What is Price Protection Policy in Real Estate Market?

You’ve finally decided to buy a home but it is plagued with uncertainties, speculation, opinions and uncalled for advice. Relatable, isn’t it? That’s because a home is possibly the biggest purchase in one’s life.

Needless to say, there’s a plethora of doubts and fears in your mind before you finalize on anything. You might take into account about the location, the market reputation of the builder, the size, and the amenities but it all boils down to 1 simple question: is your investment safe? More so in today’s financial scenario where the markets are weighed down by demonetization, slow down and the anticipation for real estate prices to fall further.

The Price Protection Policy comes in as a savior in such times; especially for those who are sitting on the fence still wondering whether to buy or not. Price Protection Policy is a solution to all your worries and has the power to instill confidence in both the buyers’ as well as the builders’ minds.

“You had my curiosity, but now have my attention”.

So what exactly is Price Protection Policy?

From the clothing industry to the automobile industry, brands use ‘cashback’ to retain their customers’ interest.

In the realty market, Price Protection Policy is that ‘cashback’ which helps us retain your confidence. It protects your investment from fluctuating prices such that, if the price of the property you’ve bought falls, the builders, refund you the difference.

price-protection-policy_loanyantra-comFor instance, if you buy a home for say, 80 lakhs, and due to market movements it drops to 75 lakhs, the builder will refund you the difference, i.e. 5 lakhs, under the Price Protection Policy, NO QUESTIONS ASKED!

Isn’t that so assuring and relieving?

But it’s important to note that the price protection window might differ from builder-to-builder. That means each builder might offer a different time frame to cover your properties under Price Protection. Usually the builder offers it till the buyer takes the possession.

How does the Price protection policy benefit the home buyer?

Price protection policy is first implemented in 2008 by a renowned builder Rohan Builders for their projects in Pune. This was done in the wake of global economic recession and real-estate crisis that crippled nations and organizations worldwide. As was mentioned in the property agreements, the difference was actually refunded to the customers.

It is a safety net for one’s life savings. In a market so volatile that even vegetable prices keep changing week-on-week, one is wary about parking lakhs or even crores of rupees in an asset like home if it’s their necessity. The Price Protection Policy alleviates that fear and instills confidence.

The realty market is betting big on this new policy. Make sure that you not  only have a verbal commitment but also make the builder mention in the document.

Be optimistic to get something tangible and legal to hold on to when you buy your dream home from your builder.  There are many known builders who follow this policy. Find out from your builder if he follows the policy. We only hope that every realtor follows for the betterment of the overall realty market.

Price protection policy followers

Pethkar Projects’ Seyona at Punawale is offering Property Rate Protection Policy from the day project was launched in 2014. Some of the followers of the price protection policy are Concord Builders, Tata Homes, Mahaveer Group, Runnal Group, Lodha Group, Oyster Living, Citrus Ventures. These developers had started implementing the policy post demonitization to bring back the boom in the realty market.

The purpose of the policy is in the interest of the home buyers not loosing their hard-earned money during the post demonetization when the realty market was going low. But with the decrease of home loan interest rates, the real estate market had become a hit again.

 

How much you will save, with RBI Slashing its benchmark repo rate by 50 basics point?

Dated : 29-Sep-2015 


RBI slashed its benchmark repo rate by 50 basis points (0.5 percent) to 6.75 percent. This came after a total of 75 basis point cut earlier this year in three tranches as inflation pressures eased in the economy. 

Check out RBI’s trend

 





Questions which arise for the existing customer… 


Will this reduction be passed to existing home loan customers ? 

SBIHopefully the banks and lending institutions will pass on the benefits to there existing customers. If not full at-least partial in some wave form.


Already, the country’s largest state ­run lender, State Bank of India , has cut its base rate by 40 basis points, or 0.4 percent, to 9.3 percent, effective October 5, Chairperson Arundhati Bhattacharya told CNBC­TV18. 


In an interview, Bhattacharya said that there could be further rate cuts in the future by banks, given that the RBI Governor Raghuram Rajan has indicated that the door for future rate cuts is open. 


SBI also has cut its deposit rates by 25 basis points across maturities, effective next Monday, the bank chief said, adding that it would help bring down cost of funds for the lender.

If  banks/lending institutions doesn’t pass on this benefit to existing customer,  is there a way to avail it. If so how ?

Yes, existing loan lenders can avail the benefit in following ways 

  1.  The old home loaners have the choice to convert their existing rates to current rates by paying hefty penalty charge of minimum of 0.56% on left over principle to the banks/lending institution. Its advised to compare the benefits of paying part-payment over penalty.  Check out LOANYANTRA.com part-payment calculator.
  2. The old home loaners have one more choice of switching to new bank or lending institution. Check out LOANYANTRA.com Switch & Save option and get rewards and benefits from LOANYANTRA.com

How much does it save tenure ?

Definitely, there will be a change in the tenure when you go for a lesser interest rate. Infact, 0.5% change in interest rate will result in closing your loan to a maximum of  30 months earlier. 

For example, if you have a loan of 50 lakhs for a tenure of 20 years with 10% interest, a change to 9.50% interest will change your tenure to 18 years and 2 months. 


How much does it save my EMI ?

If you want to keep your tenure same, your EMI reduces from Rs. 48,251 to Rs. 46,606. This leaves you with a saving of Rs. 1645. 


Competition in home loan space has been quite intense not only from banks, private banks, nationalised banks but also from the NBFC space. SBI has again proved that it stands on the top among its rivals. Infact, with the immediate reduction in the interest rate and implementation, it makes way to the competition.


Reduction in the interest rate is always advantageous. 

For new loans and hassle-free balance transfers, logon to www.LOANYANTRA.com. 


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