Respite for the first timers

Are you looking to buy a house for the first time? Thanks to the Union Budget of 2013, you can heave a sigh of relief as new loans up to Rs.25 lakh will be eligible for an additional tax deduction of Rs.1 lakh for interest payments. This is their way of encouraging people to buy their first home ever. Good move, and definitely deserves a sigh of relief.

However, this is of course on for the financial year of 2013-14 as of now. So that means, a person taking a loan of up to Rs.25 lakh for his first home between April 1, 2013 and March 31, 2014, will be entitled to an additional deduction of interest of up to Rs.1 lakh. Apart from being beneficial to first time buyers, this move will also boost a number of industries like steel, cement, brick, wood and glass, besides giving jobs to thousands of construction workers. With this, the total deduction for interest payment for 2013-14 will be Rs.2.5 lakh. If the interest component is less than the deduction limit, the balance can be claimed in the next financial year.

With the advent of this benefit, taxpayers can continue to claim deductions up to Rs.1 lakh for repayment of home loan principal within the overall limit of Section 80C of the Income Tax Act. There are a few areas to look into though, as can be the case with any rule or law.

1. A deduction of up to Rs.1.5 lakh for interest payment (under Section 24B) is allowed if the house is ready and occupied by the taxpayer.

2. Any pre-construction interest is allowed to be deducted in five equal instalments within the Rs.1.5 lakh limit after the house is ready.

3. If the house has been let out, the taxpayer can claim the entire interest component as deduction from the rental income.

This move is definitely very encouraging for buyers on the lookout as well as opportunities in real estate, both of which will see a significant rise as per predictions of many.

Where there's a Bill, there's a way

The Real Estate Bill 2013 has been in the pipeline for quite a while and it's only recently that it was approved by the Union Cabinet and is now waiting to be passed by the Parliament. This Bill allows for the creation of a regulator in the real estate sector, for residential properties. Here's how it attempts to safeguard buyers' interests:

1. Property brokers must obtain a license.
2. Developers to submit authenticated copies of approvals and sanctions from the competent authorities while applying for registration.
3. No advertising, selling or money raising will be permitted before project approvals are in place.
4. If a developer flouts a provision of the Bill, he could be fined severely or jailed.
5. The provisions of this Bill will also apply to government agencies involved in housing projects.
6. Developers should maintain a separate bank account for each project in a scheduled bank to prevent diversion of funds from one project to another.
7. Compulsory registration of all real estate projects of more than 4000 sq.mts.

One of the best parts of all the documentation this Bill demands is that brokers, especially those who only deal in cash, will have to redo their methods, so to speak. The buyer's cost will be affected just by this.

With the good comes the bad. Here are some shortcomings of this Bill:

1. The Bill will be applicable only to new real estate projects. Those projects that have already been launched and sold will not come under its purview
2. While there are penalties for failing to deliver on time, there is no clarity on what happens if the delay is due to the failure of government agencies to give timely approvals.
3. Since Registration is required only for projects over 4000 sq. mts smaller developers will evade the Bill's scrutiny.
4. A developer will now launch a project only after he has received all the approvals, which is a timetaking process.

There are several complaints that developers will have but it benefits a real estate buyer and is quite the sigh of relief. But the sighs will have to wait as for it to be passed by the Parliament and adopted by all the States, there may still be time. Lots of time.

Home is where the loan is

The real estate industry today has seen a huge change as far as the attitude of the buyer is concerned. Today's buyers are more informed and aware and carefully retain other's experiences in their mind so as to extract a lesson from it later. But, even so, the irony is that too many smart people are buying homes and still having problems. Sometimes, it's the quantum of readable material available that is confusing in itself. Want an upper hand when applying for a home loan? Believe it or not, just revisit your basics. 

1. Impact of loan on your personal finance: With the new cash out flows there's bound to be a dent, so you'll need a brand new monthly budget in place. 

2. Know your maximum loan eligibility: Some banks calculate the income available for EMI payments based on an individual’s gross income and not on his disposable income. Do your research here. 

3. Check your CIBIL score: A score above 700 gets home loans easily. The Credit Information Bureau India Ltd (CIBIL) provides a credit score on a scale of 300 to 900 based on your current financial stability, loans existing, card usage, etc. 

4. Co-application: If you want a loan amount higher than what's offered, having a co-applicant with his/her own source of income helps and also make sense from a taxation perspective with each applicant being able to avail the tax benefit available on interest payment of an EMI. 

5. Tenure: Shorter tenures mean greater EMI burden, but your loan is repaid faster. What you would pay as interest over the term of your loan would be substantially lower. 

6. Type of interest rate: The type of interest rate you choose has an impact on the monthly EMIs you pay. It is important that you know the difference between fixed rate home loan and floating rate home loan. 

7. Pre-payment and foreclosure charges: Sometimes, pre-payment of loans may require you to pay a penalty. Do your research well so that there's flexibility if you can close your loan earlier. 

8. Loan Options: Banks generally offer either of the following loan options: Floating Rate Home Loans and Fixed Rate Home Loans. The EMI of a floating rate loan changes with changes in market interest rates. 

9. Take cover: A life insurance plan that covers the re-payment of loan in the event of an unfortunate death of the borrower can at least help the family retain their home. 

10. Loan transfers: Old customers have higher rates of interest while the new ones have lower rates. So, over time the good deal turns into a sour deal. So the cost of switching is always high. 

11. Implications of delayed payments: Try to clear your EMIs in time because once you are declared a defaulter or your credit history turns bad, and taking any kind of loan in the future may be an issue. 

12. Read the documents carefully before you sign: Check the documents to ensure that the terms are same as what you negotiated and agreed upon. Don’t let the bunch of home loan documents bog you down and just sign on the dotted lines. 

Buying a home is an important personal finance decision for every individual. Before applying for a home loan and paying your processing fee, make sure you analyze the above aspects to get a satisfying and smooth deal

SARE: Three awards and still counting

We are truly excited to announce the top honours we won recently at the Realty Plus Excellence Awards 2013! Our maiden luxury project ‘The Grand’ in Gurgaon was awarded ‘Residential Property of the Year - North Zone’, while our Ghaziabad property 'Crescent ParC - SpringView Heights' was awarded ‘Integrated Township of the Year – North Zone’ and that's not all. Our Chennai property in OMR ‘Expandable Villas’ won the ‘Residential Property of the Year – South Zone’ award. 

The Grand is the newest phase of our 65-acre integrated township in Sector 92, Gurgaon. It offers centrally air-conditioned 3BHK and 4BHK apartments equipped with sophisticated individual zone-control (VRV System). The project has several world-class amenities including an 18,000 sq. ft. 5-star luxury lobby. Just step in and you will be greeted by two breathtaking 23-storey high atriums, elegant reception areas with billiards tables, landscaped sit outs with a coffee shop and many more thoughtful conveniences. The Grand also houses Gurgaon’s largest and finest residential club, called The SARE Club, measuring 35,000 sq. ft. 

Springview Heights is spread across an 88.35-acre integrated township called SARE Crescent ParC on NH-24 in Ghaziabad. Its unique features include six towers with seven clubs, of which each tower has its own club. There is also one common club and a central park on a 10-feet-high beautifully-landscaped elevated podium, complete with a Sky Lounge Terrace and entertainment features that offer a first-of-its-kind indulgent experience! 

This GDA-approved township is in an advanced stage of construction and habitation. Families are living happily in phase-1, with phase-2 being ready for possession soon, and construction in full swing at phase-3. The leading facility management company Jones Lang LaSalle (JLL) has been appointed to manage the project. 

Our 112-acre Expandable Villas project in Chennai enables homeowners to add additional living space at a later stage as per their convenience. The Crescent ParC township at Chennai’s Old Mahabalipuram Road not only caters to lifestyle needs of prospective homeowners, it also maximizes the value of their investments. 

On winning the awards, Mr David Walker, Executive Director, SARE Homes, said, “We are very pleased that our first project in the luxury space has been recognised on such a prestigious platform. The fact that as a national-level FDI developer of quality community housing projects, our efforts have been acknowledged, comes as a bonus.” 

“For a customer-centric company such as SARE Homes, these awards will go a long way to encourage us to realise the lifestyle dreams of our customers,” said Mr. Vineet Relia, Chief Operating Officer, SARE Homes.