Launched Project or a Livable Condition Project. Which One Should You Prefer?

Buying a home is no doubt, an expense that needs a lot of planning, both time and budget. What is the most important factor while planning to buy a home is affordability, followed by preferences and priorities.

Know your source of income, calculate your expenses and savings. Make sure you have enough amount for the down payment, for rest is funded by home loan. Research on the best-fit home loan product. Know your credit limit.

under construction_loanyantra.comNow decide on your priorities. Do you have a time limit? Are you looking in a particular place? Do you need multiple bedrooms in your home?

Analysis on above points will help you short-list and finalize on your property. Undoubtedly, an option keeps you in dilemma. Which staged property to buy? Under construction one or a completed one? Let us dive into the details.

Under construction property is the best if you fall short of complete investment. If you plan to shift to a new home only after two or three years. If you want to save and self-fund than get funds from any other source. If you want to have a customized finished apartment.

livable condition_loanyantra.comSimilarly, if you choose a livable-condition apartment, you need not worry about the on-time completion of the project. You get a finished apartment where you can just go ahead with interiors of your taste. You can plan on a complete home loan EMI with out any hassle.

But what are the points to be remembered while booking an under-construction apartment?

  • Research about the builder. Go ahead if they are known for timely delivery.
  • Decide what to choose w.r.t. bank loan. Pre-emi or no pre-emi one.
  • Get a thorough legal check done for the documents once you get them after paying the booking amount.
  • If not satisfied with the property, do not hesitate to call back your decision and money as well.
  • If you choose a pre-emi option, ensure that you keep a track on the amount disbursed in stages and the increase of EMI.
  • If there is a delay in the delivery, ensure that you are paid back the assured percentage as per the agreement.

According to the real estate regulatory authority, the builder should promote only a launched project but not a pre-launched one. So, it advisable that you choose a launched one if you choose an under-construction property.

While finalizing the project, ensure that you analyze on every point in detail and choose that fits your financial plan.

Amendments w.r.t PF Withdrawal Rules.

The reliable source of income during retirement stage is PF. If one doesn’t withdraw PF during their career, they can enjoy a stress-free life after they retire. But for any reason, if the PF is withdrawn, ensure that you invest in the best returns. To withdraw PF, there are some rules that need to be followed.

pf_loanyantra.com

Withdrawal Procedure

To withdraw your EPF, you need to fill up Form 19 (which can be downloaded from www.epfindia.org) and submit it with your previous employer. With the Form 19 duly filled in, sigprovident-fund-break-up_loanyantra.comned and attested by the former employer, you need to submit this along with other documents, such as resignation acceptance letter or relieving letter and a cancelled cheque of your bank account, to the EPFO of your jurisdiction.

However, there are the new rules by the government which are supposed to be implemented on April 1st 2016 which is now changed to August 1 st 2016.

Here is the brief description about the existing rules and to be implemented rules.

Existing Rule Modified rule
You can withdraw both employee’s and employer’s contribution. You can only withdraw employee’s contribution and the interest accrued on it.

The employer’s portion can be withdrawn after the retirement age.

After the full withdrawal of PF amount, you are no more a member of EPF Scheme. Since you cannot withdraw the whole amount, you remain to be the member of EPF Scheme.
Retirement Age – 55 years Retirement Age – 58 years.
Minimum balance amount in the PF account – Rs. 30,000. Minimum balance amount in the PF account – Rs. 50,000.
Withdrawals are not taxable Withdrawals are taxable if you withdraw within five years of joining.

The modified rules are advantageous for anybody who has no plans for post-retirement. But those who want to start a new phase in life say, starting a new business or buying a new house or performing a marriage, cannot depend on the complete withdrawals of PF. Which in a way is a boon and also a bane.

For more details about PF, refer the below links.

Tax benefits with PF account.

Use PF for Home Loan?

What are Registration Charges?

Owning a home is a dream come true for many individuals. It is the culmination of much efforts and time. Getting across the gauntlet that is securing the appropriate financial measures is only the beginning in what is often a long and arduous process before you finally get to own your home for good.

registration charges

Owning a property is so much more than simply taking possession of your dream house

 There are a huge number of legal hassles and tedious documentation to get through before you can undoubtedly own your property. You need to have a clear title and other relevant documents of ownership that affirm your ownership of the property.

In the final stages of the paperwork, you need to pay stamp duty and relevant registration charges before you are handed over your documents. With these final hurdles cleared, you are now free to enjoy your home to the fullest extent possible.

Stamp duty is one of those insidious charges that tend to sneak up on you and not make itself known until the last minute. Stamp duty is a kind of compulsory fee payable to the state government. There is a time period within which stamp duty must be paid in full before you can take ownership of your home. The actual rate differs from state to state but usually varies between 5 to 7% of the registration value and not market value (also called transaction value). Until this fee is paid in full, the house will not be transferred to your name and you will be, in all effect, an illegal occupant in the property in the eyes of the government. The stamp duty serves as the charge to maintain your name as the owner of your property in the official records of the government. It also ensures that all government sources and documents reflect you as the proper owner of the property.

After stamp duty has been paid, you need to register your property within four months. This requires payment of an additional registration fee over and above the stamp duty that you have already paid. Registration fee is the charge required to actually register the property in your name and make any transfers from the previous owner (if any). Although these charges vary from state to state, the registration fee is typically 1% of the market value, usually subject to a pre-set maximum. The registration process is typically a painless one that involves you providing documents of personal identification such as copies of photo ID, various other verification documents, and the proof of payment of stamp duty.

While these charges can add up to a huge number, there are some ways to save a bit of money here. Many states offer a lower rate of stamp duty if the property is registered in the name of a female. Also, you can claim a tax deduction on the amount you pay on stamp duty and registration fee. You can also save tax by agreeing to a purchase price that is close to the base price published by the government.

‘Wh’ Questions About loanyantra.com

What is Loanyantra.com ?

www.loanyantra.com is an online market place and a one stop solution for all your home loan needs. First time ever in India, loanyantra.com introduced online home loan management system.

How does Loanyantra.com work?

Our work continues where many others’ end. We manage your loan from the time you decide to take a loan till the closure date. In whichever phase you are, whether, checking the eligibility, shortlisting and deciding on a bank, applying, loan disbursal, balance transfer, existing home loan, market updates to stay on lower interest rate, part-payment tips, early closure of the loan, we nurture it, so that you stay stress-free.

When did Loanyantra.com start ?

Loanyantra.com started operations since 2016 from T-hub. Loanyantra is one among 500 participants to get selected and get placed in T-HUB. This made them confident and more focused to achieve their goal. Loanyantra was the only start-up which was earning revenues in the first year itself. We are always owed to t-hub for the exposure they provided.

Why Loanyantra.com ?

Look up for us if you wish to be under the category organic home loans. In India only 2% users take the online support for home loan. We are here to reach out to those left-out 98% users too and make them rely on us for a pure and an organic support.

Who is behind Loanyantra.com ?

Loanyantra.com is an initiative by BITS Pilani allumni associated with experienced bankers and financial planners. Loanyantra.com, currently, is a strong team of 12. In the process of growing big as a team.

Where is Loanynatra.com office located?

Loanyantra.com is under the incubation service T-HUB Catalyst Hyderabad, proving itself to be successful out of many start-ups.

Legal charges – Is there a way to reduce?

So you have bought a new home; congratulations! A home is a place you can call your own; a man’s home is his castle. However, such a large purchase is also fraught with various responsibilities and dangers. You might already know that buying a home also involves a few legal issues, not unlike buying a motor vehicle. In the case of a home though, those “small” legal bills can quickly pile up and amount to a huge cost that you had probably not accounted for.

Legal charges

Thankfully, there are many ways you can minimise your legal costs when buying a home

This step, called conveyancing, includes working on mortgage negotiations and management issues that crop up when you are buying and selling property; few people buy homes straight up with a lump sum payment, so lawyers usually include dealing with mortgage issues in the work they bill as conveyance.

Because legal fees are such a subjective issue, there is no set “market rate” for you to consult as a reference. The two metrics that most lawyers will use to quote you a price is the price at which you are selling and/or buying property. Depending on the valuation of the property, it can either be a flat rate (called a fixed fee conveyance) or a percentage of the valuation as legal fees. Also, consider if the lawyer you are consulting is a fiduciary or not.

Your real estate agent would probably recommend a lawyer; don’t fall for this trap. Usually, such recommendations come on the back of kickback arrangements, so don’t be afraid to shop around. Ask an unbiased friend or an acquaintance who might have recently bought a home for their experience and recommendation. Call up some lawyers and ask them for a quick off the back of their hands quote. If you think someone is offering a competitive rate, set up an appointment.

Go on a few meetings to really understand the services they are charging you for. Many lawyers include handling the mortgage for you, as mentioned previously. The quote you obtain on the telephone can be surprisingly deceptive and designed to trick you into getting a meeting; it is much more likely that you would consent to their demands if you have taken the trouble to clear your schedule and attended a meeting. Lawyers will charge you sky-high prices for seemingly mundane issues like photocopying and postage. They might also charge you additional sums for transferring money above the charges made by the bank, often billed as a “convenience” charge. Of course, there are some things that you do need to pay for out of the pocket such as stamp duty and other search charges, but be sure to ask detailed questions about exactly what a lawyer charges for what services.

Do not be afraid to walk out of a meeting if you think that the lawyer is out to take advantage of you by piling on endless fees and might have deliberately quoted you a low price just to get you to the meeting. It can be quite stressful and time-consuming to attend meetings with lawyers over these issues, but that is the cost of getting a good deal.

When is pre-EMI advantageous?

Pre-EMI is a loan repayment program where your monthly payments wholly go towards payment of interest accrued on the loan amount that has been disbursed. Contrasted with typical full-EMI programs, pre-EMI programs differ in a few key points. Before you commit yourself to a payment plan, you would do good to properly acquaint yourself with the various advantages and disadvantages of a particular choice. Often what is suitable for one individual is not favourable for another; it is necessary that you pick the plan that is best suited to your needs and desires.

When is pre-EMI advantageous

Usual “full-EMI” programs split the payment between the interest and the principal amount owed; this split is done according to a document called an amortisation schedule. In the beginning, a greater part goes towards paying interest, but this ratio skews the opposite way further such that the split towards repayment of the principal increases over time. In these plans, the principal amount starts reducing from your very first payment.

Not so with pre-EMI plans. Since 100% of your payment goes towards the payment of the interest, the principal amount you owe the lender remains unchanged until the entire principal has been disbursed. Pre-EMI payment options are typically offered for customers of home loans for projects that are still under construction; the interest payable depends on the total amount that has been disbursed. Therefore, your EMIs go up as you draw down more and more of your principal. And once 100% of the principal has been withdrawn, presumably after completion of construction and after you take possession of the premises, you need to make payments on the principal.

It should be said forthright that for most cases, going for the full-EMI option makes the most financial sense. Although you do pay a slightly higher amount every month, you also reduce the principal amount you owe. This goes a long way in reducing your liabilities in the future, as far as loan payments are concerned. Also, payments in the pre-EMI form are not tax deductible as full-EMI payments are (albeit in a 5 year spread instead of annually). Delays in construction or possession also disadvantage you significantly, something you should definitely keep in mind.

However, there are a few situations where going for the pre-EMI option can be beneficial.

  • You cannot afford to make full-EMI payments
    If you are strapped for cash and cannot afford to make the higher payments under the full-EMI plan you might choose to go for a pre-EMI plan. Keep in mind though that in the long run, you will pay a lot more under a pre-EMI plan since your principal does not reduce until after you take possession.
  • You plan to sell the property as soon as it finishes construction
    If you are buying the home as an investment, you might very wisely choose to pay only the interest for the duration of the construction and then pay the remaining principal amount as a lump sum after you sell the property. This way you minimise your risk as well as your liabilities.
  • You can consistently earn a good return by investing the money you save over a full-EMI plan elsewhere
    If you are a skilled investor and believe that the opportunity cost of investing in a full-EMI plan is too high and that extra money can be made to yield a good enough return to offset the greater net payment in a pre-EMI plan, you might choose to go with a pre-EMI plan. Keep in mind that typical loan repayment plans are of a duration of 10 to 20 years, sometimes even 30.

What is pre-EMI? What should you know?

Pre-EMIs might look like the attractive cousin in the otherwise off-putting family of financial liabilities known as equated monthly instalments. Equated monthly instalments or EMIs are the most common loan repayment procedures where you make monthly payments to the lender against a big loan. These payments include interest as well as part of the principal amount. In most cases, the ratio according to which the payment is split towards interest and principal is outlined in a document called an amortisation schedule; the portion of interest decreases over time while that of the principal increases.

What is pre-EMI

For the longest time, there were no two ways about making loan repayments, especially on large loans like those taken for the purposes of buying homes or real estate. However, the ever busy financial pundits have come up with a new product: the pre-EMI.

Pre-EMIs are offered on home loans where the home is still under construction and not fit for possession. On the face of it, pre-EMI looks quite attractive. When you opt for pre-EMI, you only pay the interest on the amount that the lender has disbursed until that point. It is only after you take possession of your home are you required to make payments towards the principal loan amount.

Consider this: when you opt for pre-EMI, the payments you make go towards paying off the interest that has accrued on the loan amount that has already been disbursed. When further funds are disbursed, your EMI goes up accordingly. Your principal amount does not reduce. When you take possession of your house, you need to make payments on the entire principal amount you were loaned. Because you are not making any contributions towards your principal, your monthly contributions remain low compared to the regular full-EMI option.

As a borrower, your top priority must always be to pay off your debt as soon as possible while at the same time maintaining your present standard of living. Therefore, it makes significant financial sense in paying full EMI where your payments are split towards both the interest and the principal; this way, your principal amount keeps reducing from the day you start making payments. Pre-EMI payments are also not tax deductible.

However, if you do not have the capability to afford to pay full-EMIs from the beginning, you might opt for the pre-EMI option. You might already be paying rent and therefore are strapped for cash. This is possibly the only scenario in which case it is preferable to opt for pre-EMI because you do not reduce your principal amount until you take possession. Other exceptions include situations if you are buying the property to sell it as soon as it is completed; in this case, it makes sense to go for pre-EMI since you need to make only interest payments and upon the sale of the property, you can pay off the principal in a lump sum.

If you can afford to, you should opt for a full-EMI payment plan. It reduces your principal as well as the unexpired tenure.

What is a legal check when you take a home?

So you have finally read through the brochures and dived through furniture catalogue. You might already be brimming with ideas for interior décor. However, there remains one important caveat before you can finally buy your dream home: it has to be legally clear. Ensuring a property is legal to buy and possess is obviously an important prerequisite; unfortunately, not enough of us really give it a thought until absolutely necessary. Left on its own, legal issues have the peculiar tendency to stay undiscovered until the very end where you have to pay inordinate amounts of money to get rid of what could have been fairly simple issues. Some preliminary checks and a little responsibility can go a long way in ensuring that your dream home safely finds itself in your possession with little to no additional hassles.

Legal check

CONFIRM CLEAR TITLES

A title is the conclusive legal document about the ownership of any property. With real estate as well, you need to see if the title is under dispute; if so, it might be a good choice to look elsewhere for a home. Court cases of real estate can stretch on for years, especially if documents are missing (which they often are). Hire a property lawyer or similar legal consultant to see if the title is clear or not. This will save you a lot of hassle (and tears) in the long run.

CHECK FOR APPROVAL FROM BANKS AND FINANCIAL INSTITUTIONS

This is one way you can get someone else to do the heavy lifting for you. Apply for a loan to buy a property and if approved, it means that the bank or any other financial institution has done the due diligence on the legality of the property. If they refuse you a loan, it might signify that there might be some issues with the property. Banks will often perform their own legal checks and verifications and it is fair to admit that with their resources, which are better than yours.They might be able to conduct more thorough investigations than any individual could afford to. Therefore, if a bank or a financial institution is willing to finance your purchase, it can help you validate the legality of the property. This is not watertight, though, and you should always conduct your own independent verifications.

CHECK FOR OUTSTANDING LEGAL DUES OR MORTGAGES ON THE PROPERTY

A document called an encumbrance certificate testifies that a property is free of any legal liabilities or dues payable. This means that there are no outstanding or unpaid mortgages on the property. If you can get this document, it means that you can go ahead and buy it with peace of mind. Many shifty realtors or owners might sell you a property with outstanding dues to make a quick buck off you; beware of this all too common trick. Otherwise, you might find yourself having to move out of your new home for not paying on a loan that the previous owner took on the property and transferred the liability on you when selling you his property. Yes, it is that complicated.