February, 2018 | Kolkata Real Estate | Kolkata Property

Tips To Manage Home Loan EMIs Under Financial Crisis

A home loan is nothing but a long-term financial commitment. Life is not a bed of roses. Hard times can be at the door at any moment. One needs to be prepared for combat with all such situations which can be nerve-testing such as- a sudden job loss, loss in business, temporary outflow for prolonged disease etc. Being in home loan repayment tenure, all these temporary issues can be wisely handled albeit.

Bank will instantly label you as a defaulter with a single skip in EMI repayment. Of late, the government of India fortified the laws governing non-performing assets (NPAs), by giving more power to the financial institutions, to recover the NPAs. As a result, defaulting on EMIs will be observed more rigorously from the time forth.

What happens if you default on home loan EMI?
Based on a healthy credit score banks will sanction your home loan approval. Failing EMI repayment can hit the credit score. It will get in the way of future loan application. Banks generally wait for two EMIs to be missed. Banks are more interested in recovering the fund rather than getting into legal proceedings or property auctioning. As a last resort, a legal notice will be sent to the borrower and the loan will be classified as a Non-performing Asset (NPA). If the borrower unable to pay, then, the authorized officer will ask for the physical possession of the mortgaged property, by serving a demand possession notice to the borrower.

Ways to manage home loan EMIs during financial distress
“Cheap home loans shouldn’t be the only factor for borrowing a cumbersome loan amount. Before borrowing home loan it’s wise to have an assessment of your capacity of repayment counting your monthly expenses and also securing enough savings for unforeseen happenings. A proper assessment can actually safeguard you from an extreme financial crisis,”- suggested Mr. Mahesh Somani, Chairman- National RERA Committee, National Association of Realtors India (NAR-INDIA).

Here are immediate pointers on how one can manage their EMIs under financial stiffness-

• Inform the bank about your situation– When in an unfavourable situation,inform the financial institution about your issues. Considering your situation most lenders would try to help you out than to take any strict action.

• Consult financial advisors or credit bureaus for help– If you find that the situation is anyhow not favourable for repayment, you can always take assistance from financial advisors or credit bureaus for further guidance. They will definitely help you in maintaining a good credit score.

• Quick repayment– Quick repayment of the principal amount shortens the tenure as well as reduces the interest burden of the borrower. A double EMI repayment is permissible on annual basis.

• Careful spending– Apart from credit obligations, there should be a certain upper cap on your monthly spending. Have some savings for emergency situations.

• Home loan insurance– Taking an insurance against home loan reduces borrower’s obligations towards the loan repayment. It can even help you to pay up to 3 interests in case of job loss.

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The Biggest Financial Plan For PMAY Urban Under Cabinet’s Approval

The cabinet is about to give a go ahead for the biggest ever financial plan for the Pradhan Mantri Awas Yojna Urban (PMAY-U) to measure up the budgetary requirement for 1.2 crore affordable housing development across urban areas of the country by 2022. Under this scheme, the share for the central government for building affordable homes in a couple of upcoming financial years was estimated at around Rs. 60,000 crore.

It’s expected that the government will raise this huge amount from the non-budgetary resources. Fund-raising entities such as HUDCO or National Small Savings Fund (NSSF) are likely to help the housing ministry to cumulate the amount. By far, NSSF has deposited Rs. 1.2 lac crore.

In the present financial year, the housing and urban affairs ministry requires about Rs. 8,000-Rs. 10,000 crore to meet the vast urban affordable housing need. The budget proposal had a consideration of raising Rs. 25 crore from additional funding from 2018-19 and the similar amount will be needed in the next fiscal to ensure that there’s no financial crunch. However, the housing ministry has approved 39.25 lac houses under the scheme. Finance minister Arun Jaitley had announced to establish “Affordable Housing Fund” which will be anchored in the National Housing Bank (NHB) to raise the amount from the non-budgetary resources.

Union minister Hardeep Singh Puri said, “The Centre’s flagship scheme Pradhan Mantri Awas Yojana (Urban) would not face any financial constraint because of the creation of a dedicated ‘Affordable Housing Fund’ announced in the Budget 2018-19.”

The minister said so far, this was the massive increase of funds as against Rs 6,042.81 crore allocated for PMAY (U) in 2017-18.

“Union budget coupled with institutional incentives will foster considerable real estate selling across India. Both the private developers and investors will have an extensive landscape to invest in,”-said Mr. Mahesh Somani, Chairman- National RERA Committee, National Association of Realtors India (NAR-INDIA).

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Taxability On Real Estate And Under-Construction Property Under GST

“Applicable GST rate” is where the confusion of the property buyers cut loose. There’s nothing to get panicked if you have the right amount of knowledge of GST levied on the construction sector. The unified tax regime, GST replaces the earlier service charges, cess, VAT and other indirect taxes. Basically, you will have to pay a single tax on your purchase.

In order to remove the applicable GST rate on real estate, the Central Board of Excise and Customs (CBEC) has recently issued a clarification regarding the applicability of GST on ready-to-move and under-construction projects.

“The simplified tax policy will benefit the industry in a long run. It will squeeze the profit margin of the developers and it will put stop to the inconvenient practice of multiple taxations which used to result in an artificially jacked-up project price,”- said, Mr. Mahesh Somani, Chairman- National RERA Committee, National Association of Realtors India (NAR-INDIA).

GST rate on ready-to-move projects– These projects are exempted from GST purview. It’s neither considered as goods nor services. Worthwhile mentioning, projects those have received the completion certificate before giving out the possession will also be considered as ready-to-move projects and thereby not inviting GST.

There is no need of paying GST on those projects for which you already paid the full sale amount before the date of GST implementation (July 1, 2017). But such transaction will attract a service tax of 4.5% under the erstwhile regime. Resale projects will also be considered as ready-to-move ones; GST will not be applicable in such transactions.

In case the buyer has paid a part of the sale amount before GST implementation, he will have to pay GST separately.

GST on under-construction projects– The effective GST rate on under-construction projects or undivided share of land is 12% with full input tax credit. However, the original GST rate on under-construction projects is 18% but one-third of this 18% is deemed as the value of land or undivided share of land supplied to the buyer of the property.

GST on PMAY affordable housing purchased under Credit-linked Subsidy Scheme- Effective from January 25, 2018, any purchased property under CLSS scheme will attract 12% of GST and the effective rate will be of 8% after deducting one-third of the amount charged for the value of the land.

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It’s Time For The Youth-Driven Real Estate Market

Being a developing country India currently has rapidly evolving and increasingly competitive market offerings. Thus the career options of the Indian millennial are no longer predictable as it was as straightforward as it was for their parents. Alike the prevalent sectors real estate sector too is influenced by the choice and preferences of the millennial. According to the estimation, the young working population is of 46% of the total workforce of India which means approx 400 million working professionals of our country falls into the category of 20-30 age group.

Mostly, Indian young professionals prefer to rent rather than buying a home. This the main reason which is why the rental market across the prime cities in India is higher scoring than that of the primary real estate market. However, a typical millennial family of today is essentially nuclear for the requirement for compact homes equipped with modern amenities holds the greater market demand. However, the millennial have emerged as the user-base of the country. Accordingly, the investment behaviour and the market appetite are also changing in a tandem.
“Buying a home has been one of the prime requirements of all the time. It’s certainly one of the major financial accomplishments for any individuals. But for the generation of the 21st century, the perennial lifestyle requirements are the cyclical roadblocks for buying their own homes,”-said, Mr Mahesh Somani, Chairman- National RERA Committee, Head- East Zone, National Association of Realtors India (NAR).

Along with the career choice, millennial are experimental with their choice of properties too. For a nuclear family or even for dual-income household social surroundings has the bigger role-play than the size of the apartment. Here are some important facts that have been majorly considered while buying a home–
• Gated housing society with modern day amenities and security measure.
• Distance from the residential place to the workplace and enhanced public transport connectivity.
• Technologically- enabled smart home features and internet connectivity.
• Environmental sustainability of the project.
• Value for money. All-inclusive lifestyle features at a competitive rate.

As we can see that the parameters of choosing a property for the investment of the generation are different from their forebears. Still, the basic idea of buying a home is just the same as it used to be which is stability and setting down and here we have no exception by the age-group or the nature of the investment.

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New Real Estate Marketing Trends in 2018

For a long real estate market in India is awaited for a complete restoration. While an increased market price and unreliable market sentiment made the buyers fence-sitters, policy changes and structural reforms made the slowdown even nutrient. Right now, real estate market is betting big on 2018 to have a modified arrangement with better transparency. It requires a modification in the marketing strategies of the developers to bring in complete standardization in the real estate business practice as the developers need to dispense their on-hand inventories for making their financial ranking stable as well as speeding up the overall market sales.

First things first– buyers are no longer gullible. They know about all the forums and platforms to be knocked while having a quick and effective redressal. Thus, developers need to uphold the quality and the actual offerings of the buildings rather than focusing on marketing strategies. For real estate purchase buyers have a comprehensive, online market study before visiting the seller/agent. Followed by the overall change in market behaviour real estate companies have to adapt to the changing market demands. Online promotion is an effective marketing strategy for the builders. Through all their online promotional activities an approach should be innovative enough to hook up the buyers.

Here are potential new trends that might replace the traditional marketing strategies in this year–

Personalization of property– People are running out of time these days. So a property seeker likes to visit multiple projects in a single day. Thus, developers should adopt Personalized messages or images of the property in order to leave a positive and unique impact on the buyers’ mind.

Emerging market behaviour– With so many power boosters “affordable housing sector” is showing the prospect of growth. As government needs to provide 2 million low budget homes by 2022, developers will have a huge investment opportunity lies before them. Thus, they need to employ both the online and offline marketing channels to pull the mass target audience.

Brand videos on YouTube– Visual media platforms have a huge role-play in luring buyers. It takes just a few minutes for a video to get viral. Nothing is more effective than a 360° property video to attract the prospective buyers.

Sponsored events– Sponsored events and more collaboration with the related industries are majorly required for brand development and reach to the buyers.

Emotional connect with the brand image– No advertisement with an emotional backdrop has succeeded ever for brand image establishment. The uniqueness of the proposition attracts the buyers the most. Unconventional advertisements are the biggest crowd-pullers.

“It’s not easy to distract the buyers with over-sized promises against an average offering. Effective marketing strategy along with honest offering is the mantra of ruling the market. Either one of these can’t be taken for granted,”- said Mr Mahesh Somani, Chairman- National RERA Committee, National Association of Realtors India (NAR-INDIA).

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