interest:

We get incredibly excited when we know that our loan has been sanctioned, but one significant aspect of taking a loan that we don't prioritize is the home loan interest that we will have to bear. The interest loan rates can vary among different banks, so comparing the rates and terms before you take a loan is crucial. Even a 0.1% difference can save you a lot of money as, in the long term, the money compounds, and the 0.1% can save you lakhs of rupees, so do all the calculations properly before you finalize a loan. Try to reduce the duration of the loan as well because a more prolonged duration will lead you to a stage where you will be paying more interest than the actual amount. Home loan interest is a huge factor in calculating the overall cost of the house in the long term. The interest rate also determines whether the house is a good investment.

4. Loan Processing Fees:

When your loan is approved, you must also pay loan processing fees. This fee is usually charged because there are some administrative and processing expenses while sanctioning the loan the bank has to bear. When we plan to take a home loan to buy our dream house, in the excitement, we don't consider the processing fees. The loan processing fees are usually some percentage of the loan amount. The average home loan processing fee is around 0.5% to 1% of the home loan. So if you don't add loan processing fees to the overall cost of the house, you are unaware of where you are spending your money, and with the incorrect house cost, you won't be able to calculate whether it was an excellent decision to buy the house.

5. Stamp Duty and Registration Fees:

To buy a house, you must register it in your name, and for the registration process, you must pay the registration fees and stamp duty charges. It doesn't matter whether you buy an old property or a new property registration fees and stamp duty charges are inevitable and are must-have documents to claim ownership of your property. The state government levies these charges, and various states have different registration charges. The stamp duty and registration charges are usually 1% of the property's market value in India, so it turns out to be quite an immense amount that many people have not planned for.

Tip- You can get a discount on the registration fees. There are a lot of states that provide discounts on property registration fees for women and senior citizens. So, if you have a female member or a senior citizen, you can save a lot of money.

You can claim Stamp duty as a deduction under Section 80C of the Income Tax Act and claim a deduction of up to Rs. 1,50,000. Here is the table that depicts the stamp duty and Registration fees charges in top cities of India.

Name of the City	Stamp Duty	Registration Fee
Bangalore	1% of the total market value of the property	5%
Delhi	1% of the total market value of sale deed plus Rs.100 pasting charge	4% if a woman is the owner
		6% in the case of a male owner
Mumbai	4% for Rural Areas	1% or Rs.30,000, whichever is lesser
	5% for Municipal areas
Chennai	1% of the total market value of the property	1%
Kolkata	5% for Rural Areas	1% which is applicable only when the value of the property exceeds Rs.40 lakh
	6% for Municipal Areas

6. Legal and Documentation Charges:

For property verification, title search, and documentation processes, one needs to hire legal professionals to get the legal paperwork done. These charges are the additional expenses to get everything legally verified and authentic. Even though these charges are not huge compared to other hefty charges, they still add up to the overall cost of buying a house.

7. Brokerage Fees:

If you want to find your ideal home, then you need the assistance of a Real Estate Agent. On average, the Broker charges 1% of the value of the property as his brokerage. But this money spent is entirely worth it because the Broker will help you choose a home, help in negotiation, and will represent you in the deal. The Broker can also help you find a steal deal that will save you way more than what you pay to the Broker. Having a Broker while purchasing a property is significant because the Broker ensures that both parties are genuine and works as a medium of communication between both parties. The brokerage fees are also a part of the total cost of the house.

8. Maintenance and Repair Costs:

If you think you have bought the house and you don't have to face any other charges when you move into it, the reality is quite different. Every house needs some repairs, and before you move into your new house, you should get the repair fixed before they become a significant issue. No one buys a house every other day, so it becomes essential for the new homeowner to invest in the maintenance of the house to give the property a long functional life. Maintenance and repair costs such as painting, plumbing, electrical work, and other costs are also an addition to the overall cost of the house.

9. Property Tax:

Property tax is an expense you must pay on your property every year. If you skip it, then next year, you will have to pay the penalty as well. Property tax is charged by the government of India and, in most cases, collected by the Municipal Departments for the civic services they provide, such as clean roads, parks, water services, and much more. When you have your own house, this additional expense aggregates in your life and increases the house's cost.

10. Utilities and Moving Costs:

After you have paid all the charges and will finally shift into your new home, you will have to spend more on utility connections, installation fees, and moving expenses. Most people hire Packers and Movers when they want to shift to their new home because the movers take responsibility for the whole move and ensure that nothing gets damaged during the move.

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At first, these costs might look like meager costs, but as soon as you start to calculate the overall expenses of moving, you know that these costs quickly add to the cost of your new home.

11. Furniture and Interior Costs:

Now that you have purchased your dream house, it is time to personalize it and make it look like you own it. Everyone wants their new house to look classy and attractive, so it is essential to invest in furnishing and interior decoration. Matching the interior design theme with the Furniture will make the house an eye-pleasing place. Also, Furniture chosen according to the dimension of the house will allow full utilization of the floor space. Costs like buying new Furniture, appliances, decor, or other customization expenses add to the overall cost of the house.

Once you've purchased the house, you may need to invest in furnishing and interior decoration. Factor in the cost of Furniture, appliances, decor, and any customization you plan to undertake.

12. Opportunity Costs:

Even though in the general public's mindset buying a house is the best investment humans can make, a house provides excellent returns, has shallow risk, and can also provide passive income if you give the house on rent. These factors invest in a house the best decision of our life. While buying a house is one of the most significant purchases in life, statistics show that it is not the most optimum investment. Let's look at the data of the last 30 years of real estate returns and compare it with the safest stock to invest in the Nifty50 Index, which includes the top 50 companies of India listed in the stock market. We get to know that the Index quickly gives way more returns than real estate and is also a safer option. When you invest in stocks, you get benefits such as dividends, low capital requirement, highly liquid investment, and many more.

So the harsh truth is that financially buying a house is not the best investment of your money, but having your own house has a more profound value to us as it is also an emotional decision. But when you choose to buy a house with your savings, you miss the opportunity of investing in stocks, bonds, Mutual funds, or any other lucrative investing option. You miss out on the additional profit and benefits you would have gained if you had invested in stocks, and this difference also adds up to the overall cost of the house.

Understanding the comprehensive cost of buying a house in India is vital for making an informed decision and managing your finances effectively. Beyond the property price, numerous factors contribute to the overall expense, from down payments and home loan interest to legal fees and ongoing maintenance costs. By considering all these elements, you can confidently embark on your journey to homeownership while ensuring that you're financially well-prepared for this significant milestone in your life.