#Aspects of #home #loan #Seeker #should #know #what #bank #home #loan

Owning a home of your choice is a dream that all sections of people dream of, irrespective of their social status, financial position. In a country like India, there are vast differences between different sections of people based on various factors. In spite, one of the common wishes that every family looks to fulfil is to own a home of their own. However, owning a home of their own is not something that everyone can acquire outright due to lack of sufficient funds.

In such a scenario that the availability of home loans comes to their rescue. Today most banks and financial institutions offer home loans that can be availed even by low income families or individuals based on their income and repayment capacity due to expansion of organized banking and various private and public banks. However, before approaching such banks or financial institutions, there are various factors that home loan seekers need to take into consideration.

krish Harmony

·  Credit history of the home loan seeker:

To determine the financial health of the loan applicant the bank undertakes a thorough due diligence. In this regard, the bank which provides the home loan will seek bank statements of the applicant for a certain period, salary slips, company background. Besides, it will also ask for disclosures of Income Tax Returns (ITR) for the last few years, certificates showing the Tax Deducted at Source (TDS) as well as the proof of other financial transactions.

These documents are sources by the bank directly from the applicant while the credit history is obtained from other concerned agencies such as CIBIL (Credit Information Bureau of India Ltd, repository of credit records for banks and financial institutions). However, it is also possible for the applicant to get his credit history report directly from the CIBIL. The credit history not only determines whether an applicant qualifies for a home loan, but also the terms and conditions that he can avail on the loan.

·  Volume of liability:

Bank loan is a huge liability and one must consider his/her limitations, even banks consider carefully this aspect. The bank sanctioning the loan will try to determine the repayment capacity based on the past and present credit history of the applicant before sanctioning the loan. However what will be uncertain is the unforeseen future expenditure that the applicant may incur. Hence, to be on the safer side, it is always advisable to adopt a more conservative approach by taking a loan as low as possible. Ideally, no more than 40% of your salary should go towards payments of your EMIs (Equated Monthly Installments). Safer option is to choose EMI which is about 30% of your income.

·  Fixed or floating interest rate:

This is one of the pertinent aspects that an applicant should consider while going for a home loan. Banks, generally permit applicants to avail of fixed rate of interest in the first couple of years of the loan repayment tenure to attract the loan buyers, based on the total amount of the loan availed as well as the tenure of the loan. On the contrary, it is more beneficial to go for a fixed interest rate if the rate is lower currently but expected to rise soon. Even if the bank allows the applicant to avail of fixed rate of interest on the home loan, it is likely to be beneficial only in the short term. In the long term, it would be better to convert to a floating rate of interest. Hence, it would be better to clarify with the bank regarding such procedures especially about charges for converting from fixed rate to floating, reducing EMI burden or reducing term of the loan. Besides, the applicant can arrive at an appropriate decision by approaching different banks and checking out their policies as well as their terms and conditions.

. Krish Group, Bhiwadi : Residential  Apartment and Commercial Space for office, shops, Reputed Developer of Bhiwadi

Krish group provided the residential and commercial property which having bank approved and loan are available up to 80% of property amount. The Residential Project like Krish Icon , krish Aura , Krish Vatika phase 1, krish vatika phase 2, krish city 1, krish city 2, krish city height ,Krish Seasons- Plots & Group Housing,Commercial project krish mall and krish Square .

Why real estate Ponzi scheme will continue despite new Real Estate Bill

On 7 April 2015, the Union cabinet cleared the Real Estate (Regulation and Development) Bill. The Bill essentially mandates that every state needs to set up a Real Estate Regulatory Authority (RERA), to protect consumer interests. Real estate policy. Reuters

Every commercial as well as residential real estate project needs to be compulsorily registered with the RERA of the concerned state. Real estate companies need to file project details, design and specifications, with the concerned RERA. They need to put up details concerning the approvals from various authorities regarding the project, the design and the layout of the project, the brokers selling the project etc., on the RERA’s website.

Consumers will be able to check these details on the website of the real estate regulator. Further, only once a project is registered with the RERA will it be allowed to be sold. Also, like is the case currently, a real estate company will not be able to go about arbitrarily changing the design of the project midway through the project. In order to do this the company will need approval of two thirds of the buyers.

If the real estate company makes incorrect disclosures or does not follow what it has stated at the time of filing the project with the RERA, it will have to pay a penalty. There are other provisions also that seek to protect consumer interests. Real estate companies will have to clearly state the carpet area of the home/office they are trying to sell, instead of all the fancy jargons that they come up with these days. Further, the bill allows buyers to claim a refund along with interest, in case the real estate company fails to deliver.

So on paper the bill actually looks great. But there is one provision that essentially makes all these provisions meaningless in a way. The Bill requires real estate companies to compulsorily deposit half of the money raised from buyers for a particular project into a monitorable account. This money can then be spent only for the construction of that project against which the money has been raised from prospective buyers.

This is an improvement from the way things currently are. The way things currently work are—a real estate company launches a project, collects the money and then uses that money to do what it feels like. This might mean repaying debt that it has accumulated or diverting the money to complete the projects that are pending. Given this, at times there is no money left for the project against which the money has been raised. In order to get the money for that, another project will have to be launched. Meanwhile the prospective buyers are stuck.

Developers love launching new projects simply because it is the cheapest way to raise money. Money from the bank or the informal market, means paying high interest. Hence, they raise money for the first project and use it to pay off debt or the interest on it. To build homes under the first project, a second project is launched. Money from this is then used to build homes for the first project.

Now, to build homes promised under the second project, a third project is launched and so the story goes on. In the process, all the buyers get screwed and the builder manages to run a perfect Ponzi scheme. A perfect Ponzi scheme is one where money brought in by the newer investors is used to pay off older investors. In this case money brought in by the newer buyers is used to build homes for the older buyers.

The Real Estate Bill seeks to stop real estate companies from running such Ponzi schemes. As explained above, half the money raised for a particular project needs to be deposited in a monitorable bank account and be spent on the project against which the money has been raised.

The thing is when the Bill was first presented in the Parliament in 2013, the real estate companies had to deposit 70 percent of the money raised against a particular project in a monitorable account and spend that money on that particular project.

Between then and now the real estate lobby has been able to dilute the 70 percent level to 50 percent. What this means that the real estate companies can still use 50 percent of the money raised against a particular project for other things. And this will essentially ensure that the real estate Ponzi scheme will continue.

Real estate companies will continue to launch new projects to raise money and use half of that money for things other than building the project for which they have raised the money for.

Also, this provision will allow the real estate companies to continue to hold on to their existing inventory and not sell it off at lower prices in order to pay off their debt, given that they can continue to raise money by launching a new project.

The question to ask here is why should a ‘new’ regulation allow money being raised for a particular project to be diverted to other things? It goes totally against the prospective buyers who are handing over their hard earned money(or taking on a big home loan) to the real estate company, in the hope of living in their own home.

A possible answer lies in the fact that if the government had regulated that the money raised for a project should used to build that project, it would have closed an easy way that the real estate companies have of raising money. This would have ultimately led to real estate prices coming down. And any crash in real estate prices would have hurt politicians who run this country, given that their ill-gotten wealth is stashed in real estate.

Read more: Click Here