PARAMETERS FOR GETTING A PERFECT PROPERTY

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Every person would need to have a house,whether or not spacious or little house in line with their financial standing.Someone wishes to have a house since it's not solely a concrete structure however conjointly involves a part of emotional bonding towards constant.

Nevertheless, it's not easy to either obtain a brand new house/apartment or to construct on the plot.If a want of a person is to shop for an apartment, then it's necessary to spot the correct location and a reputed builder and if the will is to construct a house, then a reliable and right person, is extremely necessary.  

Selection of a location

Before feat any property, additional impetus ought to be on the location since it plays a preponderating role in most aspects of the important estate. However, the method of distinguishing the placement for owning any property depends upon the aim that such person intends to invest, that may be either for residential or commercial, since the priorities differs in line with the aim that  the property is meant to be purchased.

The following area unit a number of the rules needed to be thought of whereas choosing the desirable location area unit mentioned below:

1.The first and foremost factor that ought to be kept in mind at the time of identifying the property is that the property meant to be purchased mustn't be settled inside the vicinity of city district or  place of worship or in shut proximity to a voidance line. It’s higher if the location is inhabited with people having numerous cultures with cosmopolitan outlook and free from anti-social components and anti-social activities. 

2.If the person needs to have a house or a flat for his own occupation, it's advisable to like a strictly residential area than a commercial one.

3.It is invariably appreciated to choose purchase of an apartment designed on a Layout approved by the competent authority, since it might guarantee higher amenities to such occupants.

4.It is conjointly vital that such layout ought to conjointly comprise of well-laid roads with smart sewerage system, alongside regular garbage clearance. 

5.It is advisable  to avoid owning a house within the low-lying areas since such property usually runs below the chance of inundation of water throughout serious monsoon.

6.Care ought to even be taken to confirm that the placement isn't terribly off from the work place, Market place, educational establishments, hospitals, Bus stand, train station or different basic and vital destinations.

7.Apart from the on top of, it's conjointly necessary banking facility, ATM’s, public conveyance, public phone booths, web Centers are not terribly off from the property.Last,however not the smallest amount that the placement should even be free any kind of pollution or congestion.

8.Needless to mention, the area ought to have smart and regular offer of water, power and just in case of bore-wells, then smart spring water table is additionally necessary.

9.To ensure smart sleep and fewer pollution, decide a vicinity, that is free from any industrial plant or workshop within the precincts of your location.

10.As regards maintenance of fine health worries, it's conjointly important to inculcate the habit of cardiopulmonary exercise or walking often, that Public Parks or gardens having jogging track is critical in such circumstances, it's preferred to have a house or a flat whereby such parks or gardens area unit simply accessible. 

11.Further, it's conjointly seen that the thought of Vaastu has gained a lot of momentum now-a-days, that is subjective. In such circumstances, importance ought to run to the dimensions of the plot and therefore the Floor space quantitative relation alongside the worth tag than banking upon the Vaastu alone.

12.One factor that invariably issues everyone seems to be the parking and different provision problems, that we should always be determined before purchase. The infrastructure facilities ought to be smart all told respects. 

Necessity of acknowledged Builder

Real Estate is booming like ne'er before because of varied factors viz. IT Boom, High salaried people, soaring share costs, and wide selection of home loans accessible simply.The Builders/promoters area unit having a field day, because the demand is mounting. That being true, it's important to choose the acquisition of a flat/apartment created by any acknowledged Builders, as a result of some builders, having no expertise within the field of construction might take undue advantage of the mounting demand and will cause injury to the intending purchasers by creating false assurance, with poor result and high costs.

We tend to get to listen to lots of stories regarding such imitative builders, whose slogan is to cheat the folks to a tune of millions, collect cash and vanish with them, that state of affairs must be brought in check.The subsequent area unit few of the data given to enlighten regarding the ways in which to tackle and overcome such instances:

1.At the first, before creating any quite investment either in flats or plots or in any kind of property, it's terribly necessary to get the list of acknowledged builders of town, who area unit concerned within the land business from quite few years. 

2.Once such list is out there, then it's necessary to form an intensive investigation regarding the antecedents of the short listed builders. 

3.The next vital side once finalizing the builder from whom the property is meant to be purchased,different aspects like promptness in delivery, construction standards,strict adherence to the united prices with none increase, providing all the fundamental amenities as secure at the time of booking. 

4.It is advisable  to undertake and meet the residents residing within the flats created by such Builder. 

5.If a proposal to sell a flat/apartment is formed for the worth that is way but the costs prevailing within the market, then it's advisable  to assume it over than obtaining anxious over the throw away worth per se purchasers could also be liable to some unknown issues, resulting in heap of issues in terms of legal and quality of construction.

6.Investing in an independent house or flat designed by any unknown builder is usually a risky act.

7.Now a day, several Builders area unit creating use of contemporary and distinctive techniques and area unit making tempting brochures depiction unbelievable styles simply to draw in the purchasers to take a position in their comes.On the idea of such brochures, serious claims area unit being created by the builders and successively the purchasers don't seem to be benefited in any method. 

Safe investment aspects

As way as residential property worries, it's safe to take a position in those comes that area unit completed rather that those that area unit still under-construction.

For those that shall invest over the property aside from residential, for obtaining steady rental incomes, investment on the prepared possession properties could also be a wise alternative.Also, the chance of capital appreciation would be very restricted as prepared possession property attracts premium over the market rates. 

Thus, getting an immovable property free from any quite impediments could be a long affair, which needs choice and involvement of economical professionals like Advocate, Architect, Structural Civil Engineers, Contractors and land Agents, who have important and independent roles to be contending in getting any property.

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FORMALITIES TO BE COMPLETED WHEN PURCHASE OF PROPERTY

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Ownership over the immovable property won't be given by mere execution of the sale deed in favor of the client.There square measure several different formalities needed to be completed when the acquisition. Such post registration formalities, succeeding the registration of the sale deed has been mentioned below:

1. Obtain original documents of title from the vendor so as to match and ensure an equivalent with the copies and also the same must be scrutinized by the purchaser's Advocate. When thorough scrutiny by the advocate and if more original documents are necessary, it's recommended to confirm the assembly of such documents in originals solely.If you're availing housing finance, then you've got to use for the certified copy of your sale deed within the involved territorial Sub-Registrar workplace.

2. Apply for the most recent and updated encumbrance certificate within the involved Sub-Registrar workplace. It’s also necessary to verify whether or not such Encumbrance certificate reflects the execution of sale deed in favor of the client in conjunction with the small print relating to the date, number and conjointly the name of the parties to the deed.

3. Possession of property is very necessary.The vendor ought to fork out the vacant possession of the property to the client.So as to confirm that the vendor is in possession of the property, the client ought to examine the property each day before the registration.If the vendor is in physical possession of the property then returning the vacant possession of an equivalent is incredibly straightforward. 

On the opposite hand, if the property is in occupation of the tenants, it's important to confirm that the tenant’s square measure vacated before registration.However, the very fact that the vendor is in physical or ownership, must be clearly incorporated within the sale agreement. As per the terms of sale agreement, the client ought to receive all the keys of the property at the time of registration. If doable, main door lock are often replaced with the new lock. Just in case the property sent to the purchaser could be a vacant website, it's necessary to place display panel with the wordings“This property is in hand by ‘X’ trespassers are going to be prosecuted”.Further, fencing around such sites or constructing compound wall, tho' expensive, is desirable. Periodical visits to the positioning also are recommended so as to sight encroachment over the site, if any.

Consent Letter

The client ought to verify that each one the taxes, statutory payments in respect of the property together with power, water charges square measure paid up-to-date by the vendor. Further, the purchaser should collect all the receipts for the statutory payments and may conjointly verify at the involved offices, whether or not there square measure any arrears are there or not. Power and water system agencies collect deposits from the customers before providing services. So as to transfer such deposit within the name of the client, consent letter from the seller must be obtained from the seller. 

Registration of Khatha:

Khatha Certificate and Khatha Extract are one among the obligatory and necessary documents to prove this possession of the client over the property when execution of the sale deed. Client should make sure that the Khatha within the records of the native bodies, gram Panchayath or the town corporation is transferred to his name. 

Both the vendor and client have to be compelled to sign the appliance for transfer of Khatha, that is better if done at the same time whereas language the sale deed so as to avoid any future disputes. Application for Transfer of Khatha must be punctually crammed in conjunction with copy of the sale deed enclosed and also the same must be submitted before the involved authority and to get acknowledgement thereto impact. just in case of the property falling inside the boundaries of BMP, then applications for Khatha transfer could also be filed in any of the subject service centers or any of the 30 revenue offices in conjunction with the documents mentioned in Sarala Khatha scheme Book.Documents needed to be created includes Mother Deed, sale deed, National Savings Certificate of Rs.200, sketch showing the positioning details and Betterment charges paid receipt.If the Khatha must be transferred within the name of 1 of the co-owners, then No Objection legal instrument declaring that they are doing not have any objection for transfer of khatha within the name of the mortal, punctually sworn before the official by the remaining co-owners, must be submitted along with the appliance for transfer of khatha and different needed documents.

Sarala Khatha scheme Book, introduced by BMP, provides all the small print concerning the services of the Revenue Department, documents to be filed, fees needed to be paid, operating hours and conjointly rates for assessment of land tax underneath the Self-Assessment scheme.

For transfer of Khatha within the name of the client, transfer fee are going to be collected and later written confirmation of such transfer endorsement are going to be issued within the name of the client. Throughout the method of transferring Khatha, the property is once more re-assessed on the idea of revised property taxes, if any, so issue assessment notice within the name of the client. It’s important that the tax paid receipt ought to be within the name of the new/present owner.

Khatha Extract:

After issue Khatha Endorsement, we've to use for computerized Khatha Certificate and Khatha Extract. Khatha Extract reflects the name of this Owner, assessment details, sital space and designed up space. 

CMC Khatha:

If the property has falling underneath the CMC jurisdiction, Khatha Endorsement is issued within the name of this Owner. Town Municipal Councils (CMC) was issue type No.19, CMC Khatha within the name of this Owner. Now-a-days type No.III Khatha is being issued to the properties falling inside the boundaries of CMC since issue of type No.19 has been stopped from 29/05/2003.

The properties falling inside the limits of Village Panchayath, Form No.9 and ten is issued within the name of this Owner that refers to Assessment Order and Assessment Extract.

Transfer of Electricity offer

After the Municipal authorities transfer the Khatha within the name of the owner, meter and meter put in square measure needed to be transferred in their name.You’ve got to submit the required application along with the deposit transfer letter issued by the previous owner.When completion of all the formalities, water and electricity authority can change this owner name in their records. The authorities can issue written confirmation of transfer and lift the bills within the name of this owner.This may facilitate the owner to verify and check up their electricity and water bills to be raised in future.Annual land tax and periodical Encumbrance Certificate must be often obtained a minimum of once a year.

After completion of all the post registration formalities, absolute title, right over the property are going to be given to the client thereby enabling the client to relish the peaceful and uninterrupted possession of the property.

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BUILDING BLOCKS FOR YOUR HOME

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India is a vast country, having a population of more than 1000 million. Many are without owned shelter.After independence, the successive governments addressed this problem with various government-sponsored programmes. They are targeted at poorest of poor, and houses with barest facilities were provided. 

The problem was too gargantuan to be met with government alone. The government of India established National Housing Bank, under the supervision of Reserve Bank of India. Scheduled commercial banks, co-operative banks, were also directed to lend for purchase/construction of houses.In the beginning 1.5% of incremental deposits of commercial banks during 1988 was earmarked for housing finance sector, which was enhanced to 3% during the year 1999 and subsequent years. The banks were given freedom to exceed this stipulation depending upon their resources. The slow down of economy, slump in the demand for loans from corporate sector goaded banks to aggressively market housing loans. In the course of the time, banks have overtaken the housing finance companies in market share. The easy availability of finance, the tax benefits extended by the union government and increased earning/spending capacity of middle class, mostly wage earners have fuelled the growth of this important sector.

Change of Mindset

Owning a house, previously was the last priority, mostly at the time of retirement from out of terminal benefits savings as one could rarely find the means of financing the purchase/construction. This mindset has changed. The youngsters in early twenties are earning substantial salaries, with increased spending capacity. They prefer to own houses out of borrowed funds, which is repaid over a period of time. This helps them to avail of lower interest rates and also tax benefits for longer period.

Legal Scrutiny Report and Valuation

It is very important to have legally established ownership of the property to avail of the Housing Finance. The applicant should have all the documents to establish his title to the property. He should verify the documents available with him/or with the seller and perfect the title to the property. Financing Institutions will rely on the legal scrutiny report of their advocates on panel. In view of the severe competition in the field, many institutions are ignoring the importance of the legal scrutiny, and title to the property, and are giving much importance to the repayment capacity

Apart from perfect title to the property, the valuation of the property is also very important, based on which the loan component will be determined. The banks have approved valuers on their panel, who will value the property and arrive at the market value.

Loan Amount

Many institutions have a maximum ceiling of one crore-per party. The loan depends upon the cost of construction, land, purchase cost, stamp duty, registration charges, legal charges and also other additional expenses. The borrowers may have to bring is 10 to 15% of the cost as margin money. There are institutions, which finance full cost without insisting on margin money. In addition to these parameters, the income of the applicant, repaying, capacity of all the borrowers are being considered Maximum amount that an individual may require is 10-15 lakhs, for a good house, which is within the reach of average wage earner.

Repayment Schedule

The loan is to be repaid in monthly instalments comprising interest and principle called equated monthly instalments (EMI). The amount of repayment remains the same during the entire tenor of the loan.

In case of construction, the loan amount is disbursed in instalments depending upon the progress of construction.The regular repayment commences after the completion of construction or after the expiry of certain stipulated time. Interest for intervening period, from the date of loan to the commencement of equated monthly instalment is called pre-EMI. This has to be paid quarterly or monthly.

Though the repayments offered vary upto a maximum of 20 years, it is preferable to avail of the period of 10-15 years, considering the interest rates, tax benefits and repayment capacity. The repayment period of 5 years attract heavy monthly instalments, which prove to be burden; in repayment beyond 15 years, one has to pay heavy interest. There are institutions, which offer repayment period beyond 20 years also.

Certain banks have special schemes, under which any surplus amount available may be paid though in excess of equated monthly instalment with facility to with draw such amount in case of necessity. The account operates like a current/over draft account.This would be useful for business people. Such schemes are called Home Loan Saving Schemes, where by paying off the loan earlier substantial amount of interest is saved.

Interest

At present interest rates are very low the loans are available at 7.25% but there are signs of interest rates hardening. There are two different types of interest rates floating and fixed.

Floating Rate

Here the rates are not constant, but keep changing.There are linked to market condition.They may increase or decrease.The present floating rates has reached the bottom and there may not be further reduction. The lending institutions are very reluctant to pass on the benefits of reduced interest rates to borrowers. They adopt different strategy to keep the borrowers paying higher rates. In most of the case the old borrowers pay higher rate than a new borrower for a similar loan.

Fixed rate

This is supposed to remain fixed through the tenor of the loan. Fixed rates are higher than floating rates but many banks/housing finance companies have “Force Majeure” clause in their agreement, which gives absolute powers to change the fixed rates.

In general, the fixed rates for loans of long tenor, floating rates for loans of short tenor may be preferred.

Many offer a combination of both fixed and floating, where some percentage is charged as fixed or balance as floating.

Reducing Balances

Reducing balance means the period at which the instalments collected from borrowers are credited to the loan account. In annual reducing balances the monthly instalments collected are credited to the loan account once in a year. In monthly reducing balance they are credited on a particular day of month; and in daily reducing banks, it is credited on the same day. Annual reducing balance is mostly costly, where as daily reducing is the best. Many have monthly reducing balance, and few have daily reducing balance.

Hidden Costs

There is no transparency in Housing Finance sector. Apart from interest the borrower has to pay processing charges legal fee, but many other types of fees, such as administration fee, inspection fee, etc. Further the rates at which these are charged are also not clear. In such cases, though the interest rates are low, the hidden costs increase the burden. As stated earlier, interaction with borrowers would help.

Switch over

The borrowers have an option of switching from floating/fixed to other mode on payment of certain penalty. Generally it is 1% on the outstanding loan amount. But recently, the financing institutions have increased fee for switching over. While switching over, consider the penalty payable, the loan balance, the rate of interest available and the balance repayment period. If the balance repayment period if short it is not advisable to switch over.

Transfer of Loans

The borrowers may also transfer the loan to other institutions, which take over the loans. Many borrowers transfer the loans to avail the reduced interest rates available. The interest rates during 1990-2000 were very high. In case of transfer of loan, the borrower has to pay some prescribed fee calculated on the outstanding loan. Apart from such fees, the institution, which takes over the loan, charges processing fee, legal charges etc. They may offer some additional loan also. But avail of such additional loan only in case of absolute need. While transferring the loan apart from interest rate, calculate the transfer fee, processing/legal fee, and mode of reducing balance adopted by the institution, which takes over the loan and hidden costs. If the balance repayment period is small, transfer is not recommended.

Tax Benefits

Home loan borrowers have two types of income tax benefits:

1.Rebate on repayment of principal and stamp duty and registration charges.

2.Deduction of Interest

The Stamp duty and registration charges paid and repayment of principal is eligible of rebate on a maximum amount of Rs. 20,000/- within a over all limit of Rs. 70,000 under section 88 of income tax act 1961.

The interest paid in a financial year on housing loan is allowed as deduction under section 24 of the income tax act 1961. The maximum interest allowed at deduction at present is 1.5 lakhs in case of self-occupied house. This is per individual. If there are more than one borrower, with definite shares in property, each may avail of this deduction, subject to his share, with a maximum ceiling of 1.50 lakhs. There is no such ceiling in case of properties, which are let out. Any amount of interest paid on the loan is allowed as deduction, and the income from the property by way of rent is taxable.

Insurance

Apart from insurance of property, against fire, riot, civil commotion, many insurance companies offer term policies on payment of single premium. These term policies cover risk for certain period and repays the loan in case of any lose of life of borrower.

Selection of Financier

Housing finance is most easily available credit product. All the commercial schedule banks, co-operative banks, extend finance for purchase/construction of houses. In addition there are housing finance companies specialized in this line. Many of these institutions are concentrated in metro and urban centers. There is severe competition. In general the rates of interest in housing finance companies are slightly higher than banks. Though there is intense competition, there is no transparency in Housing Finance industry. It is better to interact with borrowers of different lending institutions and select the best. If one is a regular customer of any bank, it would be better to borrow from such bank.

While selecting the Financing Institutions, examine the rate of interest, charges for shifting, hidden charges, transparency, and accessibility to the financing institutions. Many institutions operate through direct selling agents, and the borrowers will rarely have a chance to interact with the officials of the institutions. Further there is very little of select between any two institutions.

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