Since under-construction flats are more complicated and riskier, here’s a checklist for buyers. Use this to know if you are doing the right thing by booking in a new project. Is project RERA registered? – Go only for projects registered with RERA, because it is the first stamp of approval. RERA approves a project only if it has all approvals (from municipal corporation, electricity and water department) in place. However, these approvals are only for starting construction. Are all details available? – Another advantage of a RERA registered project is that all relevant information will be available on the RERA website. Since housing is a state subject, implementation quality of RERA varies across states. Maharashtra has implemented RERA in letter and spirit, but many other states have not. In many cases, the data on the RERA website is not updated because builders are not furnishing details. It is better to avoid projects if full data is not available on the RERA website.
Is builder financially strong? – Don’t be under the impression that the house will be delivered smoothly just because it is a RERA registered project. As mentioned earlier, RERA approval is only to start a project. The builder must be financially sound too. In addition to checking financial situation of the builder, buyers should also check about other ongoing projects. Completed projects give an idea about the track record of the builder. Check whether they have delivered other projects on time. Avoid builders that got into trouble with other projects. Also, avoid builders embroiled in NCLT cases, if their borrowing is high and if there are a large number of consumer complaints. Have you seen the locality? – Facilities available inside the projects (swimming pool, gym, etc) are mentioned by builders. However, buyers must do their own legwork. Visit the site to make sure that the physical infrastructure matches your need. Don’t just sign in the agreement after visiting the builder’s office. In addition to this, buyers must also see the social infrastructure surrounding the project. Irrespective of whether you buy the property for self-use or investment, find out about upcoming projects and hospitals, malls, educational institutes and entertainment options in the vicinity.
Source: The Economic Times, Monday 2 December 2019
Money matters of home-buying
Buying a home out of one’s savings or borrowings from friends and relatives was how it happened a few years ago. No wonder, majority of people buying their own house were in the older age-group. But, today we see the young and ‘just-started-to-work’ youth going for the big buy. Easy housing loans from banks are one of the biggest factors that have contributed to this change. Also, bigger salaries and tax saving measures are helping people take the buying decisions without too much resistance. Let’s look at some other financial factors that one should consider before investing in a property.
Returns: The return on your investment should decide whether you want to keep your money in the bank or invest in a property. There are some important tools to evaluate this like the price-to-rent ratio where you can base your buying decision by dividing the cost of the house by the annual rent. If the ratio is below 15, you should buy else rent the house. Financial strength: You are a better judge of your own financial position. A realistic evaluation of how much will help you make a better buying decision. You will also be eligible to the amount of loan depending on your salary. Also, there should be some surplus after you pay the monthly EMI and household expenditure to cover your investment needs and any immediate rise in interest rates. Income stability: Home loans are for long tenures, typically, 20 years or more. Banks will also check your employment record thoroughly before approving your home loans. But as a home-buyer, it is important that you are confident about your job stability.
Source: Mid-Day, Friday 6 December 2019
Do you have a back-up plan to pay EMIs?
With pay cuts and job losses getting a tad bit rampant, it’s time to be judicious while planning the EMI of your home loan and exercise preparedness to avoid any unforeseen eventuality. Is your anxiety growing day by day as you hear about dire conditions in the job market? Not many share these fears with their spouse or family lest they worry. However, it’s not about being negative, but instead taking charge of these very fears, and preparing for any such eventuality. The worry that tops the list is how you would manage your home loan EMIs in the scenario of a pay cut or worse, job loss. India’s unemployment rate in October rose to 8.5 percent, the highest since August 2016, and up from 7.2 percent in September, according to data released by the Centre for Monitoring Indian Economy (CMIE). So, it is time to take stock of your finances and keep in mind a few things before you enter 2020.
Old School Advice: The good old adage of ‘always have a backup plan’ holds true in this scenario. Always have a contingency fund to pay your EMIs – a safe benchmark is around six months’ worth of EMIs – over and above your savings that include groceries and everyday expenses, to sustain yourself for that period. You should ideally save an amount that takes care of at least 6-12 months of expenses. This contingency fund will help you pay your EMIs for up to a year until you find another source of income. Liable and Viable: If you’ve opted for a hefty home loan, but have an additional loan (eg: car loan), be practical and sell off the car. The money can be used for home loan EMIs instead or for monthly household expenses as well as your children’s fees/tuition (if you have any). One can also consider selling liquid assets (like gold or equity) to make part-payment of loans.
Source: Times Property, Saturday 14 December 2019
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