- Buying a home in India is a major financial commitment often involving a long-term loan
- Homeowners must budget for monthly maintenance charges that increase annually
- Property tax is an annual or semi-annual local tax that homeowners must pay timely
Buying a home feels like the finish line. In India, it is one of the top financial priorities of people. It is also a major financial commitment since most people buy a home on a loan. The loan tenure usually goes up to 30 years, with investors trying to make at least 25-30% down payment.
However, the bank EMI is only the start of the journey. Once you move in, a second set of payments quietly begins. These costs do not show up in any loan statement, yet they add up to thousands every month. That is why when considering a home purchase, you need to be prepared for additional payments and costs, it doesn't put a dent on your savings or emergency funds.
Here's what to expect:
- Maintenance charges: Apartments in societies charge monthly fees for security, lifts, water, and common areas. These rise every year, which means that you need to be prepared to shell out extra money from your pocket in addition to the EMI.
- Property tax: Property tax in India is an annual or semi-annual direct tax levied by local municipal bodies. As a homeowner, you need to stay updated about the rules and timelines to avoid potential penalties.
- Repairs and furnishing: Seepage, paint, plumbing, and electrical fixes become additional responsibilities once you own a home. You need to set aside a minimum of 1% of your home value annually to ensure you can handle these costs without hurting your other plans.
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- Home insurance: This will cover fire, theft, and natural damage to your home Many people often skip this to save costs, but you need to assess whether you want security or are comfortable with taking the risk.
- Utility bills: In rental accommodations, your utility bills may not be that high. But when you own your own, larger space, it can lead to higher electricity, water, and gas bills.
- Contributions: If you decide to buy a flat in a society, you may be asked for periodic payments for broader maintenance, or any major repair work. You need to budget for these in advance.
When buying a home, you must understand that EMI is only the beginning of this journey. As a result, you not only need to check EMI affordability but also must set aside an additional amount to ensure that this goal does not stress out your other financial commitment.
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