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How are franking charges different from stamp duty on home loans?

Most home buyers, especially the first-time ones, tend to get confused between stamp duty and franking charge. These two terms are often used interchangeably and might create some confusion since there are many differences between the two. Thus, if you are not familiar with them, this article will help you understand the charges better. 

Buying a house might seem like a simple process at first sight- you opt for a home loan at an affordable rate of interest and pay it back in instalments over a fixed period. However, you need to realise that your expenditure is not limited to the property price you borrow or give to the builder. There are many other charges involved. This includes registration, stamp duty, and franking charges. 

What is a stamp duty? 

Stamp duty is technically a tax that the home buyer needs to pay in order to legalize the documents pertaining to the purchase. This might include the transfer of the property, mortgage, and sales documents. Stamp duty is in accordance with the tax laws that state that every home buyer has to pay the stamp duty for their property purchase to be legal in a court of law. 

There are certain important things to note about stamp duty. For instance, the charge differs from state to state. In India, the three most common stamping methods are franking, paper-based method, and e-stamping. 

What is a franking charge? 

Franking comes after paying stamp duty. It is basically a process of stamping your agreement which confirms that you have paid the stamp duty charges. In other words, when you visit a franking institution or bank, the respective officials affix a stamp or denomination on your agreement document. This is done with the help of a franking machine. The authority charges a certain amount for this process. It is called the franking charge. It is applicable for a home loan as well as property sale documents. 

Previously, stamp papers were used for this purpose. However, the Indian Government decided to discontinue it due to the growing rate of scams, forgery, and misuse. Thus, franking emerged as an alternative for confirming the stamp duty payment. 

Difference between franking charge and stamp duty 

Type of charge 

Stamp duty is the tax levied by the Indian Government on the relevant property documents that are required to legalize the purchase of your house. However, franking can take place only after you pay the stamp duty. It is basically a process of affixing a stamp on the legal property papers used for confirmation of stamp duty. Thus, the charge for this process is called the franking charge. 

Percentage of charge 

Stamp duty is evaluated based on the total cost of your home. It typically ranges from three to ten percent. The charge depends on a number of factors, such as the location of the house, its type, status, the state slab, the home buyer’s gender, age, and so on. For instance, women generally have to pay around 0.01 percent lower stamp duty in the majority of states. On the other hand, Franking charges range from 0.1 to 0.2 percent of the loan amount or are equal to 0.1 percent of the home value. The maximum value is estimated at ₹ 20,000 on the total sale deed. Similar to stamp duty, the franking charge also varies from state to state. 

Requirement for franking charges

Stamp duty is a mandatory tax imposed by the government that has to be paid during registration. Failure to comply will result in a penalty. Franking, on the other hand, is an optional process. Nowadays, people either opt for e-stamping or purchase already-stamped documents. 

Respective authorities 

You need to pay the stamp duty during the registration process in the Sub-Registrar of Assurances office that falls under your home’s jurisdiction. Failure in doing so leads to a fine. Franking, on the other hand, is conducted by banks that are authorized by the government. Please note that this service is generally provided for a few hours in the day only. Moreover, the banks also have a limit on the franking work done per day. Thus, you have to make sure that either you are able to complete the entire process within the fixed timeframe. 

Conclusion 

Before opting for a home loan, you need to be informed about every miscellaneous charge that is often overlooked by homebuyers. While most people are aware of stamp duty as a mandatory charge during home purchase, the majority of the banks fail to mention the franking charge that comes along with it. Thus, please make sure to check the stamp duty and franking charge of your state before applying for a home loan in order to have a smooth home buying process. 

Home automation: the next big change in the real estate industry 

Home automation is basically a system through which you can manage all your home electronic devices through automation or remote control. You can control all the functions and features of your house such as lighting, air conditioning temperature, alarm systems, and so on with ease. 

All of these electronic devices must be connected to the internet to facilitate automation or remote control. They are known as the Internet of Things or IoT. 

Home automation allows each of these devices to trigger one another which means that you no longer need to control them manually. For instance, you can schedule your lighting systems so that they can turn off accordingly when you go to sleep or you can regulate the house temperature using a thermostat to switch on the air conditioning maybe an hour before you return home from work. You don’t have to return to a hot or stuffy home and feel relaxed without further ado. 

Thus, home automation contributes to making life easier and more convenient. It can also help you save money on electricity, heating, and cooling bills. More and more homeowners have opted for home automation in recent times due to increased convenience as well as safety. Keep reading to know more. 

Understanding how it works 

The home automation system includes a network of electronic devices, all connected to the internet through various wireless communication protocols such as Bluetooth, Wifi, and ZigBee. 

Via electronic interfaces, all these home devices can be efficiently managed with the help of controllers that include either an application or voice assistants like Google Assistant and Alexa. 

Most of the time, these IoT devices have a sensor that is used to monitor temperature, light, and motion changes. This provides the necessary information about the surroundings of the device to the user. They trigger actuators to make physical changes to the device. An actuator is a part that is present in these devices that assists in moving or controlling the device remotely. 

Smart home automation involves three steps- monitoring, control, and automation 

  • Monitoring: Users can keep an eye on their electronic devices through an application. For instance, you can see the live footage of your house through a smart security camera. 
  • Control: After monitoring, the user can control the devices remotely if necessary. For instance, you can pan the house security camera to see more of your drawing or living space. 
  • Automation: Lastly and most importantly, automation is the system for integrating and setting all your devices to trigger each other. For instance, whenever the smart security camera detects some kind of motion, the siren goes off. 

Features of home automation system 

Home automation systems provide many functions and services. We have prepared a list of some of the most common features: 

  • Home lighting remote control 
  • Air conditioning or heater thermostat control 
  • Effective home security and camera monitoring 
  • Control of different home appliances 
  • Carbon monoxide and fire control monitoring 
  • Effective home alarm system 
  • Live video surveillance of the entire home 
  • Real-time email and text alerts 
  • Voice control system 
  • Integration of digital personal assistant 

Advantages of home automation system 

  • Remote control: A home automation system allows remote control of devices. This implies that you can easily unlock the door for your housemaid or plant sitter without leaving the key with someone or under the mattress. Remote access to the lock is undoubtedly more secure and convenient. 
  • Increased comfort: Suppose you are comfortably lying-in bed but suddenly realize that you have left the kitchen or bathroom lights on. This happens to most of us. However, with a smart lighting system, you can now easily turn them off while lying in the bed without having to go physically. 
  • Saving energy: There must have been times when you have left the air conditioning or heater on while you were out of the house for several hours. With the help of a home automation system, you can schedule your thermostat so that energy is not wasted. 
  • Convenience: Smart home automation allows you to control numerous devices remotely or with the help of voice commands. You can also schedule devices such as thermostats, lighting, and so on. Besides this, you can synchronize them with sunrise and sunset. All of these features are bound to make your life a lot more convenient. Just imagine that you wake up in the morning and come down to fresh toast without doing any labour! 
  • Safety and security: Numerous smart home devices can help to increase the safety of your home. This includes sensors for windows and doors, security cameras to monitor and detect motion, and many more. 

Nowadays, most of us are extremely busy and occupied with a tremendous workload. Home automation systems aim to reduce some of the workload and stress by effectively increasing the comfort, convenience, and security of your home. 

Electronic Clearing Service (ECS): What is ECS and how does it work 

Taking a home loan or a personal loan requires you to make EMI payments every month without fail. And since we all have busy lives and hectic schedules we often find it challenging to remember the EMI date. Missing an EMI date often leads to a penalty and regular late payments can even affect your credit score. Sounds daunting? Well, it doesn’t have to be. To avoid penalties, the borrowers are offered Electronic Clearing Service (ECS) by banks to ensure timely payments. In this article, we will learn more about Electronic Clearing Service (ECS) and its working process in detail. 

What is electronic clearing service (ECS)? 

Electronic clearing service or ECS is a service provided by banks that allow the electronic transfer of funds from one bank to another. It is generally used to make bulk payments including salary, dividends, payments, pension, etc. ECS is also commonly used for making payments to utility companies such as water, telephone, and electricity. Additionally, it can be used to make loan payments as well as SIP investments. 

ECS is quite beneficial for you if you have taken a loan or have to make regular loan payments. It takes out the stress of keeping track of billing dates by automatically debiting the amount from your account saving you the hassle of remembering. 

Types of electronic clearing service (ECS) 

Electronic clearing service (ECS) is mainly of two types based on the mode of payment: 

ECS credit 

When any organization or institution credits money to your account on a monthly basis, be it salary, pension, dividend, etc., it is called an ECS credit. Through ECS credit, institutions can afford to credit a large number of beneficiaries with bank branches in different locations. 

ECS debit 

When a fixed recurring amount is deducted from your account towards loan payments, utility bills, EMIs, insurance premiums, mutual fund investments, or digital subscription plans, it’s known as ECS debit. ECS debit is highly convenient for users as it not only saves time but also reduces effort. 

How does electronic clearing service (ECS) work? 

The first step to avail of the Electronic Clearing Service (ECS) is to inform your bank and provide a mandate to authorize the institution, which can then credit or debit the amount from your bank account. The mandate will contain the necessary details of your bank branch and account particulars. The institution is responsible for communicating the details of the amount being credited or debited along with the transfer dates. The mobile alerts or messages from the bank will keep you notified of the payment. For added security, as an ECS user, you can also set the maximum amount that one can debit from your account. 

What are the advantages of ECS? 

Electronic Clearing Services (ECS) provides benefits to banks, institutions, and customers equally. Let us take a look at a few major advantages: 

For banks: 

  • Less paperwork: As ECS allows electronic payment transfers, the banks have significantly reduced the paperwork. 
  • Increased transparency: Each and every transaction that takes place is recorded digitally ensuring complete transparency. 
  • Effortless processing: Adopting ECS has made the lives of banks easier as they just have to match the necessary details of the account holder in order to debit or credit an amount. 
  • No errors: Since the entire process is automated, the chances of manual errors have come down. If the details fail to match, the transaction is terminated. 

For beneficiaries: 

  • Fast transfers: With ECS, the customers are able to transfer the amount within a maximum of 3-4 days. 
  • No bank visits: If you have opted for ECS, there is no need to visit the bank physically and authorize the transactions. 
  • Enhanced security: The possibility of fraudulent encashment is almost negligible due to increased transparency. 
  • Timely payments: The payments are debited and credited automatically leading to timely payments and zero penalties. 

For institutions: 

  • Cost-effective: Due to the reduction of administrative overheads, dispatching costs, etc. the institution saves costs through ECS. 
  • Less manpower: ECS helps in reducing the manpower required for printing, dispatching, etc. 
  • Seamless transfer: ECS ensures that bulk transfers take place on a fixed date to a large number of individuals without any hiccups. 

Electronic clearing service (ECS) has made paying bills offline or manually a thing of the past. It has revolutionized the way we make payments and made it easier for users to make recurring and pre-payments. Using ECS can help you lead a more productive lifestyle as it doesn’t require you to write cheques or visit banks every month. With ECS, missing penalties are completely avoidable as the payments are automatically deducted.  

This low-risk, high-benefit service is a boon to customers, institutions, and banks equally. Discontinuing ECS service is as easy as starting it and can be done anytime you feel the need. The Electronic Clearing System (ECS) is your way to a convenient, flexible, and secure payment system. 

Top 5 affordable housing locations in India 

Is the rising price of real estate affecting your dream of buying your own house? With property prices skyrocketing in metro cities like Mumbai, Delhi, and Bangalore, the idea of buying a house sometimes seems far-fetched. However, the residential market is booming in many cities allowing buyers to own a property without compromising on quality. In this article, we will take you through the top 5 affordable housing locations in India that will not leave you in a crunch for money to become a homeowner. 

Although affordability is a relative term, here we have considered the price of the housing unit to be ₹45 lakh or below and the carpet area of the unit as 60 sq meters or below. We have curated a list of top 5 cities which not only offer affordable housing but also a good quality of life in terms of infrastructure, water, electricity, roads, schools, hospitals, universities and employment opportunities. 

Hyderabad, Telangana 

Hyderabad provides the most affordable real estate among all the metro cities in India. This tier-1 city provides world-class infrastructure and a decent quality of life to its residents. Apart from affordable housing, Hyderabad is also a friendly and peaceful city that guarantees a safer living as compared to other cities in India. Another positive aspect of living in Hyderbad is the evenly divided population in the city making it immune to traffic during rush hours. 

The burgeoning workforce due to the ever-growing IT hubs in Hyderabad has been the key growth driver for real estate. There is no dearth of residential projects at affordable prices across several micro markets. The real estate sector continues to grow and has accounted for a majority of fresh projects in the last few years. 

Ahmedabad, Gujarat 

The real estate market in Ahmedabad might not be as scaled up as in other cities but it provides some very affordable housing options for those who choose to live here. There are several reasons why Ahmedabad is considered to be a good option for becoming a first time home buyer. 

Residents of Ahmedabad enjoy a good mix of both worlds – modern and traditional. With some of the top universities located in Ahmedabad, it is also an educational hub. The major growth driver of real estate in Ahmedabad is the huge number of petrochemical industries, oil, gas, and energy industries, and automobile industries. 

Ghaziabad, Uttar Pradesh 

A crucial part of the Delhi National Capital Region (NCR), Ghaziabad is no longer a sleepy hamlet but a key residential area for a lot of the population. It majorly attracts mid-segment homebuyers due to its efficient network of roads and metro connectivity. Areas like Kaushambi, Indirapuram, and Vaishali offer a high supply of ready-to-move residential properties by renowned developers at an affordable price. Buyers looking for affordable housing can easily choose a property in the range of ₹ 30-50 lakhs. 

The government is also taking special initiatives to provide affordable housing to its citizens. The Ghaziabad Development Authority (GDA) has announced the affordable housing scheme under which nearly 12,000 flats will be developed for prospective buyers. 

Pune, Maharashtra 

After Mumbai, Pune is in the race to become the next residential hub in Maharashtra. The city provides an exceptional quality of living while providing numerous affordable housing options by renowned builders. The real estate rates in Pune are much less than in Bangalore. 

The growing IT and manufacturing sector has also led to an influx of the working population in Pune, making the demand for real estate soar high. The maximum supply of real estate is from areas such as Baner, Wakad, Hinjewadi, and Hadapsar with affordable housing available in the range of ₹ 30-45 lakhs. 

Kolkata, West Bengal 

The affordable housing market has emerged in Kolkata in its full glory thanks to favourable government policies and rising real estate demand. Kolkata has always been considered a location with affordable housing and with new competitors in the market, the new housing projects have launched a fresh momentum. Areas such as Rishra, Dum Dum, Barasat, Khardah, Serampore, and Andul are all replete with projects offering apartments and flats in the range of ₹ 20-35 lakhs. 

With the Kolkata Municipal Corporation and Bidhannagar Municipal Corporation working towards improving the city’s infrastructure, Kolkata is likely to witness an upgraded infrastructure in terms of water supply, roads, solid waste management, parks, etc. 

Parting thoughts on affordable housing 

Buying a house is a dream for everyone as it provides safety and security to the individual and their family. To make this dream come true, the Indian government has made some crucial announcements to promote affordable housing. Owing to this, affordable housing has emerged as one of the most dynamic sectors in the Indian real estate industry. Developers have started to come up with smart innovative solutions as they are realising the growing demand for affordable housing. As more affordable housing hubs come up in India, the real estate sector is projected to touch the $1-trillion mark by 2030. 

Title Insurance: A benefit for home buyers

People are used to taking and responding to risks now and then. However, in specific scenarios, we fail to assess the degree of risks involved. This primarily happens in the case of property purchase and legal sectors. Therefore, you must take precautions beforehand and opt for insurance policies that can guard you against unforeseen risks that may cause severe damage to your property. Title Insurance is legal ownership that gives you the right to use, deal with, and dispose of the property. After purchase, the homebuyer shall acquire the property’s ownership or title. However, in many cases, a certain disparity has been observed with regard to ownership transfers. Therefore, title insurance is a necessary measure to secure the system in order to protect you from such hassles.  Besides this, title Insurance comes with various other advantages that you can benefit from. Before divulging further, let us first understand what Title Insurance is exactly. 

What is title insurance? 

Title insurance is a type of security insurance that ensures against invalidity of mortgage loans and any financial imbalance because of a mishap in the title to real property. 

This might arise due to unpaid property taxes, ambiguity in the property titles, a sudden claim of an estranged spouse and many more. 

Title insurance safeguards an allottee from issues during inheritance and uncertainty of the same property title by identifying an already existing or known problem in the title. 

It also helps in claims or defects that may arise due to old unknown complications related to the title. When you have title insurance, you are safeguarded from all unknown holds on property or defects on the title as per the date of your insurance cover. 

Please remember that the insurance is not related to mishaps caused due to forgery, fraud, incapacity, undue influence, incompetency, or an entity to authorize a transfer. 

Benefits of title insurance 

  1. It makes the procedure of real estate finance and credit availability easier 

If your project comes with title insurance, the property’s value automatically increases in terms of collateral quality. This gives a much broader scope to obtain finance from institutions and banks at a reasonable rate. 

  1. Broadens the scope of investments 

When a real estate project has title insurance, it will easily bring in more investments from more institutions and individuals. Title insurance has the power to diminish any inbuilt risks involved while acquiring properties. 

  1. Coverage of insurance 

In addition to compensating the insured against any unexpected defects in the title, the insurer also has to bear other types of litigation costs. It can be an out-of-court settlement expense if sustained by the homebuyer in cases of previous unknown damages in the property’s title. Title insurance lessens the burden by covering many legal expenses. 

  1. Security for the association of allottees and individual 

According to the RERA (Real Estate Regulatory Authority) mandate, the insurance will be transferred to the association of the allottees after the promoters have acquired the title insurance and the premium is already paid. This will be a kind of precaution for buyers purchasing with goodwill. 

  1. Value for time and cost 

It is no hidden fact that when purchasing a property, you need to invest a lot of money. The whole process can be hectic, including all the additional costs. However, you can get full-time support from insurance companies like legal assistance or full-time support for home buyers with an out-of-court settlement. The process of settling disputes regarding ownership takes place in a very cost-effective way. The best part of it is that it is a one-time investment. 

Why should you have title insurance? 

No matter what transactions you are making in real estate, a buyer will always want to have a transparent and marketable title of the property. He or she will want a clear picture of all the restrictions of the property before investing. 

Sometimes local regulations and State laws can cause hindrances in the ownership of the property. Therefore, paying proper attention to the marketable title is very important. Unfortunately, even after double-checking all information and details, there can be unknown mishaps and defects present in the title. 

Title insurance provides the ultimate protection in real estate investments. It gives full coverage against any kind of financial loss happening due to defects in the title or other mishaps and irregularities while acquiring the property. 

RERA has made it compulsory to obtain title insurance. This will now benefit both homebuyers and insurance companies. The legal move will henceforth safeguard any unexpected disputes concerning the title of the property. Thus, property insurance is mandatory if you want maximum security. 

Conclusion 

Homebuyers would not opt for a property investment that is not trustworthy or completely safeguarded. Thus, developers should get title insurance to eliminate ownership-related issues during property construction. RERA has already made it mandatory for developers to obtain this insurance for new and ongoing projects. Title Insurance must become a legal practice so that one does not face issues in future regarding the title of their property. 

What is ROR in land records? 

A Record of Rights (ROR) is a single piece of document that contains all the necessary details of a land parcel including extent, ownership, and encumbrance. The ROR document plays a key role in understanding the ownership of the property. This document will soon substitute the puzzling land documents and cumbersome procedures related to land registration and transaction. 

The structure of the document and the information contained varies from one state to the other. It helps an individual claim his right to the property when challenged. In this article, we will explore more about the importance of ROR and why it came into existence. 

What is ROR? 

The Record of Rights or ROR is a primary document that records the property’s transaction from time to time along with the information on how rights on land are derived by the landowner. 

It also comprise details regarding any loans taken by the occupant, details of rights of the owner or the occupant, and if there are any community or government rights on the land. 

The ROR document is also commonly known as Revenue Records as it includes tax registers for the collection of revenue from land. It is maintained with the different officers at different levels. 

Typically, a ROR includes the below information: 

  • Location of the land 
  • The extent of the land inclusive of the total area 
  • Name of all the persons who have acquired rights in the said land 
  • The nature and limits of each person’s rights and liabilities in the land 
  • Encumbrances created on the land if any 
  • Classification of land as a fragment 
  • Other classification and reservations on the land 
  • If the land is used for agricultural activities, details of the same including information about Rabi and Kharif crops 
  • Details of charges of attachment and decrees under the order of the civil court or revenue authorities 
  • Income generated from the land 

Advantages of using ROR 

The introduction of ROR has helped in accessing the land details without going through a bunch of mind-boggling land documents concealing the important information. It has now become an important document to be added to your list while planning to buy a property. It plays a key role in understanding property ownership.  

Below, we have listed some advantages of using ROR: 

  • ROR is an important document to indicate the legal status of the land. ROR includes several classifications of the rights such as homeowners, tenancy rights, the mortgage with or without possession, leasehold rights, etc. 
  • ROR is a handy tool when it comes to identifying the land and establishing its extent 
  • ROR also keeps a record of the crops last grown on the agricultural land 
  • ROR keeps a record of registered documents and mutations. It helps in creating transparency and providing accurate land information under a single roof along with the assurance of data integrity 
  • The money obtained as rent or revenue from the property will be considered legally earned money 
  • Many states have digitised ROR resulting in easy access to land information. Anyone can view property land records and their legal status online to avoid an in-person visit to the revenue office. In case of any discrepancies, the viewer can raise an issue. 

Limitations of using ROR 

We have established how ROR has successfully substituted the tiresome land registration procedures but since there is still a long way to go, it has certain limitations. We will take a look at these limitations below: 

  • ROR is poorly maintained. To combat this issue, several states in India are in the process of digitization 
  • ROR often misses out on the on-ground position. The ROR contains several types of land details including property maps, sale deeds, etc. The ROR documents are maintained across different departments at several levels (district, village, etc.). Since these departments work in silos, the data is not updated properly leading to discrepancies in the land records. Digitization of the ROR process will help in resolving this issue. 
  • ROR are not proof of title. According to a Supreme Court judgement, a lessee will not be entitled to any right on the land solely on the basis of an entry in the revenue record. 

Conclusion 

The primary objective of the record of rights is to collect the land revenue from the person who is liable to pay the amount under the land revenue act. The presence of accurate ROR is important for a smooth system of assessment and collection of land revenue. 

In absence of ROR, it becomes extremely difficult to determine who is liable to pay the revenue over any particular piece of land, and also makes it hard to settle disputes between different claimants of the land. Hence, making ROR a crucial document in the land revenue system. It is undoubtedly a great tool to get all your insights about the property from a single document. 

What is fair market value, and how is it calculated?

Fair market value or FMV is the reasonable selling price of a business, property, or asset in an open and competitive market where the buyer has adequate data, has sufficient time to complete the deal, is under no external pressure, and mutually agrees with the seller on the price. It is frequently used in real estate, investment, legal, stock market, etc. but can easily be applied to the buyer/seller market. You must be aware of the fair value of your asset to maintain clean books, raise capital, and more. Below, we will learn more about it, its importance, and how to calculate it. 

What is fair market value? 

Fair market value or FMV is typically the price of an asset when put up for selling in an open and competitive market. The fair market value depicts an accurate of asset valuation being exchanged when certain conditions are met. The conditions are: 

  1. Both parties are behaving in their own self-interest. 
  1. Sufficient time is provided to both parties to carry out the exchange. 
  1. There shouldn’t be any mismatch in the information provided to the buyer and the seller. Both parties should be equally knowledgeable about the exchanged asset. 
  1. There shouldn’t be any pressure on either party to carry out the transaction. 

How to determine it? 

All things that can be sold, bought, or bartered have a value. If you sell a house, the amount a buyer is willing to pay for it will determine its fair market value. According to the Income-tax Act, 1961, FMV shall be the higher of cost of acquisition of the property or the price that the property shall ordinarily sell for if sold in the open market. 

There is no fixed formula to calculate the FMV of a property. The technique most widely used to estimate FMV is to look at the sale instances of similar properties in the same neighbourhood. To calculate this value, you can use different methods to arrive at an asset’s approximate fair market value. We will take you through the two most common methods of determining fair market value: 

1. Ready Reckoner 

In order to avoid under-reporting of the consideration in sale agreements (which is done to avoid payment of appropriate stamp duty), states have introduced the system of predefined prices, depending on the area and nature of construction. This is done through stamp duty ready reckoner, or announcement of circle rates, etc., which are generally notified every year. So, you can find out the fair market value from the stamp duty ready reckoner of 2001, if the property was acquired prior to April 1, 2019. 

2. Obtaining a Valuation Report: 

In the appraisal method, an expert is hired to look at the asset and determine its first market value. If the ready reckoner rate is not available for a particular year, you have another option. You can obtain a valuation report, from a valuer who is registered under the wealth tax rules and who is recognised for determining the market value for income tax purposes. The registered valuer follows a standard process for the purpose of arriving at the valuation and issues a detailed valuation report for the same. This is perhaps the most effective way of determining the FMV of your asset. 

Factors affecting fair market value 

There is no fixed equation to calculate fair market value. As discussed earlier, value determination is based on the value of a similar product, a professional appraisal, or determining average market value. There are several factors that may affect the market value of your property. Below, we will discuss three such factors which can become the basis for adjusting your fair market value. 

  • Previous purchase price of your property 

If the asset under evaluation has been purchased recently, the purchase price of the project can help determine its current fair market value. 

  • The past sales price of a similar property 

When a property similar to the property under consideration was sold recently, the price at which the property was sold can help evaluate the fair value. 

  • Replacement price of the asset 

The cost to replace the asset or the item may be relevant in determining its fair market value. 

Challenges of assessing the fair market value 

The biggest challenge in assessing market value is the lack of a fixed formula that can work in all situations. There is no one size fits all solution here. Due to its dependency on several factors, the fair market value of an asset is only as good as the appraiser’s expertise and the amount of information available to the appraiser. For instance, determining the market value of art and handmade items is difficult because they are mostly unique and there will be few or no comparisons available. Ultimately, fair market value is more of an estimation than a fixed valuation of any asset. 

Bottom line 

To put it in simpler terms, FMV is the price of a property that a buyer is willing to pay and a seller is willing to take under no external pressure and with access to complete information. The fair market value provides a lot of benefit to the seller as it helps in determining a price range that the buyer will be willing to pay and avoiding underselling themselves. While the concept of fair market value is simple, depending on the situation and the use of varied tools and services, the results may vary widely. 

10 Good Financial Habits of Successful Financial Planning

Financial planning is managing money and investments to meet your goals. It includes budgeting, saving, investing, and protecting wealth from risks. Good financial planning will include a detailed analysis of an individual’s financial position. The planning’s purpose is to make it easier for the person to achieve their goals and objectives sustainably. Here are the top 10 good financial habits of successful financial planning. 

1. Create a budget to guide your spending 

A budget is a plan for how you will spend your money. It helps you know how much money you have coming in and how much you spend each month. It’s important to create a budget before making any financial decisions to know how much money is available for each expense category. 

Creating a budget is important because it helps you stay on track with your spending habits. A budget can help you save some of your money so that you’ll have extra funds in case of an emergency. 

2. Borrow what you can repay 

Borrowing money is easy but repaying may not be the same, which is why it is important to borrow what you can repay. It will help you avoid debt and make your finances healthier in the long run. When a person takes a loan, it is important to consider the importance of borrowing manageable loans. 

A person should look at the total cost of the loan and compare this to their income. They should also consider how much they will be able to repay over time. 

The borrowing cost is calculated by considering the interest rates and fees. The higher these rates are, the more expensive it will be for someone to borrow money from a lender. 

It is important for someone who is borrowing money to have an understanding of their monthly budget before applying for a loan. This way, they can see if they can afford the monthly repayments associated with any loans they might take out. 

3. Start a good savings financial plan 

Good financial planning is like an insurance for the future. It can handle unforeseen expenses and emergencies, so you don’t have to worry about money. When trying to save money, it is important to set up a budget first. 

A savings plan is crucial for those who want to pursue their dreams or change their lives. A good savings plan will help you stay on track and not spend all your money on things that don’t matter. It will help you have more money available in your contingency fund when the need arises, such as car repairs, medical bills, etc. 

Financial Planning for retirement. 

A retirement plan is a good way to ensure that you are financially secure and can maintain your lifestyle. It is important to start financial planning for retirement early in your career, and you should continue to save money over time. 

A savings plan will provide you with a sense of security and peace of mind for the future. Your retirement savings plan will be there for you when you need it the most. 

4. Do not spend more than you earn 

Living within your means is the best way to avoid overspending and accumulating debt. People get into debt when they spend more than they earn or borrow money to cover their expenses. 

You should not spend money that you don’t have. It is a good thing to save up for a rainy day. You should also be aware of how much you spend on food, clothes, and entertainment. 

To start living within your means, you need to find out how much money you make monthly and how much you spend per month. 

5. Have a good debt management plan 

We cannot stress enough the importance of having a good debt management plan. It can help you pay off your debts faster and promptly. A good debt management plan will also help you avoid additional fees and interest rates, which can add up quickly. 

A good debt management plan should include the following: 

  • Paying down high-interest debts first. 
  • Setting up a budget to track your spending. 
  • Creating a realistic repayment schedule with your creditors. 

6. Cut down unnecessary expenses 

It is crucial to cut down on unnecessary spending expenses. The more money you save, the more money you will have for your future. You can also use this money to invest in something with a higher earnings rate, like stocks or bonds. 

There are many ways to cut down on unnecessary spending expenses. One way is to track your spending habits and see where you are wasting money. Another way is to set a budget and stick with it so that you know how much cash you have coming in and going out of your bank account every month. 

7. Create SMART financial planning goals 

A SMART financial goal defines your objective, how you will achieve it when it is accomplished, and what the result of achieving the goal will be. A SMART financial goal should also have a time frame for its completion. For example, “I want to pay off my credit card debt in 12 months.” 

SMART stands for 

S – Specific 

M – Measurable 

A – Actionable 

R – Realistic 

T – Timebound 

The most important aspect of a SMART financial goal is that it is specific. A vague financial goal like “I want to save more money” is not as effective as “I want to save INR 30000 in three months.” 

8. Invest to secure your financial future 

Investing is not just a means to make your money grow. It is also the best way to secure your financial future. Therefore, financial planning is a must. Investing allows you to control your finances and help you reach your goals in life. Investing can be difficult and requires a lot of research, but investing can become easy and rewarding with the right guidance and knowledge. 

9. Get a good insurance policy 

An insurance policy is a contract between the insurer and the insured. It is designed to provide financial protection against the risk of future losses. The two most common types of insurance are life and property. 

The purpose of an insurance policy is to protect you from financial loss if you suffer a loss that your budget or savings could not cover. Insurance policies can cover your car, home, health, or business. 

10. Look for opportunities to make passive income 

Making passive income is important for many reasons. It can provide a sense of financial security, help you reach your financial goals, and allow you to spend more time doing the things you love. 

Achieving financial independence is an important goal for many people. Passive income is a good way to do this. It means earning money with little or no effort, and it’s a great way to make money while doing something you enjoy. 

Final thoughts on financial planning

Financial planning is an important process that helps people manage their finances and make sound decisions about their money. A good financial plan should include future income, expenses, and investment projections

Benefits of buying a residential property on the outskirts 

Investing in a residential property can be quite challenging due to many reasons such as illiquidity, expensive transaction costs, longer property cycles, decreased net rental income and many more. The rental yield is generally low because of taxes and maintenance costs. However, this is no cause for concern as the residential investment industry is thriving at present and is definitely worth considering at least once in your lifetime. Investment in a residential property not only provides you with countless growth opportunities but also ensures the security of your future generations. It is not a hidden fact that the rate of residential property investment in the urban space has been rapidly increasing throughout the country. However, people tend to neglect the ample advantages that locations which are not yet considered prime such as the outskirts have to offer. 

While it may seem risky to invest in an area which is not fully developed on the front, these locations are most likely to turn into great assets in the future. There is potential for growth over time which would ultimately increase its worth. 

We have prepared a list of some of the advantages that residential properties located on the outskirts offer you. Keep reading to know more. 

6 benefits of buying a residential property on the outskirts 

Experience a tight-knit community 

Urban life lacks a sense of community and togetherness because of the daily hectic rush. People are mostly busy which leaves them less time for themselves as well as their families.  

Outskirts locations have a friendly atmosphere where children can play and communicate freely with others in their neighbourhood. 

The level of safety too is greater here than in the cities. In recent times, countless reputed schools have been established outside the city limits to improve the education quality as well as garner ample space for playgrounds. Thus, if you are a family with kids, there is no better investment opportunity than on the outskirts and no better time than now. 

Improved life and health by living in the outskirts

Urban cities are increasingly becoming overcrowded which in turn is affecting the environment negatively. 

However, you do not have to worry about these issues in the outskirts. With less population, these locations are environment friendly with better air quality, clean water supply, more greenery and many more.  

On the other hand, the city roads are filled with vehicles emitting gases which give rise to air pollution that might prove to be extremely detrimental to your health and result in serious issues in future. Thus, buying property in the outskirts is equivalent to saving money which would otherwise have been wasted on medical expenses. 

Pocket-friendly budget 

The cost of buying property in the outskirts is generally lower because of less demand. On the other hand, the cost of residential properties in metro cities has dramatically risen which is a growing concern for homebuyers. The interest rates are too high to lead a comfortable life. If you choose properties outside the urban area, you get larger spaces at a cheaper price, thus eliminating the need for any compromise. 

Enjoy frequent outdoor activities on the outskirts

Unlike cities which are constrained by countless buildings and roads, suburban areas have ample open spaces such as backyards and gardens. Thus, your children can play cricket and football without worrying about safety or hitting a person’s car. What’s better than living in a big house close to nature? 

Renters stay for longer periods 

If you’re planning to invest in a residential property to rent it out, there is no better location than the outskirts. People who generally rent a house in suburban areas opt for a long-term agreement because of many reasons. For instance, families with children prefer the outskirts for a pollution-free and safe environment where their kids can grow up. Another example is of a retired couple who may opt for a house in the suburbs to lead a quiet and peaceful life away from the hubbubs of the city. Since they plan to live for a long period, they keep their home in a good condition which will help you avoid or minimize costs on maintenance and repair. 

Expect higher returns on investment 

Buying a property on the outskirts is a great way to ensure future gains. This is because these locations are bound to develop with time which will simultaneously increase their demand and price. Thus, you can invest in these residential properties at a cheaper rate and reap higher profits in the future. 

Investment in residential properties in the outskirts is a great opportunity as the advantages outnumber the disadvantages to a great extent. You can get your dream house without investing a huge amount in a single go. Moreover, commuting to the city is also not a very big hassle as it is always connected through road or rail routes. Thus, you can still access its resources without making a hole in your wallet.