5 tips for Home loans

5 Ways Real Estate Investing will help you in your 50s

When you’re 50, what do you imagine your life to look like? A family, a tesla or booking that amazing homestay on Airbnb? All these are bucket-list must-haves but haven’t you forgotten you need a place to live? A roof above your head?

Investing in real estate early in life can help set you up for life. Taking the risk at twenty may seem like a difficult task and a risk for many. There is however one rule of successful investments that is to start as young as you can. And who knows, by the time you turn 50, a home will be all you need. This will also give you the opportunity to further invest in a rental property and help you establish a steady flow of income once you have retired.

So we mapped out a few reasons to consider investing in property both commercial and residential from an early age. It is never too young to start!

You Can Avail Home Loans Easily

The trick to controlling home loans is paying them off, one at a time. Whether you buy a home now at the age of 30 or buy a home at 50, you will take a home to purchase the home. However, you have a reduced time frame and may end up eating into your savings at a later period. As you work your way up the job food chain, your salary increases, you can pay off the loan in lump sums and also have the benefit of a healthy CIBIL score.

Learn How To Be Financially Independent

You learn to work with the salary you are currently earning and as that increases over time, the loan disappears but you have learnt to save money. This helps you invest in other ventures, working on creating a good CIBIL score. By the time you turn 50, you will be providing for a family, children, your parents and having a home at this point will be beneficial for a stress-free retirement.

It isn’t about taking a risk anymore but more of planning a constant cash flow for you and your family through either rental or commercial real investments.

A lesson in credit management

It is easier to handle credit at a younger age. Nobody expects you to be successful at the snap of your fingers, and you are given the benefit of the doubt. Dabbling in property investments will help you acquire the knowledge needed to manage future investment risks or even personal risks. It is even lighter on your mind when you have no family to care for but yourself. Take that leap of faith now! You can turn back if it doesn’t work out. To invest or not to invest? That is the question at stake. Investing in either an SIP or mutual funds or the stock market will not be new to you when you grow older. You will learn to decipher between a good investment and what wasn’t and why. Learning from such experiences make real estate investing a great idea at a young age. Real estate investing requires time, the ability to adapt and of course the ambition to make it work well.

You can personalize your real estate investing pattern

You set your rules for your investment. You can pick what type of real estate investing pattern you want to look at. You set it up at your pace and change as you go along. You can even pair up with a partner and together work towards a greater goal. Rental properties are an awesome investment. They allow you to retire early. It may not make you rich instantly, but it will help you grow and maintain constant income overtime.

You Have The Advantage Of Time

Your greatest advantage is the fact that you have time. Time to build your credit. Time to make bad investments. Time to re-sell your apartment for a bigger one or smaller one. The possibilities with real estate investing opportunities are limitless and as you grow in your career, you will earn more and save more. Let’s say you start to invest in your early 30s. You will have 30+ years to repay your loans. The time frame also makes you eligible for long loan repayment periods with low interest rates.

Over time we see real estate owners both commercial and residential gain equity. The younger you start investing, the more equity builds up. This also adds to your net worth.

Have we convinced you to take the plunge? Let us also help you with your down payment.

home

The Subvention Scheme: What Home Buyers Need To Know

Every respected family man is looking for the perfect home loan. As potential home buyers, we must be aware of the advantages and disadvantages of the various options available in the market. At the time of purchasing a new home, the developer suggests different schemes to the home buyer as well. One of these in the past few years has been the subvention scheme.

What does the subvention scheme entail?

The home buyer pays a margin of the amount to the developer. This is around 10-20% of the price of the property purchased. After that, he does not have to pay anything until the property is complete and he has full possession of his new home.

During the time from purchase of the home up until its completion, the balance amount is paid by the bank to the builder. This is a loan with a three-way agreement including the developer, the home buyer and the bank.

During the period of construction, it is the developer who pays the interest on the home loan to the bank, which provides the developer with the necessary money as the project progresses.

Does the subvention scheme work?

To a new home buyer, this scheme sounds like a dream come true. You need not worry about EMI payment until you’ve received the developed property.

But do not builders already have various schemes to help them in their projects? As a business, a developer already has the option of loans at lower interest rates. As a real estate business, the developer also has access to assets to be mortgaged. This will help unlock credit, all at a lower interest rate.

The sad truth that remains is that as a builder there is already a large debt that must still be repaid. While banks will opt to charge higher interest on new loans taken by the builder they approve when an individual with a good credit score opts for a home loan.

So while banks are under the impression that the real estate industry may be a bad investment the new home buyer still needs a good place to live.

What home buyers need to know about the subvention scheme

Though the scheme seems like a perfect plan for property investors, we need to be made aware of the shortcomings that it possesses.
In the subvention scheme, builders receive the instalments from the bank in a specific period. They also opt to pay interest on the loan for the same amount of time. Once that period is complete regardless of whether the home buyer has received possession of the home, the builder has the option to stop payments. He can also divert funds to other projects. It may take years for the project to be completed and the home buyer is left to fend for themselves until then.

As payments are halted on the home loan, it is the home buyer that suffers. This delay harms the CIBIL score and lowers the buyer’s ability to acquire good future loans. Waiting until the project is complete proves harmful to the buyer’s financial health.

The recent developments in the Subvention scheme

In the past few months, after numerous frauds committed by developers, the National Housing Bank has requested lending institutions to refrain from the subvention scheme. This will definitely harm the two main bodies of the real estate industry i.e the home buyer and the developer. With an increase in interest rates for home buyers, developers will be forced to face a liquidity crunch in cash flow. Many developers believe that the government should be in support of such schemes to help the growth of the real estate industry but there are those who want what is best for the home buyer.

Are there other schemes like this?

There are other schemes available in the industry to help home buyers like construction linked payment plans. These plans ensure that the developer receives fixed sums of cash flow when certain milestones are completed. These milestones or slabs make sure of completion of the home and work in favour of the home buyer. It keeps builders in check. 25% of the total amount is given only after possession is acquired by the home buyer.

Key Takeaways

The government, in order to boost the economy of the real estate industry, is constantly working on such schemes. But however many have loopholes and in the end prove harmful to the home buyer. Find out about past incidents with the developers before you step into these options. We all love a good bargain, but be sure to research well before you take the plunge.

Check Out Our Down Payment Program To Help You With Your Home Buying Process!

homebuying for millennials

A Millennial’s Guide To Buying A House Despite Soaring Property Rates

Working in a different city from your hometown is catching up to millennials and their way of life. They want to be free, explore the options that life has in store and also find a way to acquire some form of stability to both one’s professional and personal life. Many look towards buying a home, a place they can call their own. But with increasing property rates, buying a new home is a lot of effort and time.

Here are a few ideas on why we think home buying is a notch higher than renting, despite the soaring property rates.

  • Home Ownership comes along with a sense of security and pride.
  • Increasing rentals are a thing of the past.
  • Though you will still be paying off your EMIs on your home loan, you are more stable as you have the ability to calculate expenses in advance.
  • You will be living alone and could also rent out some of your extra space for some extra cash.

With a push in the right direction, you will soon have your own home to just sit back and watch your favorite show on Netflix (or Hotstar). This quick set of frequently asked questions could help you make your next big decision.

FAQ for home buying

But Why Can’t We Just Rent?

Numerous youth today rent homes. This idea makes their lives flexible. Living out of suitcase makes for great Instagram stories. But many fail to realize that as rent prices increase due to an increase in property rates, buying a home looks so much better.  Most of us feel that owning property will be a time-consuming, frustrating and expensive endeavor.

How Old Should I Be When I Buy A House?

Age doesn’t matter when it comes to buying a home. If you have the pieces of your puzzle set in places like your down payment, CIBIL score and a monthly salary, take the plunge into investing in property. We see property rates going up across all major cities in the country, so there isn’t a right time to buy a home, as long as you calculate your payments perfectly.

Where Do I Start?

Start with your down payment. Make a rough account of your savings, and how you will manage to pay off your home loan. Keep a keen eye on the property rates on the locality you wish to invest in. You can start small, set up a period for how much you need to save up and also start looking for homes that fit within your budget.

So why is a down payment so important?

Well, this is the link between your home and you. You reduce your EMIs on home loans when you put in as much as you can on your down payment. The normal amount that developers expect is anywhere between 5% to 20%. If you have any inquiries on how to manage your down payment, you can always ask us.

What About Home Loans?

Home loans are not as tricky as they may seem. You have multiple options but always find one that fits you. Firstly, check with your employer if they have the option of offering you a loan. Then look at your local bank. Check for interest rates, long and short term loans and the other charges when it comes to home loans. Always read the fine print before you sign for your loan. A better credit score will help you get better loan options. So pay off any pending personal or car loans and start afresh with your home loan.

Is That Really It?

There is a whole lot more to figure as you move ahead with buying your home. But once you’ve got these steps on board, you’re on the right track. Other things to think about when investing in property, especially for the first time, is picking a locality and the home you want. Though this may be influenced by the property rates, keep looking. We may want to invest in a luxurious apartment at first, but keep in mind your budget. Take the help of the right professionals. There is no harm in asking for a little help.

Let’s get started!

We suggest making a list of things that need to be done for a smooth ride. We’ve started it off for you. Add your own as you journey through the world of real estate.

  • Ensure the development is approved and entirely legal and whether it is based under the RERA act, the property rates in the area.
  • Ensure that building bye-laws are in place and there are not any outstanding violations on the part of the developer or seller.
  • Get all the no-objection certificates (NOCs) from the water department, electricity department, etc.
  • Know your payment processes. These differ when buying a ready to move in home, an under-construction home or resold apartment.
  • Collect all the paper required for your home loan. For example, the property and income tax-related documents, to help you apply as soon as possible.
  • As soon as you’ve booked your home, make sure to ask for an allotment letter. This includes all details regarding your home, flat number, amenities and outstanding payments.
  • Sign your sale agreement which ensures that the property now belongs to the buyer.
  • Register the sale deed in your local municipal.

So are you still waiting for the day to put in your own home address into Uber? Start now and make that dream come true.

Saving for Home Down Payment

7 Smart Income Tax Benefits To Take Advantage Of With Your Home Loan

The word taxes has always been associated with what benefits you can gain from them. So when it comes to buying your dream home, the Indian government has especially with the last budget is encouraging citizens to invest more into buying their first home.

Did you know that your Home Loan is eligible for tax deduction under section 80C? So while you may be paying interest on the money you’ve borrowed from your bank or NBFC, you also have the option of multiple tax benefits to reduce your outgo on your taxes. Schemes like Pradhan Mantri Jan Dhan Yojana are helping develop the housing sector in India. These schemes strive to reduce the problems of affordability and accessibility. Let’s map out the different sections that you can apply for a deductions.

Interest Deductions

These are one of the tax benefits that one can avail on their home loan. These yearly deductions are related to interest paid on a property loan. If the property under question self-occupied, an individual is allowed to claim a maximum deduction of Rs.2 lakh under Section 24. This Rs.2 lakh deduction is applicable only when the property is completed for construction within 5 years from the Financial year in which it was started.

If the construction on the property is not finished within the mentioned 5 years, your claim is reduced to only Rs.30,000. So, if your loan was taken on 30th April 2016, the construction of the property should be completed by 31st March 2022. If the property is being let out on rent, the buyer has the ability to claim a limitless amount that was paid to the bank as interest.

An individual can claim the amount spent as interest if the property is given out on rent. However, This doesn’t take into consideration a completed project or an under-construction one. But, the overall loss that is claimed is restricted to Rs 2 lakh under the head of House Property. This Deduction can be claimed from the year in which the construction of the house is completed.

Interest Paid Towards Home Loans During Pre-Construction Period

If you have invested in an under-construction property and have not resided in the home as yet, you continue to pay the EMIs. Your ability to claim deductions start only when the property is fully constructed or you invest in a recently constructed home.

You can still enjoy deductions before the completion of your home. Pre-construction interest helps out in situations like these. The income tax law states that interest paid during the pre-construction time can be claimed as a tax deduction in five equal instalments. This is from the year in which the construction of the property is completed. The maximum amount, however, remains capped at Rs 2 lakh.

Repayment On Principal

In tax benefits under Section 80C, the principal portion paid as the EMIs for the financial year is deductible. The maximum amount that one can claim goes up to Rs 1.5 lakh. One setback with this structure is that the house should not be sold within 5 years of its possession, otherwise, the amount that was deducted is added back to your income in the financial year that the house was sold.

Repayment On Stamp Duty and Registration Charges

Under section 80C, a deduction on stamp duty and registration charges can be claimed within a limit of Rs 1.5 lakhs. But can be claimed in the year that the expenses happened.

Under section 80EE

Under Section 80EE there are additional deductions that are allowed for home buyers up to a maximum of Rs 50,000. To claim this deduction, the amount of loan should be Rs 35 lakhs or less and the value of the property should not exceed Rs 50 lakhs. The loan should be sanctioned between the period of 1st April 2016 to 31st March 2017. The individual does not own any other house at the time the loan is granted. Section 80EE was reintroduced effectively from the Financial Year 2016-17 and the earlier deduction was allowed under Sec 80EE and was made available for 2 years, namely the financial year 2013-14 and the financial year 2014-15.

Under section 80EEA

The budget 2019, further introduced an additional deduction. Under Section 80EEA, home buyers are allowed a claim upto a maximum of Rs 1,50,000. The stamp value of the property should not exceed Rs 45 lakhs. The loan should be sanctioned between 1 April 2019 to 31 March 2020. The individual should not own any other house at the time of sanction of the loan. The individual must also not be eligible to claim deductions under section 80EE.

Joint Home Loan

A home loan that is taken jointly, the co-holder of the loan can claim a deduction on interest up to Rs 2 lakh each. Principal repayment in this case under section 80C can be claimed up to Rs 1.5 lakh each individually. They must also be co-owners of the home that the loan is taken on. So a loan taken jointly by a family can help claim a bigger tax benefit. Let’s say you are a co-borrower as well as the co-owner of the house, you can each claim up to the maximum deductible amount under this section.

Understanding these tax benefits will make the home buying a much easier decision. So if you are ready to buy a home, we’ve got your down payment covered.

home financing

7 Residential Real Estate Trends To Look Out For In 2020

Residential Real Estate trends have come a long way since our forefathers decided to build the reclaimed city of Mumbai. As a metropolitan city, Mumbai houses 1.84 crore individuals from various parts of the country and gives them dreams they have envisioned for themselves.

One of those dreams is buying a house in Mumbai. Millennials between the ages of 24 – 35 have started working towards buying their dream homes, but this generation is very particular about housing amenities, environmental contribution, sustainable spaces and a host of other conditions that come along with today’s housing demand.

Let’s Look at These Residential Real Estate Trends that have sprung up in recent years –

Rainwater Harvesting

Residential real estate is moving towards building a green future with housing projects that involve provisions for water harvesting. A rainwater harvesting system does not only store water for the entire society, but also saves up on the energy that is used for water transportation and requires minimal UV filtration treatment.

Solar Panels

We all know the importance of solar energy in our lives and now builders are introducing this system in the green building scheme. This will reduce electricity bills and dependence of an entire society on the grid supply which also saves energy costs!

In addition to these cost-effective, environmental-friendly solutions, the officials are in the process of declaring a 20% discount on property tax paid by developers and residents with a view to encourage eco-friendly projects.

Rooftop Skywalk

Millennials have adopted a healthy lifestyle and prefer recreational amenities closer to their vicinities. Mumbai is in short of space at the moment, but that hasn’t stopped residential real estate developers from introducing rooftop skywalks!

The rooftop skywalk again is another environment-friendly initiative that encourages a common garden with plenty of plants and ample space for jogs, games, sports and other recreational activities 10-20 feet above the ground!

Technology

Millennials love the inclusion of technology in every walk of their life. They are accustomed to using apps for most of their daily activities like hailing a cab, ordering food, shopping, banking, etc. Developers have adapted to this trend and introduced smart homes.

These smart homes provide homeowners all the security, convenience and comfort that is integrated into their lifestyle. Smart homeowners can control all the home appliances, pay electricity bills, get societal updates and lodge complaints through the tap of an app.

Ramp Parking

We’ve seen this fancy housing amenity in movies, and it is now turning into reality. The introduction of ramp parking allows a smart homeowner to summon his/her vehicle up to his apartment through a lift. This fancy amenity has been drawing immense millennial gaze towards projects.

Co-living Spaces / Shared Spaces

Uber pools replaced single passenger rides, co-working spaces replaced a private office structure, hostels have replaced hotels and now its time for co-living spaces to take over private residential apartments.

Millennials are thriving in the age of shared spaces, thereby reducing fuel, space and of course cash consumption (Its all-Digital today). It came as no surprise when the auto sector took a setback. Like we’ve mentioned earlier, they are conscious about the environment and are moving towards sustainability.

A number of start-ups have already began developing in this sector and catering to this co-living demand. There is however a section of the millennial population that live premium lives because of their thriving careers and prefer luxury living. Now those are two ends of a spectrum developers need to identify.

One of the solutions could be residential luxury coupled with luxury co-living under the same umbrella!

Affordable Housing: Flexible Home Buying Schemes

The government is doing the best it can to encourage home buying because of the benefits in the long run. The floating home loan interest rate has dropped down from 10.15% to 8.40%. A steep GST cut from 8% to 1% in March 2019, makes residential real estate buying easier. A 60 sq mt unit at a metropolitan area and a 90 sq mt. apartment in a non-metropolitan area will now fall under the affordable housing range.

A Cost-effective Home Buying Solution Awaits You

We know it has been one of your biggest dreams to own a house in Mumbai and we’d like to be the bearers of the good news. You can now buy your dream house without digging too much into your savings account and worrying about your down payment hassles, because we take care of it!

Rent vs buy

Rent vs Buy: Here are 6 Factors To Help Your Evaluate Your Decision

Buying a house versus renting is an age-old debate, especially with the way the real estate industry has been functioning for the past year. It is important to determine the income of the family before you take the first steps towards buying a home. Here are a few points that will make you evaluate your decisions and help you work towards buying a home. Rent vs Buy: here are a few reasons why the latter is a better option.

Buying Is Cheaper Than Renting

Buying a house may be more expensive at first. However, in the long run, it actually helps you save more than when you rent a home in the long run. But you must also play your cards right. We all agree that property prices have spiked by 11.59% in the past year, but we also need to take into consideration the fact that even rent rates have increased by 9.79%. Although you may start at a lower rent rate with time in India, the applicable rate of rent increase every two years is around 10 % for residential properties.

Though rent adds up to more in the long run, buying a home is not cheap. First, you will still have to put in a 5-20% down payment when you buy a home. You will have to look into home loans and work with EMIs on a monthly basis. Eventually, that will eat into your savings but once you’re done with your home loans you need not worry about it anymore. Paying more upfront is better than constantly having to pay. So we see the balance tilt a bit in favor of buying a home here.

Time For Saving Up

You know that 5- 20% down payment you need to look into. Have you looked at options for paying it? We can most definitely help you with that. But eventually, everything that is borrowed from lenders needs to be repaid, so that it does not harm your CIBIL scores or credit scores in any way.

In order to do so, you will be forced to be disciplined about where you spend your money so you can reach your goals. Experts say that being a homeowner makes you more responsible, both financially and on the personal front. It will help young adults and millennials get their act together as dates to pay off your EMIs draw closer.

Personalizing Your Home

Honestly, as a person who rents, you are living in somebody’s home. You need to respect and understand their home. You are subject to petty rules and there are times the ambience doesn’t fit your personality but more of your budget.

When you buy your own real estate property, you have control over things like redecorating, remodeling and making the place your own. If you are one of those dreamers fantasize about customizing your own dream home, being a homeowner is the only way that can happen.

Your Home And You Will Appreciate In Value

The real estate industry may seem to be a bit on the tough side of investments when it comes to appreciation in value. But it is also one you can bet on to increase over time. With good research, you could purchase a home whose value will increase each year that you own it. Though urban cities like Mumbai, Delhi, Bangalore have seen a slow rise in property prices, many other developing ones like Pune, Indore, Lucknow, Hyderabad are also great places to buy your new home with the rise in employment and development of the areas.

Buying a home also increases your net worth. Though you may already invest in SIPs, mutual funds or the stock market, this will add to your credibility financially.

Adds Stability To Your Life

When you buy a home you have taken a huge step towards settling down. You are building a relationship with the people in the community where you’ve bought your home.

Homeowners have a greater sense of stability especially when they settle into their first home. They also add to the stability of the neighborhood. In many areas with high rental properties, it gets hard to know neighbors or trust someone with your mail or pets. If you are looking for stability and a good neighborhood, homeownership is something you should look into.

Adds Security To Your Life

Homeowners do not have to go through an eviction notice from landlords. Your home is yours until you decide what to do with it. If you have an extra room you can even put that up for rent. Being a homeowner means you have a permanent address and will never have to move because of factors not in your control.

In a developing country, it is important to look at affordable cities to live in. However, if you have already set up shop in a city, here is how your city ranks in the rent vs buy debacle.

Affordable cities to buy a house

  • Indore
  • Jaipur
  • Ahmedabad
  • Lucknow
  • Kochi
  • Hyderabad
  • Kolkata
  • Bengaluru
  • Pune
  • Chennai

Affordable cities to rent a house

  • Indore
  • Lucknow
  • Jaipur
  • Kochi
  • Ahmedabad
  • Hyderabad
  • Kolkata
  • Chennai
  • Pune
  • Bengaluru

So if you do decide to buy a new home, let us help you with getting your down payment on track.

GST

The Introduction of GST and The Impact Of GST On Real Estate

The Goods and service tax (GST) which came into effect on 1st July 2017, is a consolidated tax structure to replace the indirect taxes spilled all over. It is an indirect tax levied on the supply of goods and services and was introduced at a rate of 12% for Real Estate. It was later reduced to 5% in 2019.

What Did The GST State?

The tax regime before the introduction of GST stated that buyers had to pay VAT, Service tax, Registration charges & Stamp duty mostly on the purchase of properties that are currently under construction. VAT, Registration charges & Stamp duty all came under taxes that were state levied and eventually, prices of real estate that differed from state to state. It wasn’t only the buyer that these taxes impacted in the process. Developers also had to compensate for duties like sales tax (CST), customs duty, OCTROI, etc. Credit was however not available in these circumstances.

With the introduction of GST, a tax rate of 12% was then applicable on properties which were under construction and also on properties that were completed or ready to sell properties which were applicable under previous law. So the buyer definitely benefited from the introduction of GST on real estate.

What Was the Previous Tax Regime like?

Tax under the previous regime stated that developers would bear excise duty, VAT, Customs duty as well as entry taxes and others on raw materials and inputs including service taxes on different input services like approval charges, architect professional fees, labor charges, legal charges, etc. ITC was however available for different duties. These included taxes like CST, Customs duty, Entry Tax, etc. These were however added to the price and indirectly affecting pricing.

  • Availability of input tax credit along with GST on real estate reduced developers’ construction costs significantly. Multiple taxes were included in input tax credit. The added benefit to this was a reduction in the cost of logistics
  • Developers, however, were forced to inculcate a number of calculations to help with ITC. They then passed it onto the home buyers. However, ITC can only be transferred to the buyers during the end of their payment transaction
  • ITC had a major lack of transparency which would affect the developers since buyers had the choice to ‘wait and watch’ especially with new projects
  • Allied services such as labor, material suppliers, service suppliers, etc. ended up being calculated on whether there was an increase or decrease in tax that was eventually levied on construction goods and services. The whole GST on real estate tale definitely had an impact on the real estate industry in India

Change In Taxation Rates Increased The Impact Of GST On Real Estate

With the difference between demand and supply rising daily, the GST Council, a few months ago, further reduced tax rates especially for those properties that were under-construction to a five percent & further reduced GST on affordable housing to 1per cent.

When GST was first implemented in the real estate industry a few years ago in 2017, RERA (Real Estate Regulation Act, 2016) and Demonetization were changing the face of the real estate industry. The industry was sinking slowly. The dawn of 2018 witnessed an increase in demand and supply for real estate. This was the outcome of the availability and growth of affordable and mid-income housing. Housing prices, at the same time, seemed to be either stagnant or it witnessed a slight rise in price pan India. Larger urban cities like Delhi NCR even saw a decline in the price structure by 2% according to various reports. Most of the price declines were due to an oversupply rather than the impact of GST on home loans. ITC benefits were not passed onto buyers and even where they were, it amounted to a small change in price.

The resale market also took a hit during this time. We cannot accurately gather the impact of GST on real estate as of yet. With time it may emerge to be a lot clearer.

As per leading industry analysts and players, 2019 looks to be a far better year for the ever-changing Indian real estate industry. With an expected rise in demand for commercial and residential real estate, home sales are said to go up by 16% i.e 245,500 units in 2019 than the 2018 levels. With commercial real estate on the rise, demand for office space will also rise by 19%. With very few new projects emerging at this time period, it will not exceed 32 million sq. ft. especially in India’s top 7 cities.

How Can GST On Real Estate Eventually Impact Property Prices?

The rate reduction in GST on real estate which was proposed by the GST council in February and implemented from 1st April 2019 is expected to provide a number of benefits. Here are a few you need to know.

  • A simple tax structure leading to higher compliance especially from developers.
  • For the buyer a fair price of the property mainly due to the rate of GST on real estate falling to 1% on affordable residential properties.
  • The issue of ITC benefits not being given to property buyers is eliminated. This protects the rights of the buyer.
  • A better price structure of residential properties. With the problem of unused ITC being eliminated from project cost.

With GST benefits on the rise, you should look into acquiring your down payment for your first house.

6 tips to manage home down payment in India

Your down payment is the first step towards your new home. On average, a home down payment is anywhere between 5% to 20% of the value of the property to be purchased with the rest of the money based on housing loans. It is important to plan ahead to make your down payment.

We look at 6 ways to manage your down payments and live life at the same time. Don’t let life come to stand still for the sake of property investment.

Set A Budget & Time Period

This is where research comes into play. Look at the locality you want to buy your house in and determine the property rate. Then map out how much you’ll need for your home down payment. Divide that number by the time you’ll need to save up. You will be able to create a realistic budget to help you graduate from a person who rents a home to a homeowner.

Get a Separate Savings Account

Keeping the money aside will prevent you from tapping into it. It is now possible to put a transfer monthly directly from your checking account without missing any month. Forgetting to keep aside money will not be a problem and saving will be a breeze for you. When it comes to Non- Banking Financial Corporations, SIPs and mutual funds are also great options to invest in, in order to save up for your future down payment.

Manage Monthly Expenses Through Further Research

You may have phone bills, health insurance, car loans or EMIs on your list of payments every month. These will continue to dig deep into your pocket. Looking around for better deals, reduced rates and prices will help manage your down payment. As borrowing rates decrease there will be a difference in EMI rates across banking institutions will also fall. Keep a keen eye on the changing nature of banking institutions.

Keep A Tab On Your Spending

Online transactions have made spending so much easier. With wallets, UPI and online banking driving the present towards a cashless society, it is also difficult to keep a check on spending. Use these tools to keep a check on your expenses. Keep checking your account to highlight those areas where most of your money is spent. Set a budget aside. Limit nice meals to a minimum number of times in a month or take fewer vacations. It may seem a task at first, but this mindfulness will turn into a habit and you will be able to continue such habits for the future with your housing loan as well. This is practice before the EMIs roll in.

Home Buying Schemes In India

Different states have different schemes for houses and homes for first-time homebuyers and investors. For example, the affordable housing scheme is a recent proposal that makes buying and investing in property easier for people in lower-income brackets and mid-income brackets. Their goal is to make homes more affordable for the masses and bridge the demand-supply gap in the real estate world in India.

When You Save An Amount Of Money, Reward Yourself

  • Let’s say your down payment is about Rs 1 Lakh. Every time you save an amount of Rs 25,000, treat yourself to a small lunch or dinner to make saving a milestone to accomplish. So every time you save an amount that gets you closer to your down payment, take a small break. Soon saving will not be as bad as it sounds. It will also make you work hard towards promotions and better opportunities in your career.
  • Look at arranging for your down payment as a financial goal. This will be a great milestone towards starting a life based on savings and working toward your new home. Present generations find it hard to buy homes especially in the recent markets and prefer to rent out rooms and adjust in co-living spaces.
  • The high price, however, is not the sole reason for the ignorance in housing. Credit cards and wallets allow present generations to swipe first and then pay later. With the bills mounting up, home buying is not a reality to many of them. Home buying includes the ability to provide a sum of money before all the home loans come into play. This will make the whole home buying process a little less stressful.

With all that being said, buying a home is now more convenient than it was five years. HomeCapital can assist you with an interest-free down payment scheme to make your home buying process a pleasant one!

RERA

How to use the RERA to your advantage

New home buyers in India find it hard to keep up with the developers, real estate agents and all the rules and regulations involved in the process. One policy that has tried to make this process less tedious is the Real Estate Regulatory Authority, 2016 (RERA). This came into force from May 2017 onwards and has brought merit to the sector. The Real estate sector before 2017 was considered an unregulated one especially in the metro cities around India, and with a constant flow of black money.

On the 19th of August 2019, at the National real estate development council convention. The housing and urban affairs secretary Durga Shanker stated that the government may soon consider amendments in the real estate law under RERA. Mishra stated, “Based on the inputs (received at the conference), we have felt that there is a need to bring about many changes in the RERA Act.” He added, “We will soon make relevant amendments in the law, to make it more effective.”

Here is a checklist to understand if RERA is applicable to the property you have purchased?

  • The area of the plot under construction is 500 sq mts or more.
  • The number of apartments under construction are more than 8.
  • The Act does not apply to projects that are under repairs, renovation or redevelopment.
  • The Act is only valid on development of property and not rentals.
  • The Act covers all commercial projects like shops, offices, work spaces and buildings as well as residential properties.

Let’s take a look at the benefits the Act offers to buyers, the developers and the real estate sector.

Right To Information About The Property Through The Online Portal

As an online portal, RERA is a great way to work around every issue regarding your under-construction home. You can request for full layouts, plans, the date of completion and even the competition in your area. The Maharashtra Real Estate Regulatory Authority- MahaRERA website is one of the best RERA state platforms. It exhibits the most number of residential projects registered under it across the country. As per the norms in the Act, all real estate registered projects both commercial and residential must submit all of the registered project details on the RERA website.

Standardized Definition Of Carpet Area

Prices correspond with the carpet area of the property that is being purchased. The RERA act has defined a standardized definition of carpet area. This helps to eliminate any form of manipulation or inflation of property values through wrongful measuring of carpet area. These measurements were devised by each individual builder and acted against the interest of real estate investors. The RERA act thus protects the innocent buyers from any form of misguidance by the developer.

The Implications On Builders And Developers

As per the RERA guidelines, under-construction projects is funded firstly by money obtained from downpayments from home buyers and lenders i.e. banks and NBFCs. The RERA Act has given home buyers the ability to question the developers. If any builder is unable to provide satisfactory information regarding the under-construction project, he can get penalized under the act.

Section 7 states that projects, free from litigation, may form their own society and with the approval of 51 per cent or more of its members, can divest the developer from the project.

Section 8 further states that if the builder is pulled out of the project, the first opportunity of completing the project will be accorded to the society formed by the flat purchasers.

These sections of the RERA Act, help ensure that projects are not delayed and that the builders do not misuse funds, as they can be held responsible for any defect or fault in the construction of the project, in turn protecting the interest of the home buyer.

Keep a track of RERA Approved Real estate Agents

RERA-approved Real estate agents do make the sacred passage of home buying easier and more peaceful. They are aware of the projects that have been approved by the Real estate regulatory authority. They already have an understanding of the shortcomings of the developers and provide a clear picture of issues that the buyer could face and ways to tackle the issues.

All these factors make the Act a clear benefit for any new home buyer. It provides information to any home buyer and also makes it easier to settle on down payments, home loans and future home expenses.

All these factors have been giving homebuyers an assurance about their housing investments. Homebuyers are now heading towards a safer position in the property arena, where their investments now have accountability, which in turn makes it a favourable time to invest.

An additional resource that has come into play to help you own your dream house is down payment assistance.

Let HomeCapital help you commence your home-buying journey.

question

Should you buy property with the current market scenario?

Is it a good idea to buy property with the current market situation? The Price of a house is declining, but is it a good investment? We’ve compared the advantages, the disadvantages and the risks for you, to make a smarter decision.

The advantages

Valuing real estate is easy compared to other assets

At first, looking at others such as the stock market, mutual funds, those that generate cash flow, are good investments compared to real estate. To buy property is generally a great investment option and is easier to manage compared to other assets. It can be a good long-term investment. Though that depends on the growth of its value over time.

Attractive and stable income

If you are planning to buy property as an investment and rent it out to tenants, it will generate cash flow over time. Rents go up with inflation and your EMIs for the home loans remain the same. Eventually, you pay off your loan and the cash flow will increase significantly.

The Repo rate

Recent cuts in the repo rate by the Reserve Bank of India by 35 points to 5.45 percent from 5.75 percent will have a great impact on the interest charged by private banks on home loans. With private banks such as the State bank of India already reducing their interest rates on home loans, buying real estate will be more economical.

The disadvantages

Lack of liquidity

To buy property as an investment means a lack of liquidity. Though it may generate cash flow through tenants, it isn’t a liquid asset and won’t be a strong investment if you are in need of capital. We suggest you invest half your fortune into a property and the rest into movable investments.

An unpredictable asset

It is also an unpredictable asset. With home rates falling in the country, one needs to be smart and take into consideration the idea and need for purchasing real estate. Value of the asset depends on location, the type of property, the age of the building, the state of the home, etc. Thus, when you buy property, you are investing in an unpredictable asset whose value may decrease or increase in the near future.

The risks

The present property scene in India

In urban cities, real estate investments are now cheaper compared to a few years ago. The slight dip in the price of homes and offices is the result of a lack of demand, huge inventories, and regulations. These were mapped out by the latest reports by Knight Frank, the real estate research firm.

Chennai faced a decrease in property prices due to the water shortage. There were few new launches while sales in the past one year suffered. This also led to a fall in inventory.

Kolkata looked at low property prices in the past 6-12 months, but it saw no increase in sales or launches.

While cities like Delhi NCR, Bengaluru, Hyderabad and Mumbai have been able to have some balance in price, launches and sales.

Builders are playing it safe because of the RERA act

The RERA Act has definitely changed the property scene in India. The act as a way of protecting buyers from financial and inversely mental trauma, have placed in the hands of the consumer a platform to question the developers regarding issues like date of completion and possession in the past would be left out by the builder.

The Real Estate (Regulation and Development) Act, 2016, passed by the Indian Parliament, seeks to protect the interests of those who buy property. It also looks to boost investments in the real estate sector.

With RERA and the government’s model code, it aims to create a more fair platform between the seller and the buyer, mostly in a primary real estate market. But this has led builders to reduce risks taken on projects and properties.

Before you buy property, you need to answer a few questions

  1. What is your reason for the purchase?
    1. Do I want to live here?
    2. Will I rent this out?
  2. Can I see this as an asset or a liability?
    1. Does this investment put money in my pocket?
    2. Is it worth the risk?
    3. Will I be able to manage maintenance and taxes?

It is crucial that an individual understands all aspects of an investment before. Take time to map out financial requirements like your down payment, housing loans and personal finances. Keep in mind that you are looking for an asset and not a liability.

Your next steps towards buying a property would involve checking your eligibility and arranging for the required funds, for which we have solutions!

We’d be happy to help you with the down payment for your property investment.