Many times Home buyers get the short end of the stick when it comes to dealing with builders and real estate agents.
The unfortunate truth is that many buyers have faced similar numerous problems and this has given the entire transaction a bad name.
Whether it is delayed projects, poor construction quality, delayed possession, diversion of funds or even arbitrary change in layout plans, most buyers have faced this and accepted this as the grim reality, in silence.
This was because there was no regulation in place for builders and no standardization as such. If any buyer wanted to take up cudgels against a builder, they had to opt for legal recourse, which is expensive, time consuming and definitely not easy.
But times are changing.
With the passing of the Real Estate (Regulation and Development) Bill in the parliament, home buyers will find a much more positive atmosphere.
Here’s a quick look at how buyers can benefit from this bill and what it means to the real estate industry.
No more shady projects where buyers lose money and peace of mind
Builders will no longer be able to launch projects at their whim. Before they can launch a new project, the Bill will ensure that they have to get clearance from the relevant regulatory and Planning Authorities and only then, they can go ahead.
This means that buyers will invest their hard-earned money into legitimate projects only. Also, the pre-launch discount option, which is mostly a marketing strategy to get more buyers will also have to make way for reliability. Fly-by-night operators will not be able to survive this stringent clearance policy.
Buyers are secured because their money cannot be diverted to other projects
One of the biggest grouses that buyers have, is that builders divert the money they receive from them towards newer projects. However, once this Bill becomes a law, then this will not be possible.
The Bill states that money from buyers has to be deposited in a separate bank account, and 70% of that money has to be utilized in developing and completing the project in question. This will definitely reduce delays in the project.
No more surprises as builders have to ensure final project matches advertisements
Often, buyers are tempted into investing into real estate, because they see the wonderful ‘artist’s depiction’ of the project that is being planned.
Also, most builders release snazzy advertisements and their marketing plans are enough to floor even the most hardened buyers.
But what happens when expectations don’t meet reality? When the advertised home doesn’t match what the buyer finally gets? Crushing disappointment and a sense of being taken for a ride.
However, once the new Bill is in place, builders will have to return the amount to the buyer, with interest, if the final project doesn’t match what was depicted. This will definitely put a stop to reckless promises from builders as they have to tread carefully.
Buyers can verify prior construction projects to check quality claims
At times buyers are unable to verify the claims of the builders regarding their quality. This will no longer be the case once this bill becomes a law.
Home buyers will be able to verify the quality of the builder’s prior constructions because the bill makes it mandatory for developers to provide details of projects launched in the past five years.
This includes a brief detail of the projects launched by the promoter,in the past five years, whether already completed or being developed, including current status of projects, delays in completion, details of cases pending, details of type of land and payments pending etc.
This means that buyers can now make an informed and wise decision before choosing the builder for their dream home.
An extended repair period to ensure continued support from builders
Face it. This has happened with most buyers who take possession of their home and a couple of years later, find that paint is peeling or there are leaks in the pipes. The honeymoon period is over because buyers were liable for repairs for 1 to 2 years.
But with the new Bill, this will also change. Builders will be held liable for any structural defects up to five years now, to ensure that they will make the necessary repairs.
So far, so good. This pro-buyer bill doesn’t spell a death knell for builders. It just streamlines processes that have been all over the place until now and ensures that both parties are satisfied.
In the bigger picture, regulation for builders makes housing more affordable for everyone and that is certainly a good thing.
Unexpected late night phone calls always carry a sense of foreboding.
When I received the call that my younger brother (in his early 40s) was hospitalized for a minor heart attack, I was understandably shocked. Here was a man, with a young family, good job, who had recently invested in a luxurious home, now lying supine in a hospital.
Of course, being young and overall healthy, he sprung back up pretty soon. With stern instructions from the doctor, he got back to his routine and took the trouble to reduce the stress in his life. But one of the first things he asked me when he got better was, “What will become of my family if something happens to me. I don’t want them to be financially burdened with this new home; what can I do?”
I was quite surprised that my brother had not opted to include home loan insurance as a part of the deal. Of course, he did get an admonishing from me on trying to cut corners, but I followed it up with advice on why this should be a New Year gift to his family!
What You Should Know About Home Loan Insurance
- The insurance is for the loan and not for the home and its contents.
- This insurance covers the family’s liability to pay EMIs if something happens to the principal borrower – you.
- If availed of – this insurance will cover all future EMIs that need to be paid. Some insurance providers also have a provision where the principal amount is returned to the family to make their future more secure.
- The cost of home insurance will decrease each time based on the amount paid to the bank.
Main Criteria on Which Premium is Arrived At
- Your age – the older the applicant, higher the premium.
- Your loan amount – higher the loan, higher the premium.
- Your loan tenure – longer the repayment period, higher the premium.
- Your overall health – Since my brother had a heart attack already, he will be considered a high risk and will have to shell out a higher premium now. If you are healthy, this will not be a concern.
Questions to Ask Your Home Loan Insurance Provider
- Is the insurance applicable for death by any cause or only by accident?
- How easy is the claims process?
- Does my home loan amount have to be of a certain amount?
- Can the EMI be paid in installments?
- What are the exceptions?
- Is a health check-up mandatory?
- What happens in the case of pre-payment of loan?
- Are there tax benefits?
- Are there any implications if the loan is a joint one?
With these considerations, my brother has already got his home loan insurance taken care of. This New Year is going to be a much secure one for his family. Perhaps, its time you ensure the same for yours.
- Home loan insurance is often optional, but you must take it.
- Home loan insurance covers the loan and not the home.
- Some providers also give your family additional monetary benefits.
- Home loan insurance premiums may be paid in installments or at one go, but there are implications with both.
South Bangalore has always been predominantly a residential sector. There are a few localities that are always in demand as far as rental properties are concerned.
Here is a look at 5 such popular localities and what makes them conducive as rental prospects.
What makes it tick?
This is a predominantly residential sector of Bangalore and is divided into 10 blocks. It is one of the earliest planned residential sectors in the city. Jayanagar has managed to hold on to a large portion of its green cover and you will find numerous parks and gardens dotting the landscape.
It is home to some of Bangalore’s elite and you will find numerous beautiful residential homes here.
Why rent here?
There are several projects in the mid-to-upper range of apartments by both branded as well as small time builders. Several individual homes have additional floors built to cash in on the possible rental opportunities they have.
On average rental prices here are begin at Rs 12,000 for a 2BHK. This varies based on the size of the home and its location in Jayanagar.
What it offers?
Jayanagar is rather self-sufficient and has the massive 4th block market that caters to every kind of home need conceivable. Every brand worth its salt has a standalone store in the area as do popular restaurant chains.
The Swagath Garuda Mall in neighboring Tilaknagar as well as Central Mall in JP Nagar serve as entertainment spots.
There are several quality schools in the vicinity and premium medical facilities. The Metro is an added draw. The area also connects easily to Bannerghatta road, Koramangala and Whitefield, all of which have numerous work places.
What makes it tick?
This is the largest locality in the city and is spread over 6 stages. It is well connected to Mysore Road, Kanakpura Road, Girinagar, Rajarajeshwari Nagar and several other areas that are home to companies with a large workforce.
Banashankari, over the years has developed in tandem with Jayanagar and a number of working people find it a convenient place to live, especially if they work at the Global Tech Village, in Electronic City, on Kanakpura Road or even in Jayanagar and Koramangala.
Why rent here?
There are several branded as well as mid-size builder apartments available here. More popular are individual homes that rent out apartments on each floor.
What it offers?
The area, much like Jayanagar, is quite self-sufficient as far as everyday requirements for home and family are concerned. With Jayanagar in close proximity, almost everything is taken care of. Rentals in the area are spread across a wide range depending on where your home is located. A 2BHK will range between Rs 10,000 to Rs 15,000 on average.
What makes it tick?
Hosur Road leads into what is popularly known as E-City or Electronics City. E-City is spread over 3 phases and is home to over 3000 companies and a massive work force. Little wonder then that the residential market picked up immensely in this region and there is a sustained demand for rental properties.
Why rent here?
Villas as well as apartments are easily available for rent across Electronics City. Connectivity has improved immensely with the opening of the elevated highway which made getting from Silk Board Junction to Electronics City much easier.
Development has taken place across the sector and every kind of home is available for rent – from single room PGs to massive penthouses in branded apartment complexes. Many of these also work on the basis of lease considering the massive turnover of staff at various companies.
Across the Hosur Road stretch – areas such as Bommanahalli, sections of BTM Layout as well as locations liked Attibele are in demand in terms of residential rentals.
What it offers?
As with most other popular residential/commercial areas in Bangalore, this too is self-sufficient in every manner required.
What makes it tick?
This layout is technically to the Southeast in Bangalore, yet it is an area that is extremely in demand among people looking to be placed close to Whitefield and Sarjapur.
These two areas have a number of commercial companies functioning within its borders and naturally people look for homes closer to their workplace. HSR Layout is divided into 7 sectors and development took place almost overnight here.
Why rent here?
Rental properties range from apartments to individual homes, all of which tend to be in the premium bracket as far as prices are concerned. While the area has most of what an individual will require, scope for entertainment is a bit low.
But with Whitefield relatively easier to access, this is an obstacle that is taken care of.
What makes it tick?
A natural spill over of development in the Jayanagar and Banashankari sectors saw the rise of Kanakpura Road with its promise of large tracts of land.
Why rent here?
While the outskirts of the area were picked up for the development of farm houses, often second homes for people in the city, numerous branded names in realty have picked up sites here and are constructing massive apartment complexes.
Names such as Gokulam, Mantri Group, Brigade Group and more already have a presence here. With Metro work in full swing here, this area continues to be well sought after.
South Bangalore offers a wide range of rental opportunities for people looking for a great place. While these are the five popular localities, there are several more that have sprung up around these areas that are in demand as well.
- South Bangalore is in demand primarily because of its proximity to IT hubs like Whitefield and Electronics City.
- Jayanagar is much sought after for its green cover, quality homes and self-sufficient neighbourhood.
- HSR Layout and Kanakpura Road have a great deal of premium residential offerings.
Bangalore City has a number of prominent stretches that are in demand – for their proximity to IT hubs, potential for residential development, high-end commercial development and more.
People look to invest in property for multiple reasons – commercial gains, good appreciation levels which may lead to great returns or resale value; better connectivity to common places of interest and more. One such place that may meet all these requirements and more is that of Hosur Road.
Securing a home loan is by far an important criterion in getting the home of your dreams. While the paperwork involved may seem simple enough, there are several factors involved in the processing of a home loan. Lack of attention to smaller details may result in your home loan being rejected.
Shibu Sukumaran, Partner – Capital Core is a professional with over 13 years of experience in Home Loans and Mortgages. He explains to you the various aspects you need to look into when applying for a home loan, to ensure that it is not rejected.
Bad Credit Score:
Thanks to a multitude of advertisements and general increase in awareness, you now know that a bad credit score may result in your loan application being rejected. Before you apply for a home loan, it is best to know what a good score is. Any score above 700 is considered good. Besides your score, a bank will also look into:
- Past loan repayment track record
- Number of loan enquires
- Number of non-EMI based loans (credit card, gold loans, overdraft)
- Whether applicant is guarantor for any loan and the loan repayment track record of that particular loan
If your research shows you that you have a bad credit score, then here are some ways in which you may improve it:
- Reduce the number of loan enquires you make
- Reduce the number of unsecured loans you have (Personal loans, Credit Cards)
- Bring down the outstanding on your credit cards
- Repay by your due date time frame (avoid EMI bounce and pay at least the minimum on your credit card before the due date)
- Avoid being a guarantor for your relatives or friend’s loans. Any loan delinquency on their part may result in rejection of your loan application
Your Loan Application:
Before filling in your loan application form, you will need to do your due diligence. Here are a few reasons why it may be rejected. These reasons may be attributed to you not doing your homework well:
- You are not eligible for the loan amount you are seeking based on multiple factors such as income, age etc.
- Property cannot be funded as per policy (Deviation, B Khata, number of units, outside geographical limits etc.
- You may have loans you have not declared
- Your employment status may be considered unstable
- You have multiple loan enquiries indicating uncertainty
- Loans availed after present Home Loan is sanctioned
- Credit Card/ Loans: written off or settled.
- Processing fees cheque bounce
Various scenarios that may lead to home loan application rejection
Though listed above, there are several common scenarios that unwittingly lead to the rejection of a home loan application. Let’s take a look at some of them.
Credit card fraud:
There are chances you may be the victim of credit card fraud. In such cases, your loan application may be rejected. Here are some tips to safeguard yourself:
- Do not settle any loans or credit cards. Always consider full closure and ensure you have closure proof from the bank
- Do not serve as guarantor for any loans other than for your spouse/father/mother
- Never apply for credit cards or loans at malls or other such public spaces
- Ensure you have closure communication on any loans / credit cards applied but not availed from the bank.
- Apply for your CIBIL report directly and clear any anomalies in the report before applying for the loan.
Applying to multiple banks simultaneously:
This is a common practice among most people who are on the look-out for a home loan.It is not a wise decision to apply to several banks simultaneously because it resultant rejection may reduce the credit score of the applicant and co-applicant. Several applications raise a red flag at the bank and they may feel that your papers are not in order or you may be purchasing multiple properties at the same time.
Unstable job scenario:
Here are a few scenarios with regards to employment and home loans that you need to consider
Scenario 1: You have resigned from your current job and are in the notice period and have a offer from a new company.
>> Here you may have applied for a loan with the offer letter of the new company and payslips of your old one. The loan may be sanctioned based on the new company offer letter but, the disbursement will happen after you join the new company and receive your first salary. The office verification will be done with the new company.
Scenario 2: You have resigned from your present job and are in notice period without an offer from a new company.
>> You should not apply for the loan, as it will be rejected.
Scenario 3: You have joined a new company but are yet to receive your first salary
>> You may apply for a loan with the details of the previous company, relieving letter, new offer letter and appointment letter. The loan will be sanctioned based on the new offer letter and disbursed after the first salary credit.
Scenario 4: Loan is sanctioned based on the present salary and then you resign from the present job.
>> You have to submit the new company appointment letter and first salary credit bank statement before the sanction letter is revised and disbursed.
Age: Based on policy there is a minimum / maximum age that is predefined for a bank. It is important that you find out what this age is before you apply for your loan.
Location:There are predefined locations which are not funded by banks. Check with the bank before applying for a loan.
Applying with co-applicants: Below is a matrix that will help you with your application. Any other combination may risk being rejected.
- Self + Wife
- Father + Self
- Mother + Self
- Father + Mother + Self + Wife
- Self + Brother ( is allowed if there are two units in the building )
Any other combination is a deviation and is case-specific. It will be decided on the strength of the loan application (like property, income, past loans and present, relationship with the bank etc.)
These are some of the reasons that may result in the rejection of your home loan. It would be a good idea to do your research and consult a home loan advisor before you send out your application.
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