A "low interest" loan shouldn't mean you have very little interest in paying it back!
The real estate sector in India is witnessing a paradigm shift right now. Ever since the implementation of demonetisation and the Real Estate (Regulation and Development) Act, 2016, and the Goods and Services Tax (GST) the real estate market in the country has been quite stagnant. Even though these reforms are going to improve the sector drastically, they still have to overcome the initial hurdles which are rather time-consuming.
This is one of the reasons why the developers and the lenders have reduced their rates - to invite prospective homebuyers and revive the housing industry in India. In fact, from an investment perspective as well, there is not a better time than the present to buy a house in India. But don’t take our word for it.
In this article, we will explore some of the top reasons to purchase a house in India in 2023.
Over the course of last few months, some of the leading financial institutions in India have slashed their home loan interest rates in a bid to boost their home loan portfolio. State-owned banks such as State Bank of India and Bank of Baroda reduced their marginal cost of fund based lending rate (MCLR), thus effectively bringing down the interest rate to 8.30%. Even the private lenders followed suit and slashed their respective home loan lending rates.
Many experts now believe that from this point on, the interest rates will only rise. Private banks like Axis Bank, Yes Bank and IndusInd Bank have already signalled the change in interest cycle by hiking their MCLR by 5-10 basis points. Moreover, as the real estate sector stabilises in the coming months, the prices are likely to rise. Therefore, now is the time to enter the market and acquire a home loan at affordable rates before they move up.
Pradhan Mantri Awas Yojana (PMAY) is an affordable housing scheme launched by the Government of India. As per this scheme, affordable housing will be provided to the urban poor of the country, belonging to the Economically Weaker Sections (EWS), Lower Income Groups (LIG) and Middle Income Groups (MIG).
As per the various components of the initiative, applicants fulfilling the required criteria will be eligible for grants and subsidies provided by the Central Government. One of the components that have proven to be quite popular among the people is the Credit Linked Subsidy Scheme (CLSS). Under this scheme, one can avail subsidy on home loan interest to a maximum of Rs.2.67 lakh, provided the requirements are fulfilled.
Additionally, with the Union Budget 2018-19 right around the corner, many industry giants are expecting that the Housing for All scheme will be allocated additional funds.
Up until the moment this Act was implemented throughout the country, prospective homebuyers were at the mercy of builders and developers. Many of them were exploited and had to go through various troubles like hidden charges, delay in the housing projects, et cetera, before finally getting their dream house.
With no proper mechanism for grievance redressal in place, customers in the sector were growing increasingly frustrated. In addition to this, real estate sector is one of the largest contributors to the Indian economy, but it lacked organisation and proper control. The implementation of the Real Estate Act of 2016 solves that very problem, along with bringing a great deal of transparency in the realty market.
As per the Act, a Real Estate Regulatory Authority (RERA) has been established in all the states and Union Territories, whose sole function is to deal with matters pertaining to real estate in that region. It is now mandatory for buyers and developers to register their current and future projects and disclose all the important details like layout, plan, et cetera. Non-compliance with the same will result in strict penalties.
Furthermore, RERA also stands to serve as a mediator to settle disputes between builders and buyers. In case the buyers are dissatisfied with the developers, they can approach RERA, lodge a complaint and hold the builders liable for their incompetence. An appellate tribunal will also be established in each state whose job is to consider the appeals against the rulings of the state RERA.
Needless to mention, the idea behind RERA is to protect the interest of homebuyers and ensure that they can go about purchasing a home confidently.
One of the best things about taking a home loan (apart from paying for your dream house) is that the part of the EMI you pay can be claimed as tax deductions.
As you know, an EMI has two components - principal and interest. The sum paid towards the repayment of principal amount of the home loan is eligible for tax deduction, as per the Section 80C of the Income Tax Act, 1961 and the maximum amount that can be claimed is Rs.1,50,000. Similarly, the Section 24 of the Act speaks about the tax benefit on the interest component of the home loan EMI. The maximum tax deduction for the same is Rs.2 lakh.
Apart from this, stamp duty and registration fees are also eligible for tax deductions. Additionally, first-time homebuyers can claim an additional deduction of Rs.50,000, under the Section 80EE of the Act.
Paying your home loan EMI every month may seem like a financial burden, but it is a commitment that is definitely worth fulfilling. After all the troubles and sacrifices that you go through, you finally get to have a place you can truly call home. It is a tangible asset whose value will only increase over time. You can also take a loan against your property, in case you need access to cash. In fact, no other investment is likely to give you higher returns that come with owning a property. That’s why investing in property is a notion that you should consider in your lifetime. It will require a great deal of financial planning. Presently, the interest rates are low and the consumer interest is protected owing to RERA. If you happen to find yourself in a position to afford a home loan, then 2018 is the year to act on it.
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