Types of housing loans that can be availed from banks and NBFCs

So finally, you got the big career break were working diligently towards and now you are financially capable of buying your own home. Good news is, in India there are so many institutions that are eager to fund your home via housing loans. Demand for home loans have risen twice over the last twenty-five years with the new age of nuclear family that India has stepped into.

While speaking about buying a home or home related requirements, housing loans are the most viable options as they are largely flexible, can be customized to a particular degree and is also affordable considering the long tenures you commit yourself to.

Banks and NBFC’s not only offer easy housing loans, there are loans available for many different purposes. Let’s take a look at all the different loans available and how one can take advantage of them:

1. Home loan

This is the simplest and most obvious choice when buying a home. You can even take housing loans if you own a piece of property and want to construct a home with it. The interest rates are generally affordable and these are long term meaning your income won’t take a big hit.

2. Home improvement loans

A home improvement loan comes handy when you want to renovate or repair your existing house, and either you don’t have the needed funds, or you don’t want to disrupt your savings. This loan comes as a blessing in disguise as it is mostly an unsecured loan, meaning you do not have to mortgage your property to avail this housing loan.

3. Loans for house construction

Usually taken for the purpose of either building your own home or any other property. These loans are generally sleeked by builders. Since the house construction loans are viewed as risky, the interest rates are high and the tenure short. Mostly just a year. The house construction loan may also be disbursed in phases. Here the terms of the loan are mostly decided by the lender.

4. NRI home loans

If you are a Non-Resident Indian and are planning to purchase a property in your home land, the banks and NBFCs will welcome you on a red carpet. Well not literally. Housing loans are the easiest to avail in terms of paperwork as you can apply for the loan online and get all the services from the comfort of your home. It is one of the most flexible housing loans where the tenure can even be extended up to 30 years, hassle free.

5. Bridge loans

Bridge loans are housing loans that involve bridging over from one phase to another. It means, it’s a loan you take to buy a new house until you can arrange your finance by selling the old or the existing one. It’s a short term secured loan where you either secure your existing home or hypothecate the new one. These loans are very popular in the real estate market, that help you cover the gap. What you should know is that the interest rate will be at least 1% higher than a general housing loan.

6. Home extension loans

This loan feature comes handy when you want to make structural changes to your existing property. When family extends you need to extend your space too.

Keep in mind that you will not be sanctioned a huge quantum of money for the extension purpose. The tenure and interest rates are almost alike to that of a regular housing loan. A very big plus point is you are still eligible for this loan while you are servicing a home buying loan.

7. Composite home loans

As the name suggests it’s a housing loan where you are clubbing two loans together, that is a loan for buying a plot and a loan for building a house on it. This is a common loan and the amount is decided upon the fixed obligation income ratio. Basically, you will get a lump sum amount that will be disbursed as and how the entire process advances.

This is a short-term loan where the creditor is expected to honor the loan amount back in approx. 5 years.

8. Home loan balance transfer

Sometimes it may so happen that the bank or an NBFC you have approached for a housing loan may increase the interest rates as per the RBI discretion. You may find yourself unable to service the loan. Or sometimes you are not happy with the facilities provided by your lender. In such a case you can request transfer of the balance to a financial institution of your liking. You can also avail a bigger quantum to the existing loan from the new bank. Make sure you transfer your case to a reputed institution.

9. Plot loans

A plot loan is for funding the purchase of a piece of land with the intention of building a house on it. You are entitled to certain tax redemptions once you actually build a house.

10. Stamp duty loans

When buying a house, you should also take into account the stamp duty and registration charges. With the real estate price sky rocketing it is obvious these amounts are enormous as well and may very much need a loan too. Hence the stamp duty loans, where the builder will mostly have a tie up with a bank whom you can approach. This will only make the process of acquiring the loan easy as against going to you own bank where you may have to do a lot of paper work.

Whatever your reason for seeking a housing loan, your best preparation is to thoroughly go through those reasons that may become a road block between you and your dream home.

We’d love to help you manage your down payment with a program that we have curated especially for first time home buyers. Click to check it out!

5 Ways to identify the right house at a suitable location during your home buying process

When we start our house hunt, its generally like searching for a needle in a haystack kind of an affair. There are too many options and equal amount of confusion. But finding the right abode may not be as difficult as it may seem. Just remember to look into a few key factors that will help you make an informed decision. Most important of all, do not rush into anything on impulse. Your R&D is what will score high on decision making.

1. Budget Vs. locality

First, zero down on the locality. Are you the one who wants to live in the quite suburb away from the noise? Or are you the one to thrive in the vibrancy of a city. Can you handle the traffic? Do you like it laid back? Is a popular neighborhood important to you? Ask yourself a lot of questions. Home buying is such a life impacting decision that it is wise to spend some time looking within yourself.

Once you have concluded on the locality, the next big factor into play will be your budget. Generally, people have a budget and that is what mostly determines one’s home buying decision. But that’s not the right way forward. Do not let your budget be the decisive factor in home buying. Once you have concluded on the area, you may get a home in your budget. There will be ample choice so do not worry.

2. Proximity

Proximity is a very important factor in home buying. How close are you to the nearest railway station? How effective is the public transport in your choice of area. Can you survive without your own vehicle? Is the said area easily accessible? The distance and the connectivity from your work place or the school of your children.  All these questions will also play an important role in your decision making.

3. Social infrastructure

When we refer to social infrastructure, we not only mean the basic amenities. Yes, during the home buying process, these come first, but we also have to look into facilities that may give us a better lifestyle. So do make this checklist. Is there a school, hospital, bank, ATM, departmental store etc. located in the vicinity? Is there a police station close by? Besides the day to day requirements, are there other facilities that may upgrade your lifestyle e.g. gymnasium, swimming pool, track and field, cinemas, shopping malls, parks etc. Is it a place where you will get most of your requirement within the range without having the stress of driving down? These again, are some intrinsic question to ask. How easy your life will be will depend a lot on this checklist.

4. Resale value

Always consider the resale value while home buying. It’s a tough call to take before selling a property while you are thinking about purchasing one. But it is prudent to look into this factor. Do consider this. Are you purchasing a property in an area that seems growth oriented? Is there an airport close by? Look out for big connectivity network either by rail or road. Are any business parks that seem to be coming up in near future? Is it a planned city? Few years down the line is the vicinity going to look upmarket or it is going to be thronging with more people and a growing population? Why are these questions important? Because you don’t want to investment in a property just to start regretting it a few years down the line.

5. Research

Do exhaustive research for a good amount of time. Do not make hasty decisions in the process of home buying. Be patient. Check out as many property options as you can and check up on the builder along with conducting a background check on any property disputes. You will get all the information regarding the builder and the ongoing project on internet and on RERA. Get the hidden facts. Understand the taxation as you will be surprised that the taxes can change from area to area. When you are narrowing down on a property, drive by it at different hours of the day. You will get the real picture of the traffic and how peaceful it actually is. Check the safety bit of the locality since it is of prime importance for your family. The stronger your research before zeroing on a home the lesser the regret.

And a final parting word. While home buying remember, a perfect home is when your need to check another property finally ends. While you have to take into consideration many aspects, it’s not always about the affordability and market risk. Home buying is as much about your instinct. When you have found your dream home you will know it. Before you plunge into the decision, take the time to understand that this home is going to fulfill your socio-economic and your emotional needs. Hence it always makes sense to never exceed your budget as it may impact those very spheres of your life.

An update on the housing sales in Bengaluru

Bengaluru, a.k.a. the Silicon Valley of India, the IT hub, the capital of Karnataka, the place out of which many multinationals operate, the city of startups, lakes, age-old parks, dance villages and a land of architecturally splendid temples. The perfect weather and the vibe of the city. All these and many more make Bengaluru a very desirable destination to live in. In recent times Bengaluru has been the more preferred city to call home, over Mumbai and other metros. This not completely because of its panoramic beauty but also because of the number of opportunities available here.

What is the current housing scenario in Bengaluru?

The real estate market in Bengaluru got a much-needed relief after the implementation of RERA. It has gradually found ground and is now headed to an unfaltering demand in housing sales.

India’s IT capital has shown an 80% rise only in the first quarter of 2019 making Bengaluru one of the most active residential property markets in the country. A significant rise in the demand for affordable housing has also ensured a healthy market growth. This active housing sale phase took care of the unsold properties of the down phase and is now ready to add new projects to the market.

Why are people looking to purchase more houses in Bengaluru?

After encouraging government policies Bengaluru has seen some positive customer sentiment toward housing sales. With increasing commercial activity from the IT and the ITES sectors, and having more disposable income at hand, the immediate effect is seen on house buying.

According to the Bengaluru Innovation Report 2019, Bengaluru will be the fastest growing city in the world for the next 15 years and have a GDP growth rate of 8.5% up to 2035. The city is continually upgrading the infrastructure along with top-class health care and educational facilities. Also, the newer tech-enabled homes are attracting young IT professionals to invest in residential properties.

With the massive white-collar migration to the Silicon Valley, the house rentals have become steep and this only encouraged the millennial investor to buy a house while working in the city.

Demographics of this segment of home buyers

Traditionally speaking, in India home buying is almost related to a retirement plan whereby a man works all his life to enable house buying. But with the IT boom in the last decade and a much-globalized workforce to follow, we have seen a major shift in this trend.

Along with better jobs and the trend of affordable compact homes, buying a house has become viable. Hence the home buyer’s age bracket has gone down drastically. Bengaluru is now home to many youths and young couples who have chosen this city to settle down in.

Statistically speaking the demography of home buyers of Bengaluru is 52% in mid-thirties, 18% in mid-forties, and a noteworthy 21% below 35 years of age thanks to the launch of mid-segment homes.

Lack of savings for millenials

Today young millennials from the IT sector are hardly ever cash trapped. With big salaries that multiply each financial year, they usually have disposable income in hand. This brings a tempting proposition to forth of investing in real estate. But buying a house is a tall order that will need detailed calculations. Many a time the dream does not take off due to insufficient funds.

In such a scenario housing loans can be appropriated through banking and non-banking institutions. While banks would help you in getting a home loan for a part of the required amount, you would have to invest the remaining funds from your savings. At such times, when most home buyers face a shortage of funds, HomeCapital can help you in getting a personal loan up to 50% of your down payment which can be repaid to their partner lenders at no extra cost in EMIs.

Projects in Bengaluru

Housing Sales in Bengaluru have not only shown an upward trend but the housing realty has also made homes of all budgets possible. The world’s 24th most populous city is gearing up for more housing sales to meet the ever-increasing demand.

Some popular projects to look at:

  1. Habitat Eden Heights and Godrej Air Nxt Whitefield. Check these properties if you are looking for a residence at Whitefield
  2. Godrej 24 Bangalore is the property to check out as it offers 2 to 3 BHK apartments starting INR 60 lakhs. Find this project at Sarjapur
  3. Rohan Upavan is a prime upcoming property to check out by Rohan Developers as it offers apartments of various configurations such as 1, 1.5, 2, 2.5 and 3 BHK starting INR 32 lakhs. Find this project at Hennur Road
  4. Purva Smiling Willows for those looking for villas. This is the property to check out as it offers 3 to 4 BHK villas. Find this project at Bannerghatta Road
  5. Purva Zenium for luxury apartments and BlueNex technology-controlled houses head to Hoshalli where this property is spread across 10 acres
  6. Vaishnavi Serene in Yelahanka is beautifully designed and has shopping malls and offices nearby, making it a promising lifestyle destination

A guide to the issues faced by first time home buyers and the solutions to them

Buying your first home is a special experience that can hardly be matched by any other. But with the sky-high real estate prices, it is a daunting exercise, especially for a first-time homebuyer. Even with aggressive saving and careful planning, we get nowhere close to gathering enough even for the initial down payment on a new house. Even if you’re eligible for a home loan, it serves to be futile if you cannot come up with the initial down payment. And the expenses don’t end here.

Stamp duty and registration charges for a new home are quite high, but these are rarely taken into consideration by a first-time homebuyer. Then there are the documents that need to be submitted to the bank for a home loan, on time and with proper signatures wherever necessary; all the while ensuring that the down payment is done on time. It seems like you have to jump through a lot of hoops to buy your own home. And yet, the down payment remains the biggest issue. How do you come up with enough down payment to fund your new home?

With down payment assistance of course! HomeCapital understands this crucial issue and steps up with up to 50% of your down payment as an unsecured interest-free personal loan. Add that to your savings and suddenly you have enough to make that all-important down payment! Before we find out what that is, let us take a deeper look at the potential issues that plague first-time home buyers and how they can be possibly avoided.

Issue 1: Not Saving Enough

This is a common issue that arises due to 3 main reasons:

  1. An ever-changing property market
  2. Changing and evolving buyer expectations
  3. Not accounting for the high stamp duty and registration charges

The property market almost always appreciates and real-estate prices steadily increase. This also inflates the stamp duty and registration charges. Most first-time homebuyers do not have the foresight to plan for this while saving for their homes. Add to this the possibility of home buyers’ changing expectations, and the savings will fall short. Always do your research and factor in various eventualities before you start saving for your home.

Issue 2: Unhealthy CIBIL Score

Most people are not even aware that something like a CIBIL score exists. It scores your creditworthiness and is the first thing banks and financial institutions check before granting you any loan. Whenever you take a loan or use a credit card and not repay them back in time, you end up degrading your CIBIL score. If your score gets really bad, you might not be able to take a new loan, which includes a home loan. To maintain a healthy CIBIL score, always pay back your loan and credit card EMIs on time. Preferably, try not to have any other loan running while applying for your home loan. It will increase your chances of getting your home loan sanctioned by manifold.

Issue 3: Not Doing Enough Due Diligence

When buying a home and applying for a home loan, there are a couple of due diligence that needs to be done, especially for a first-time home buyer. The first thing to check is the builder’s reputation and their track record of completing projects on time. If your builder promises you the delivery and possession on a certain date, hold them to it. Many-a-times, it so happens that your home loan repayments start and the project gets stalled. This is one of the worst-case scenarios for any home buyer. The second thing you need to check is the reputation of your lending institution. If an offer seems too good to be true, more often than not, it turns out to be a dud.

Issue 4: Not Comparing Offers from Different Lenders

This is another classic issue faced by first-time home buyers. In their anxiety to close the deal as quickly as possible, most people simply do not do enough research. Often going with the first offer loan offer they receive; they potentially miss out on some great which could’ve been availed with a little bit of research. Make sure that you check with as many lending institutions as you can before settling on the one that offers you the best repayment terms. You can even compare home loans with easy-to-use online tools that lay it all out in front of you in the simplest possible terms.

Issue 5: Making a Small Down Payment

Most people tend to pay the least amount of down payment as far as possible because it seems like a big upfront cost. In a way this makes sense, but it is far from ideal. In reality, the bigger the down payment you make, the lesser is your long-term financial load. Try to minimise the amount of loan as much as you can and your finances will thank you in the long run. But what if it is simply not possible for you to come up with a substantially large down payment? Which brings us back to down payment assistance.

What is Down Payment Assistance?

At its core, a down payment assistance program addresses a critical issue faced by a first-time home buyer, coming up with the maximum down payment. What it does is it simply finances a part of your down payment with an unsecured loan. As of now, HomeCapital is the first and the only company offering down payment assistance with interest-free credit. With this assistance, you can save money upfront to use it later while furnishing your home. What’s more, HomeCapital has partnered with lending institutions as well as builders to streamline the entire process for you. So, when you visit a builder to book your home, all the necessary formalities are taken care of in one visit.

Features of HomeCapital’s Down Payment Assistance Program

  • HomeCapital provides the down payment assistance in the form of an unsecured, interest-free personal loan.
  • The tenure of your HomeCapital loan is 18 months regardless of the amounts involved.
  • You repay the down payment assistance loan before your home loan EMIs start, which does not over-burden you financially.
  • HomeCapital’s repayment plan does not affect your home loan eligibility.
  • There are no hidden charges or lien on the property.

Benefits of HomeCapital’s Down Payment Assistance Program

  • With HomeCapital’s down payment assistance, you get to hold on to a big chunk of your money, which is then repaid in installments.
  • When you receive down payment assistance, you can buy your house earlier, without having to wait any further.
  • You can buy the home of your choice when your upfront payment is bolstered by the down payment assistance program.
  • With HomeCapital’s Down Payment Assistance Program, you can actually save the money that you would’ve had to pay as interest on any other loan.

Eligibility Criteria

There are certain criteria you need to fulfill in order to be a part of this program. You need to hold a steady job with a reputed company and you must satisfy all the credit standards of partnering financial institutions. In addition to your existing financial obligations, financial track record, income levels also play an important role in determining your eligibility criteria. Also, you must have a healthy credit score as it ultimately determines your eligibility for the Down Payment Assistance Program.

So now be hassle-free and buy your dream home, and let us also help you with your down payment requirement.

residential real estate

5 Myths of Purchasing Residential Real Estate

It was the year 2016 that can be called the ice breaker for Indian real estate, but especially for Residential Real Estate. The RERA Act (Regulation and Development Act) in 2016 and the introduction of GST (Goods and Service Tax) in 2017 proved to be a boon after a very disheartening lull. India is finally seeing a happy phase in the housing sector.

The government responsible for some path-breaking work has developed policies that are very encouraging for the serious buyer as well as the seller. For e.g. The GST brought in some much-needed transparency in accounts. The GST council also eliminated the Input Tax Credit leading to a positive sentiment.

But what looks so green may not be, just yet. The buyer is vary of the unstable market and has doubts regarding investing in a home. Let’s take a quick look at what seems, and what may be.

1.   Buying a house in a tier 2 city is not the correct decision.

Well, it is actually the other way around. From an investor’s point of view, it makes sense to invest in Residential Real Estate in a tier 2 city as the market is cheaper than the metros hence the rental yields are better. The government is making a paramount effort to bring these cities at par with the metros to prevent migration. The mall culture, overall better infrastructure and many more job opportunities ensure a better lifestyle compared to the competitive and stressful lives of the metros.

2.  Buying a property in India is a cumbersome process.

The RERA has chalked out specific rules and regulations especially for the Residential Real Estate buyer, to secure him and help him understand his rights better. It has stringent and clearly explained mandates for the builders. Registration of project completion and occupational certificate are also covered under RERA. It has even created the Real Estate Authority where a buyer can go and complain about his grievance. Overall RERA has looked into cushioning the buyer well and ensuring buying property is a better experience for him. 

Also, the government, as well as the private sector, has facilitated easy housing loans and EMI schemes so as to promote Residential Real Estate Investment.

3.   One should not buy a house in the current market situation.

According to common sense yes one should not invest in Residential Real Estate during a slowdown. But if you think about it, it is most lucrative to invest in a property during a slump for obvious reasons. Prices of houses and the rate of interest are significantly down. 

Real estate over the years has always shown capital growth, besides it doubles in value as compared to other investment plans. It is one of the most tangible assets to own. Investing in Residential Real Estate also has an added advantage to it which most other investment schemes don’t offer and that is you can lease out your investment and earn good rent. 

The most important aspect is that your property can also be leveraged or hypothecated in stressful times or you can even have a tenant and not lose your property.

4.  Renting a property is better than purchasing.

Yes, buying a house can be a massive expense where you end up putting all you have earned and saved over a long time. But there are innumerable benefits of buying a house vis-à-vis living in a rented one.

  • Investment in Residential Real Estate means lifelong security.
  • In distressing times, it is one of the most bankable assets. 
  • The returns are higher than the investment always. 
  • You will never have to surrender a premise you made your home out of. 
  • You will not have to deal with the ever-inflating rentals. 
  • A property can become your second source of income and can be your retirement plan. 
  • When you live in your own home you are more in control of your life. Rented premises always come with interference frill. 
  • Buying a home can be very expensive but in the long term, it turns out to be cheaper than renting one.

5.  You will have to spend from your contingency funds even after you avail of a home loan from your bank.

If you are planning to buy a house and are looking for a home loan then you are obviously calculating the high rate of interest you will be paying to the banks, which sometimes ends up being more than the principal amount. 

Well not anymore. The government is offering excellent down payment and EMI schemes for Residential Real Estate investments especially with the middle segment in mind. The interest rates are incredibly low and real estate is tax-deductible which will help you save a lot eventually.

You can also consider going to Non-Banking Housing Finance Companies which have far more relaxed interest rates and also offer a higher quantum of loan. There are many nonprofit making organizations and house finance companies that help you secure a housing loan at almost zero percent interest. Do your research well and you are good to buy your very own home… stress-free.

We Take Care Of Your Down Payment Needs And Would Love To Help You Fulfill Your Dream Of Buying Your First House! 

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 home stay 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 early to start!

You Can Avail Home Loans Easily

The trick of controlling home loans is paying them off, one at a time. Whether you buy a home now at the age of 30 or at 50, you may take a loan 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 30’s. 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 installments 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 favour 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 assist 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

In order to boost the economy of the real estate industry, the government 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!

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 (It’s 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 begun developing in this sector and catering to this co-living demand. There is however a section of the millennial population that lives premium 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!

Top 10 Properties In Pune

A First Time Home Buyer Must Look At These Top 10 Properties In Pune

Pune is the eighth largest metropolitan city in India. The real estate market in this urban city is growing positively. With the developing infrastructure, more offices and employers pouring into the city, a wide range of healthcare facilities and civic amenities in almost all neighborhoods of every locality are factors that have strongly affected the growth of the city of Pune. Enjoy all things that urban life offers, along with a bit of tranquillity unlike the fast-paced cities like Mumbai or Bangalore. A first time home buyer who is looking to invest in property should definitely look at Pune now because of it’s growing potential. The upcoming metro is a great addition to this city which is already connected through a bus system and local auto rickshaws and cabs. Here are a few upcoming properties that are tempting for the first time home buyer.

Hinjewadi

A prime commercial center of Pune, ‘Hinjewadi’ is located in the neighborhood of the 500- acre 500-acre Rajiv Gandhi Infotech Park. This is home to many of the country’s IT companies along with other multinationals. It offers an option of residential projects making it a location most sort out to live and work in. Hinjewadi is connected to other places in Pune through the road system. The Pune metro will, however, shorten the distance in through Line-3 in a few years.

Average price: 5700 per sqft

Properties to look at –

The Kohinoor Tinsel County

Located in phase 3 of Hinjewadi, this complex comprises of 6 towers with 12 floors each. The flats range from 1-2 BHK. the vicinity boasts of good schools and some of the country’s finest employers.

Kolte Patil Life Republic

A major builder in the city of Pune this residential complex offers a first time home buyer ranges of flats from 1 BHK to an entire villa. With 7 towers, and phase 1 having been completed in 2015 and the second phase underway, this project is registered under the RERA act.

Kharadi

Kharadi is an established real estate market in the eastern suburbs of Pune. The locality houses the famous MIDC Knowledge Park. This neighborhood has grown to accommodate some prime properties especially for the first time homebuyer that is looking for suburban premium and luxury apartments. Kharadi has located 10 km from the Pune International Airport and is well-connected to the rest of the city through the strong road network.

Average price: 7080 per sqft

Properties to look at –

Majestique Landmark- Oasis

With phase one under construction to be completed in 2022, this is a great property to invest in if you have a little time on your hands. With 6 towers of 2BHK and 3 BHK apartments, it will be a great complex to reside in.

Duville Riverdale Heights

A Rera registered project, this complex has apartments that range from a 1 BHK to 4 BHK. With 5 towers of 22 floors each, the now under construction project is set to be completed in 2021.

Wagholi

Wagholi was previously known as an industrial hub but now has developed into a prime residential locality. Close to Hadapsar and Kharadi, it is connected will by the four-lane highway that links Pune and Ahmednagar. The locality though still under development will soon prove to be a promising residential hotspot, especially for first time home buyers and millennials.

Average Price: 5200 per sqft

Properties to look at –

Marvel Ganga Fria Phase 1

This is a ready-to-move-in project in the locality. With homes ranging a two-bedroom hall kitchen to 3, it has two towers and 13 floors each. Though not a large complex, the developers also have a phase 2 to be completed at the end of 2020.

Sancheti Mount Castle

Also being built in two phases which are expected to be completed in 2020 and 2022, this is a great option for young families. The amenities offered by the builders include an amphitheater, a play area, and a pool.

Baner

Baner in Pune which is located parallel to the Mumbai-Bangalore Expressway is very close to Hinjewadi IT hub, Pune City, Aundh and Mumbai. With Planned infrastructure, the area has witnessed a rise in property investments, prices.

Average price: 11030 per sqft

Mandarin 33 west avenue

An under-construction project with 2 towers of 13 floors each, this complex is expected to be completed in 2023. Flats range from a 2 BHK to 4 BHK. With a great location, the prices may seem a little high for first-time investors but it is a great investment option.

Park Grandeur

This is another under construction project that first-time buyers must look into. Spread over 5 acres of land, the complex is promising and located in a good neighborhood.

Hadapsar

Hadapsar is another prominent property investment option for the first time home buyer. Located in the eastern suburbs in Pune it offers the property at premium prices because of the wide-scale development in and around the neighborhood. Surrounded by special economic zones, like Magarpatta City, the Amanora Parktown and the Fursungi IT Park (SP Infocity), this fast-growing residential area also houses the offices of prominent IT companies in Pune. With good road connectivity, the Pune metro is said to add to the further development of the neighborhood.

Average Price: 7094 per sqft

Kumar Propera

A Rera registered project, this project will be completed in 2022. The complex is made up of 2 towers with 19 floors each. Located near malls and schools, it has a great location.

Leisure Town

This mega project of 18 towers with 12 floors each, is a Rera registered project. It stretches over 22 acres of land. Phase 2 is ready to move in while phase 3 is still under construction with phase 1 yet to start.

So if you are getting ready to buy your first home, let us help you with your down payment. For more details, click this link.

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.