Points to Check While Considering a Home Loan - Raja Housing Trends

With the real estate market going in an upward stride, the housing loan has become the most followed trend in the lending section. This type of loan serves the need of the middle-class people and aids them in owning their dream home. So, this article is intended to those who opt for home loans and aims to guide them to take the right path while choosing a home loan.

Below mentioned are some of the checklist that one should consider while opting for a home loan:

What are the criteria to avail home loan?

To avail home loan certain banks and lenders have some standard criteria and if one meets all this criteria, banks and others financial institutions approve their required amount through loan. Though, these criteria many change from banks to banks, but still there are few basic criteria that every financial institutions look for and they are:

·         A secure reliable source of income irrespective of salaried employee or self-employed

·         A positive credit score for at least 6 months with active bank transactions

·         Age criteria, for salaried employee should be between 21-60 years and for self-employed it is 21-65years.

Most of the loan seekers are confused that the lender with provide them with the entire amount that is required for the purchase of their home. But, the assumption is not right; all the banks and financial institutions will provide 85% of the cost of the property, which one wants to buy and the remaining 15% should be arranged by the buyer itself and should also be ready with other costs separately like the stamp duty, registration charges, brokerage fee etc.

Check your eligibility?

Before getting depressed that the bank didn’t approve your loan, as the borrower is not eligible, take some time for yourself and check your eligibility and calculate your eligibility based on the below points:

·         Your total income

·         Overall obligations like financial commitments such as car loan, personal loan or another loans.

·         In case your spouse is also salaried employee or has any other income source, he/she can be included in the loan process as a joint applicant as this will increase your eligibility for a higher loan amount

How to calculate interest rate on your home loan?

Interest rate is a certain amount charged by the bank or financial institution on the approved loan amount and this rate varies from bank to bank and lenders as well and also depend on the EMI.

Know about different types of interest rates like the fixed rate, floating rate, and reducing balance and how it is applied and how you will benefit from it. Research thoroughly about all the charges included under loan processing, be sure about the processing fee, commitment fee and admin fee and this will be deducted from your loan amount. Before blindly approaching any bank or institution, as a borrower, it is better to study well about which bank is offering good discounts and rate of interest that is right for you.

Documents to be furnished for home loans

Below mentioned are the list of documents that one should be ready with while planning to take home loan.

·         Address Proof

·         Proof of your Age

·         Copy of your PAN Card

·         Passport Size Photographs

·         Last 6 months bank statements

·         Last 6 months salary slips for salaried persons

·         Form 16 for the last 3 years for salaried persons

·         Copy of the Property Title Deed

·         Copy of IT Returns of last 3 years for business-people/self-employed people

·         Copy of audited Balance Sheet & profit and loss (P&L) statements of last 3 years for business-people / self-employed people

What is a pre-payment?

Borrowers should also check for pre-payment options, Pre-payment is an option where the borrower can pay the lender the complete amount before the EMI period and can close the loan. So, it is advised to the borrowers to keep pre-payment option as an important requirement as it will save you from debt burden and will give you the pride of ownership.

What are the tax benefits on home loans?

The tax-benefits is really a big relieve for the borrowers who opt for home loans as they can claim both the interest and principal amount of their repayment of loan during that financial year.

To avoid any confusions and future complications, while availing home loan it is always better to do a research about the financial market and then to decide which the right bank or financial institution and interest rate that suits you better.

Raja Housing Info - Ready to Move House Gets Tax Benefits

When you don’t have much choice, shopping becomes simple. This implies while purchasing a house as well. If you’re planning to purchase a house, the important decision you have to take is whether to go for a under construction one or ready to move house.

PRICE

A ready to move house will cost more, if property type, location, size and neighborhood are same. The reason is transparent. For the possession you don’t have to wait and also can save the rent. A cost of under construction house will be less, but if you opt for that you have to keep paying the interest on home loan and also rent on your present house.

Compare two properties, one ready to occupy and other to be ready by next three years but costing 25 percent less. The annual outflow, assumptive 80 percent house worth as loan, are going to be virtually same within the initial 3 years if down-payment amounts are constant. The purpose is that the tax breaks that you are going to be eligible for within the total purchase and zero rent outgo.

TAX

One must purchase their first house in life as soon as possible to gain from tax deductions and to save rent. Claiming deductions is not so easy for an under construction house, says experts.

This is how related tax laws work. The principal amount paid up to Rs 1 lakh is deducted from income under Section 80C of the Income Tax Act. The interest paid for a loan is entitled for deductions up to Rs 1.5 lakh on the first house under Section 24(b) of the IT Act (the whole interest payment can be deducted for the second home from the income that is earned from it).

For the properties which are ready these deductions are permitted. An under construction property is not eligible for Rs 1 lakh deductions available for principle payments. When the property is under construction the interest paid can be deducted in five equal installments.

A huge number of buyers are not eligible for the tax deduction of Rs 1.5 lakh on interest payment, with projects slows a standard rather than an exception.

Previous financial year’s interest paid will also become qualified for deductions. Pre- construction interest of one-fifth can be added to the interest paid during the year, and over the next four financial years the rest will be included.

However, when the loan is huge, deductions on pre-construction interest does not make much sense. This is because principal payments and interest of present year will cut off the tax deduction limit. If you’re in 30 percent tax bracket you can save Rs 45,000.

SERVICE TAX

If a developer is selling a property in a group housing project before it is ready for possession, a 12.36 percent of service tax is charged on a part of price. There is no such tax if the carpet area of the property is up to 60 sq.ft.

For the property which is not exceeding 2,000 sq.ft in area or if the properties worth is of Rs 1 crore, than only on 25% of the price the service tax is applicable. The effective service tax is 3.09%.

The service tax is calculated on 30 percent of the cost, for the high-end properties, which means 3.71 percent is the effective rate. If the property is ready to occupy than it’s not necessary to pay this tax.

Raja aristos news - Real Estate Growth to increase by Second-half

Post general election; cuts in interest rates; and corporate expenses are likely to enhance the real estate growth.

Real estate veterans are sure about their anticipation in the growth of the real estate sector in the second half of 2014, after the general election, which may bring transparency in the new government and attract more international and domestic investments.

The real estate sector failed to see the anticipated growth in the year 2013 as all asset segments like residential, office and retail properties witnessed a sturdy drop in absorption sparing some cities like Bangalore.

Mr. Anuj Puri, Chairman and Country Head of Realty Consultant Jones Lang LaSalle India (JLL) says, the year 2013 didn’t turned to be so good for the Indian economy because of the deprived macroeconomic situations, sluggish income growth, continued failing in the rupee, increased inflation and high interest rates made the consumers to diverge from spending.

While stepping into the New Year – 2014, let us look back and take a glance of things that was confronted by the real estate sector in 2013:

Residential Segment
The residential segment went down in the first three quarters of 2013 with the sluggish absorption of residential units in most of the cities like Delhi-NCR, Mumbai, and Pune.

A report by Jones Lang LaSalle India (JLL) shows that during the first three quarters of 2013, the weighted average prices of homes in pan India increased by 10 per cent over year-on-year (y-o-y).  The growth in this segment was seen in the peripheral regions and emerging locations, as against the city sub-markets and the rental values increased by 8 per cent in this period.

Mr. Puri also told ‘it is anticipated that the end-users and buyers optimism will remain down in the first two quarters of 2014 due to qualms of general elections and macro-conditions’.  But, the undecided investors are likely come into form post elections and the piled up inventories will be reduced with the increase in absorption of residential units that will raise residential prices by 10-12 per cent in 2014.

About 45 per cent of under construction properties that are vacant in the Mumbai market shows the pressure in the real estate sector, says a recent report of Knight Frank a UK-based firm.

Mr. Sunil Rohokale, Managing Director of ASK Group and an investment manager also stated that during the first half of 2014 interest rates will be high and will drop in the second half, which will improve the sales and absorption.

Mr. Shishir Baijal, Chairman and Managing Director of Knight Frank, India also said that in the beginning of the second half of 2014 the sales volume and launches in residential to get a hold and the prices may see an upward pressure. 

Office Segment
During 2013, the office realty segment lagged the most, as the end-users delayed in rental activity owing to the largely slowdown and ambiguity.

The office segment is driven more by economic grounds, hence the growth in this segment is likely to take place with a quarter lag.

The office space absorption in the major seven cities of India fell by 14 per cent on q-o-q analysis in Q3 of 2013 that accounted to 6 million sq. ft. against the 7 million sq. ft. of Q2 of 2013, says a report released by CBRE a US based firm titled India Office Market View Q3 2013.

Rajeev Talwar - Executive Director at DLF, the country’s largest developer stated as the commercial real estate will grow only when the individual and corporate earnings rises.  He also added that to see growth in office segment many banks should be allowed to support the sector.

 
It is also anticipated that the vacancy rates in office properties will raise from 18.2 per cent (2013) to 19.2 per cent (2014) as the supply is increasing and the absorption is restrained and with government allowing tax relief for real estate investment trusts, commercial sector will grow, says a report of JLL.

Retail Segment
It is anticipated that the entry of multi-brand retailers will boost the retail sector in 2014.

According to a study by global consultant Cushman & Wakefield (C&W), in 2013 the retail segment observed a 39 per cent rise in mall spaces, though18 malls were delayed by the developers, said

C&W further added that the total vacancy in malls in this segment has reduced by 2 per cent due to the improved rental activities in the newly launched malls that began with a high proportion in possession and the average occupancy of new mall space in 2013 was over 94 per cent.

Raja housing review for Better Option: Renting or Owning Your Apartment

Most of the apartment owners think over the idea of renting out their homes though they may be in need of extra income to save money or pay down bills, or mortgages as well.  Although, homeowners who are unable to sell their apartment at their expected price due to market down, they may choose to rent their apartment until the market strategies improve.

But, renting involves far more than handing over the keys and collecting the rental amounts.  Hence, it is important to evaluate the pros and cons of renting an apartment before doing so.  There are numerous benefits in renting an apartment, but there are also some disadvantages.  Here are some points, which one must consider before renting their apartment:

Organize your apartment
Before renting your apartment, organize it by cleaning it thoroughly and ensure all appliances in your apartment are working and in good condition.

2. Understand the responsibility involved

First, determine whether you can handle the obligation of renting your apartment and it is secure to presume that things may sometimes fall short.  As a landlord, it is now your responsibility of maintenance, collect rent, and pay your home insurance policy.  Though now you are the landlord, try to avoid creating more fuss to your tenants by interfering and keeping an eye on your tenant's housekeeping skills.

3. Consult your attorney

Before renting your apartment, consult your attorney to ensure that you abide to tax laws and rules of the local properties.  According to IRS the rental income should be documented on your tax return and you will qualify for tax deductions.

4. Cost of the rent
Before setting a cost as rent to your apartment, make a little research and check for the rental value on the surroundings of your area.  Keep in mind, as prospective tenants will be looking for deals, so set an attractive price as rent and make sure you highlight all the most important features of your home.

5. Choose your tenant carefully
Once you have shown you apartment to a tenant, be very careful in choosing a genuine tenant, ask for their identify proofs to be more secure and if you have time check for the tenants background and credit histories.  When you found your right tenant, ask for a reasonable security deposit, which is also termed as advance, arrange an appropriate payment schedule and explain them all the terms and conditions that you would have prepared.
 
The benefits of renting are many that include avoiding the damage caused by letting your apartment sit vacant, tax deductions, generating income that may cover some of your bills or insurance.

During market down, renting your apartment is an ideal idea until and unless the apartment owners don’t create too much frustration to the tenants though it is still your apartment.

Raja Aristos case studies - Investing in Marathahalli of Rs 40 lakh Gains a Rent of 16K Every Month

Investing in an apartment in Marathahalli of Rs 40 lakh can gain a rent of Rs 16,000 to 17,000 each month. The locality is the top grosser at 4.94 percent in terms of per annum yield in Bangalore.

Investors benefit is not just a high rental returns, but the locality will also be able to manage a 9 percent of growth rate during July-September 2013 quarter.

Let us check why Marathahalli stands on the top in high performing localities in the city. First of all Marathahalli is located close to Outer Ring Road. When you move to Outer Ring Road, you can come across the entire major cities. As Outer Ring Road is a Signal free road it is the biggest advantage for this locality. It is hardly 1-2 km from Marathahalli.

The 6 lane railway over bridge begins from Marthahalli Junction and enters to Kundalahalli area and HAL Airport Road. The closeness to areas such as HSR Layout, Whitefield and KR Puram drives through property values in the locality.

Sometimes it would be reasonable to purchase an apartment in Marthahalli than Whitefield. Whereas a size of 1,000 sq.ft. Apartment is available at Rs 40-45 lakh in Marathahalli but the same size apartment shall be sold at Rs 40-45 lakh. Now it’s left to an investor whether he chooses big apartment in Marathahalli for the same cost or save 10% of his funds.

But the question is whether the locality has enough number of properties. Yes in this case Marathahalli is a purchasers market. In this area there are 20 new projects under progress. There are many real estate developers who are going to start up with multi-storey projects.

 As Marathahalli is one of the well know locality in Bangalore and it is surrounded with IT hubs, hospitals, shopping complex schools and engineering colleges for the benefit of the residents. Anyone who has a dream of buying or constructing a house in Bangalore sure will buy a plot in Marathahalli for his benefits.

Many promoters are coming to construct houses in this area with salient features. As there are many IT companies around Marathahalli, due to which there is a high demand for rented house in the locality. The locality also sees hike in rental prices.

Marathahalli has developed towards concrete locale due to which margin for rental and sale value has increased significantly. The benefit to invest in Marathahalli is due the unparalled connectivity of Outer Ring Road.

Marathahalli is the central location in Bangalore where there is ever demand for the land for the features it contains. Compared to other areas of the city Marathahalli stands top most of the localities. People who invest in Marathahalli for buying a plot or constructing an apartment gains good profit.

Plots in Marathahalli are almost of A Katha type, this will help the buyer to get easy loans from banks. It would be a good idea to invest in a place like Marathahalli which offers decent living in a best house. Because investing in Prime location can double the amount in short period of time and can gain high profit without no loss.

Most people prefer Marathahalli to build or buy their dream home, as it is near to IT companies, Super markets, Shopping Complex, Restaurants, Multiplex etc. Due to which the demand for rented house has also increased in this locality. Due to Outer Ring Road people reach to their place very fast without any traffic signal.

Rental value in Marathahalli has increased by 20 percent and expected to rise more in future due to demand that exceeds supply. As this area is calm, quiet and near to IT companies many individuals prefer to live in this locale. As it is near to Tech parks and IT hubs, the location has become famous for IT population.

This area is outstanding as it is just 5 Km from Tech Park and Ring Road is just a Kilometer away. The rental value of 2 BHK and 3 BHK apartments will be approximately Rs 25,000 to 30,000 per month, with all basic facilities. The rental values are appreciating in this area.