Financial Consulting

 

So that your dreams find a home.

Owning a home is a matter of pride and brings an immense level of satisfaction to our lives. Whether you want to build your own house, move into a new apartment or invest in property, there are some essential points to be kept in mind while making your decision.

1. How do I zero-in on my dream home?

Identify your needs and preferences before you decide to go house-hunting. Here are few important points to take into account:

  1. Property type: You need to decide the kind of a property you wish to buy, given your budget constraints – a condo, an apartment, a row house or a bungalow. Your decision should be based on what suits you and your family the most. If you have a senior family member, give due to importance to his or her lifestyle needs. If you have pets, a bungalow or the ground floor of an apartment is recommended.

  2. Resale: If you are looking to invest in a property you should check resale values in advance

  3. Location: The location is of the property is of prime importance since it determines the property value and resale value. Would you prefer to stay in a quiet residential area in the interiors or would you wish to stay closer to a commercial neighbourhood which may be noisier and closer to the main roads? You should conduct through research on the following factors before taking a final decision:

  4. a) Traffic in the area

    b) Safety measure in the building/society and the crime rate in the area

    c) Future construction/future growth of the area

    d) Proximity to markets, railway stations, schools, your place of employment, hospitals, restaurants, cinemas and malls

    e) Quality of schools in the vicinity, if you have kids

2. Can I afford to buy a home?

If you have a steady job and a decent credit history, there is a good chance that you can find a bank/home lender who will lend you most of the purchase price of your new house. The loan amount generally depends upon your repayment capability and can be a maximum of 80% to 95% of the cost of the property, depending upon the conditions laid down by the bank you choose.

3. How do I go about getting a home loan?

Prior to availing a home loan, you should carry out a thorough research on home loan trends, market rates and zero-in on the best financing option for you. There are several banks and home loan companies who will lend you a home loan at competitive rates. Things that ought to be considered before you finalize your financer include the following:

  • Best Scheme: Almost all the major banks in the country offer easy home loan options with competitive rates and special schemes. It is important to search for and understand the various options available. This will involve comparing different schemes given the value of house you intend to purchase, your budget constraints, and of course, the interest rates. Today there are websites that assist you in choosing the best home loan option.

  • Customization: Banks these days offer customized solutions to suit the individual requirement of buyers. You can include a co-applicant in order to club incomes and ease your home loan repayment. You should make sure you choose the bank and that offers you maximum flexibility, tax benefits and customized payment of your EMI’s as per your repayment capacities.

  • Documentation: It is equally important to understand the loans procedures, quality of services offered and possession of the title deed of the property as a security for the housing loan. You should choose a bank that assists you in understanding and simplifying the documentation process.

  • Security: It is important to safeguard yourself against uncertainties. You should ensure that the bank you choose offers home insurance cover.

4. What is meant by the market value of the property and is Stamp Duty payable on the market value of the property or on the consideration as stated in the agreement?

Market value refers to the price at which a property could be bought in the open market on the date of execution of such instrument. The prices are determined and published by the Government. The Stamp Duty is payable on the agreement value of the property or the market value whichever is higher.

5. Which are the instruments that attract the payment of Stamp Duty?

Every instrument of conveyance, exchange, gift, certificate of sale, deed of partition or power of attorney to sell immovable property when given for consideration, deed of settlement or transfer of lease by way of assignment attracts Stamp Duty on the market value of the property.

6. Who is liable to pay Stamp Duty - the buyer or the seller?

The liability of paying the Stamp Duty is that of the buyer unless there is an agreement to the contrary. Section 30, of the Bombay Stamp Act, 1958 lays down the provision regarding the liability for payment of stamp duty.

7. What are the Tax implications on sale of any Residential / Commercial property?

You shall be liable to pay tax on the profit arising out of the sale of a Residential / Commercial property, which is classified under capital gains.

8. What are the permissions required and papers that should be verified when one is buying a flat in a building under construction?

When you are buying a flat in a building under construction, you must verify the following, prior to submitting the booking amount:

  • Check the reputation of the builder

  • Check if the land on which the builder is building is his own or whether he has undertaken an agreement with a landlord. Verify the title of the land ownership with the help of an advocate.

  • Verify the approved plan of the building along with the number of floors and ensure that the floor that you are buying has already been approved

  • Verify the specifications mentioned in the agreement to sell / sale brochure with the actual construction

  • Check the building bye-laws as applicable in that area and ensure that the builder is carrying out the construction without any violation of front setback, side setbacks, height, etc.

  • Ensure that urban land ceiling No Objection Certificate or NOC (if applicable) has been obtained or not

  • NOC from water, electricity and lift authorities also have to be obtained

9. What is difference between Carpet Area, Built-Up Area and Super Built-Up Area?
  • Carpet Area: The Term ‘Carpet Area’ refers to the total usable area within the four walls of an apartment or a commercial space as the case may be. As the term suggests, it refers to the area for which a carpet can be laid if required by the owner.

  • Built-Up Area: The ‘Built-up Area’ is what you arrive at when you add the space covered by the thickness of the inner and outer walls of the flat to the Carpet Area.

  • Super Built-Up Area: This includes the Built-Up Area along with the area available in the common spaces such as the lobby, lifts, stairs etc. This term is therefore only applicable in the case of multi-dwelling units.

10. What is FSI?

Floor Space Index (FSI) refers to the ratio of the combined gross floor area of all floors (other than the areas specifically exempted under these Regulations) to the total area of the plot.

FSI = Total covered area on all floors on a certain plot / Area of the plot

11. What is TDR?

Transfer of Developmental Rights (TDR) refers to a certificate issued by the relevant Municipal Corporation on acquisition of property reserved (either part or whole) for the purpose of public utilities such as road, garden, school etc to the original owner of the property. Instead of paying cash compensation to the land owner, the Municipal Corporation issues a TDR certificate which mentions the zonal Floor Space Index (FSI) potential of the land acquired. This certificate, which is transferable, can be sold in the open market by the land owner for an agreed sum of money. There may be restrictions on the utility of TDR in certain areas of the city.

NRI

 

Investment in properties across India by Non-Resident Indian(NRI) and Persons Resident Outside India is governed by the regulations framed by the Reserve Bank of India (www.rbi.org.in) from time to time.

Kindly refer to the relevant website links below of Reserve Bank of India for the guidelines covering such investments. Kindly note that the guidelines prescribed below are subject to amendments and modifications as may be decided by Reserve Bank of India from time to time.

rbidocs.rbi.org.in

rbi.org.in

rbidocs.rbi.org.in