RBI started raising the CRR and Repo, Reverse Repo rates, at this juncture floating rates are likely to go up. If they do, your home loan tenure or EMI or both will increase also.
If you decide to switch from floating to fixed or changing your lender in that scenario consider the below facts on the same.
If you are foreclosuing the loan the conversion fees to other financier could be around 1-2% of the outstanding amount. If one decides to change the lender, foreclosure penalty as well as the processing charges on the new loan might defeat the purpose of the change or foreclosure
The post tax effective rates could be less than the actual ones. For the first house, you get a tax break of up to Rs 1 lakh on the principal repayment and Rs 1.5 lakh on the interest. If you haven't used up this limit, then a higher EMI will only mean higher tax benefits. But make sure you have enough funds to pay for higher EMIs
While prepaying factor in tax breaks, your post tax effective home loan rate will change according to the tax slab you are in (see the below table), You should start prepaying once the effective rate crosses the assured risk-free return rate of PPF, Prepaying helps hold EMIs at a fixed level
Home Loan Rate At 20% of Tax Rate At 30.9% Tax Rate
7.00 5.56 4.84
7.50 5.96 5.18
8.00 6.35 5.53
8.50 6.75 5.87
9.00 7.15 6.22
9.50 7.54 6.56
10.00 7.94 6.91
10.50 8.34 7.26
11.00 8.73 7.60
11.50 9.13 7.95
12.00 9.53 8.29
12.50 9.93 8.64
13.00 10.32 8.98
Note: Considering 8% of PPF interest as the highest assured risk-free return, start prepaying your home loan once the post-tax effective rate crosses 8%
Saturday, May 8, 2010
Thursday, April 22, 2010
What are the approval documents?
What are the Approval Documents?
In a complex, there are basically three types of Approval Documents indicating approval granted by the authorities concerned. These are the Approved Plan, the Planning Permission and the Building Permit or the Licence to build. All the three are important and are to be scrutinised for checking whether the development is properly approved. Depending on the nature of the development, certain additional documents may also be required on a case-to-case basis.
Whether the sale and registration of the Undivided Share of Land is sufficient to give me title to the flat?
Although the Sale Deed is effected only in respect of the land, in matters where land alone is sold on a first sale basis, the ownership of the flat is acquired by entering into a proper Construction Agreement which in most of the cases does not require mandatory registration. When the documents are read together on a composite basis and when there is completion of construction and delivery of the apartment concerned with the intention that the purchaser shall acquire the ownership of such flat, then the documents are sufficient in normal course to have a ownership of flat as well as undivided share of land.
In a complex, there are basically three types of Approval Documents indicating approval granted by the authorities concerned. These are the Approved Plan, the Planning Permission and the Building Permit or the Licence to build. All the three are important and are to be scrutinised for checking whether the development is properly approved. Depending on the nature of the development, certain additional documents may also be required on a case-to-case basis.
Whether the sale and registration of the Undivided Share of Land is sufficient to give me title to the flat?
Although the Sale Deed is effected only in respect of the land, in matters where land alone is sold on a first sale basis, the ownership of the flat is acquired by entering into a proper Construction Agreement which in most of the cases does not require mandatory registration. When the documents are read together on a composite basis and when there is completion of construction and delivery of the apartment concerned with the intention that the purchaser shall acquire the ownership of such flat, then the documents are sufficient in normal course to have a ownership of flat as well as undivided share of land.
Parent and patta documents for a flat
What are parent documents?
The Sale Deed or other document under which a person derives title is known as “Title Document”. All earlier documents that indicate the title of the persons who are predecessors in interest establishing the flow of title up to the present purchase are known as “Parent Documents”. In order that a title is clear, both the present title deed and parent documents have to be in order.
Is Patta issued for flats?
Generally, as undivided shares of land are sold to the Purchasers, Patta is not issued for undivided shares of land. The non-issuance of Patta in these cases will not affect the title if the same is otherwise in order. However, in certain cases and where practicable, there are instances of all the co-owners of a complex obtaining joint Patta.
What does sale of Undivided Share of Land mean?
There are many purchasers in an apartment complex. The size of the apartments may also vary. An undivided share of land is the proportionate share, which a Purchaser should own and possess in order to acquire ownership for his or her apartment. There are various methods of calculation of this undivided share. Generally, the undivided share being purchased must match the approved FSI as per approvals granted by authorities. This is transferred by means of a Sale Deed to enable the Purchaser to hold that share to have a registered document of title relating to the same. The undivided share will be an important factor to be taken into account in case of demolition of entire complex and redevelopment of the same and other similar circumstances, to work out the rights of the purchaser.
The Sale Deed or other document under which a person derives title is known as “Title Document”. All earlier documents that indicate the title of the persons who are predecessors in interest establishing the flow of title up to the present purchase are known as “Parent Documents”. In order that a title is clear, both the present title deed and parent documents have to be in order.
Is Patta issued for flats?
Generally, as undivided shares of land are sold to the Purchasers, Patta is not issued for undivided shares of land. The non-issuance of Patta in these cases will not affect the title if the same is otherwise in order. However, in certain cases and where practicable, there are instances of all the co-owners of a complex obtaining joint Patta.
What does sale of Undivided Share of Land mean?
There are many purchasers in an apartment complex. The size of the apartments may also vary. An undivided share of land is the proportionate share, which a Purchaser should own and possess in order to acquire ownership for his or her apartment. There are various methods of calculation of this undivided share. Generally, the undivided share being purchased must match the approved FSI as per approvals granted by authorities. This is transferred by means of a Sale Deed to enable the Purchaser to hold that share to have a registered document of title relating to the same. The undivided share will be an important factor to be taken into account in case of demolition of entire complex and redevelopment of the same and other similar circumstances, to work out the rights of the purchaser.
What does Encumbrance Certificate mean?
All transactions that are in the nature of conveyance or transfer of immovable property of the value of Rs. 100/- or more have to be effected by a duly stamped and registered document. The entries relating to these transactions are recorded in a book known as Book I in the office of the Registrar of Assurances concerned. The Encumbrance Certificate is an extract of this book for the period requested. It is issued in the name of the person who makes the application. It may be noted that merely issuance of this application in the name of the applicant does not signify any ownership of the property by itself.
What is value of Encumbrance Certificate?
A buyer who is purchasing the property has to take all reasonable care and caution in purchasing the same. As the Encumbrance Certificate reveals all registered transactions relating to the property concerned, this is a mandatory step to understand as to whether there is any previous transaction that will affect the instant purchase. Further, the rights of a Purchaser will be subject to the rights of parties under such documents. Furthermore, this is an important step for a person to make a purchase in good faith.
How is Car Park allotted?
Usually, the Car Park is allotted by including the same in the Construction Agreement. A Plan of the area allotted is also annexed. The Car Park can also be allotted under Amenities Agreement, Car Park Agreement or a Letter under which the same is allotted. These allotments are in the nature of giving an exclusive right for usage of the Car Park. At times, when land and building are sold under a single Sale Deed, Car Park may also be sold under the Sale Deed.
What are the typical documents for purchase of a flat?
Agreement for sale
The usual practice is to have an Agreement for Sale for sale of undivided share of land to the Purchaser. This gives the right of purchase to the Purchaser, subject to the terms and conditions contained therein. This document also sets out the extent of undivided share of land to be purchased.
Agreement for Construction or Builders agreement
This contains the terms of construction and also payment by the Purchaser. The specifications of the flat are set out in this Agreement. This is in the nature of a Works Contract. The Purchaser acquires ownership on completion of the contract and delivery of the flat.
Other Agreements like, Amenities Agreement, Car Park Agreement, Common Area Allotment Agreement are also entered into depending on the requirements and the structure usually devised by the builder.
The usual practice is to have an Agreement for Sale for sale of undivided share of land to the Purchaser. This gives the right of purchase to the Purchaser, subject to the terms and conditions contained therein. This document also sets out the extent of undivided share of land to be purchased.
Agreement for Construction or Builders agreement
This contains the terms of construction and also payment by the Purchaser. The specifications of the flat are set out in this Agreement. This is in the nature of a Works Contract. The Purchaser acquires ownership on completion of the contract and delivery of the flat.
Other Agreements like, Amenities Agreement, Car Park Agreement, Common Area Allotment Agreement are also entered into depending on the requirements and the structure usually devised by the builder.
Sunday, April 18, 2010
Judge your home price
How we can arrive a price of a Residential Property?
Method1
One old and powerful methodology to arrive a price of a particular property is calculating its "Rental Yield Per Year". For example a property which fetches rent amount as 3000 rs per month (A). The property owner is asking around 1500000 rs (B), Then the Rental Yield is (A*12/B)*100 -> 2.4%. If the rental yield is 5% or morethan 5% then the property is worth to buy or best to wait for another property
Method2
If the current price is 15% more than 2004 or 2005 then you can surely go ahead with that
Method1
One old and powerful methodology to arrive a price of a particular property is calculating its "Rental Yield Per Year". For example a property which fetches rent amount as 3000 rs per month (A). The property owner is asking around 1500000 rs (B), Then the Rental Yield is (A*12/B)*100 -> 2.4%. If the rental yield is 5% or morethan 5% then the property is worth to buy or best to wait for another property
Method2
If the current price is 15% more than 2004 or 2005 then you can surely go ahead with that
Subscribe to:
Posts (Atom)