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 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

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 set back 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 tools will make the home buying a much easier tax. So if you are ready to buy a home, we’ve got your down payment covered.

apartment-real-estate

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!

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.

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.

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.

Understanding RERA

How Has RERA Helped Home Buyers and Property Investors In 2018?

RERA as an Act has been beneficial to buyers but this meant complete transparency from the developer’s end which brought out all the hidden rodents to the surface for clear transactions. RERA is the RTI (Right to information) in the Real Estate world, but our question here is, was it necessary? If yes, then did home buyers benefit from the Act?

Many home buyers believed that the real estate transactions were heavily skewed in favor of brokers, developers, and other middlemen. The Act was set in place to protect home buyers from fraudulent activities like money laundering and to mainly establish a more streamlined process for the Realty sector. The whole purpose of the act is to basically make every real estate transaction safer by inculcating more transparency and accountability.

Ashutosh Limaye, head of research at consultancy JLL India, says while so-called ‘fly-by-night’ developers have been exiting since RERA was implemented, it would be unfair to think that all small players are unscrupulous. “It has nothing to do with the size or scale at which developers operate, it is about their intent. Several small players have made themselves RERA-compliant, because they want to be in this space for the long term,” Limaye says.

RERA’s Benefits to home buyers

Carpet Area Standardisation

The Act introduced a carpet area formula for an even calculation. The carpet area is therefore defined as ‘The net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment’.

This standardization has kept the builders away from inflating the carpet area price which works perfectly in favour of the buyer.

Rate of Interest for Defaulters

The Act has brought both the buyer and seller parties on a common platform by maintaining an equal rate of interest for defaulters. Before the act, the interest paid by the builder to the home buyer was less but if the buyer defaulted, the interest was higher, and this was an unfair deal that discouraged home buyers.

No More False Promises

The buyer has every right according to the act to withdraw from the project with a full refund if the builder fails to deliver any commitments. This increased the faith of home buyers back in the whole Real Estate system and we shall give you the proof to it further.

Advance Payments

The builder can’t take more than 10% of the cost of the apartment, villa, etc. or any other application fee before entering into an agreement of sale. This works in the buyer’s favour yet again!

In case of defects

Any infrastructural defect in quality, workmanship, provision or service if discovered within the first 5 years is entitled to rectification by the builder at no extra cost within 30 days and buyers can also claim compensation for the same.

Delay in Possession

The buyer has all the rights to withdraw from the project with a full refund, along with interest payable from the due date of completion until the amount is refunded. If the buyer decides to continue with the project, till the completion, he will be entitled to compensation along with interest payable from the due date of completion of the project until the project gets completed. This ensures proactive commitments and a fair process that is beneficial for both the buyer and the builder.

A Title Compensation

A defect in the title of the property can also result in compensation which is not barred by any limitation and this means there isn’t any time limit within which you need to discover the defect.

Right To All Information

The buyer is entitled to all the information related to the project in terms of the plan, layout, execution, completion status, facilities, etc. What more could a buyer ask for?

Grievance Redressal

In case the builder fails to comply with the terms of this act, the buyer can take it to the state authority set up under the act, which has the power to redress the grievances.

A MahaRERA official said, “If a homebuyer or a developer is not satisfied with the RERA order, he/she can make an appeal to the appellate board instead of approaching the high court.” 

Did Housing Purchases Increase Post RERA?

Housing sales in the top seven cities grew by 12% in the first quarter of 2018 which indicated that the act restored the faith of serious home buyers, attracted by the new environment of transparency, accountability and financial discipline back in the Real Estate sector – Anarock Property Consultants.

Around 49, 000 units were sold in the quarter, with NCR, MMR, Bengaluru, and Pune alone accounting for 80% of the sales, while the only state that experienced a 12% drop was Chennai.

Homebuyers are now encouraged to make their first home purchase because of the security provided by the state. There couldn’t be a riper season than now, to take advantage of the schemes implemented by the government and an array of firms that are trying to close the massive gaps between the desire of owning a house to turning those dreams into reality.

If you are a new home buyer, we’re happy to let you know that you can now own your dream house without even worrying about the total down payment, because HomeCapital takes care of that!

5 Financial Investment Decisions You Should Take in Your 20s

A financial investment sounds like an adult step in your life, now that you’ve reached a certain stage of stable income. Millennials all over the world find it hard to save, while in India, we find it hard to spend. You’re probably familiar with the words ‘Saving at an early age is good for your finances beta’, because the habit of saving and investments have been deeply ingrained into our culture.

The question however, that arises here is, ‘Where do I invest these savings?’ While you begin thinking about your financial investment decisions, make sure you don’t invest all your eggs in one basket. They need to be spread out across baskets made of iron, cane, gold and even cement for optimal return on investments.

Charting a financial investment plan is easy but sticking to it is where the game changes. This is where you account for every penny that you spend, so that its on the right track towards giving you a prosperous future.

Equity / Stocks

Stocks aren’t for the risk takers we agree, but what if we asked you to skip spending on a T-shirt that costs Rs 300 (with no returns) and invest in a stock worth that amount? When you watch that stock double in a few months, you’ll thank us! You can take baby steps with SIPs and Mutual funds for starters and then take the big risky moves once you’re confident enough.

Before you make your financial investment in the stock market, you must know that you won’t see your money double instantly. The path to long-term wealth creation is building a diversified portfolio of stocks, bonds and a variety of other assets.

Bonds

Bonds or fixed income investments are basically loans from an investor to a company or government. Bond investors receive periodic payments based on the interest rate at which the bond is sold. A bond is usually tied to a coupon or interest rate that is known at the time of buying and this is where you identify your profit in the long run.

All bonds offered to the public have to be listed on a stock exchange and you can sell them on the stock markets if you need funds before maturity. You make a long-term capital gain (LTCG) if you hold the bonds for at least one year before sale and you also score the benefits of indexation while calculating the LTCG tax!

Fixed Deposits & Recurring Deposits

One of the safest financial investment strategies would include multiple fixed deposits od FDs with different tenures. Fixed deposits are a form of investment where you invest a fixed amount of money for a period at a predetermined interest rate. Your money here is safe and returns are guaranteed with high interest rates, but the only drawback is the inability to withdraw this money before its maturity as compared to other investment instruments.

Recurring deposits on the other hand serve your short-term investment goals where you invest a certain amount of money for a fixed tenure. Interest rates for this kind of a deposit are predetermined and based on the amount and tenure, but the catch here is that you cannot change the monthly deposit amount, nor can you withdraw any part of the investment until the tenure is over.

Gold

Gold is one of the best financial investment tools that will always come in handy. As Indians we cherish the idea of stocking gold because we already know its financial value in times of emergencies. You can buy physical gold in the form of jewellery, coins, gold bars and also own paper gold by using gold exchange traded funds and sovereign gold bonds. There are also gold mutual fund options today that gives you added flexibility towards owning the asset. So the next time you receive gold as a present, preserve it in your locker.

Real Estate / A House

Real Estate is the only commodity in the world that will never depreciate in terms of its value. Investing in a house will give you returns in the from of appreciation (Increase in the housing value) and rent.

In 2017, the rental real estate market was pegged at one crore units and was valued at $22 billion (Rs 1.53 lakh crore). By 2023 its volume is expected to reach 1.8 crore with a valuation of $41 billion (Rs 2.85 lakh crore). Make sure you invest in a locality that is upcoming or in high demand to reap maximum benefits.

While you think about this decision, you’ll have one aching question ‘But What About Down Payment?’ Let our home down payment program take care of that!

An example

With that being said, we’ve come up with a hypothetical situation to give you an idea about your financial investment roadmap:

Name: Rahul Kapoor
Age: 26
Salary: Rs 40,000 PM
Savings: Rs 1,20,000
Wishes to buy a home in 5-6 years

Rahul should begin by investing 50 percent of his income in Mutual Funds. He must ideally invest Rs 12,500 in ELSS funds and Rs 7,500 in non-ELSS funds for five years via SIP, so that he gets a good base amount to purchase his new property. He can invest his savings in Corporate Fixed Deposit with yearly cumulative interest.

SIP investment – Rs 20,000/month
Expected rate of interest – 14 percent
Investment duration – 5 years

Post 5 years, the invested Rs 12 lakhs along with SIP investment’s future value will give him a total of Rs 17.24 lakhs. He now has close to Rs 18.5 lakhs as down payment which can be utilised if the home, he is buying is under Rs 80 lakhs.

Using his own savings, a bit of a contribution from HomeCapital and a home loan on his current salary, Rahul can now own a home in 5 years.