Realty Developers Expect Measures to Improve Ease of Doing Business, Says CREDAI

 Real estate developers across the country are hoping to see an improvement in ease of doing business through measures in the upcoming Union Budget 2022 that would lead to positive sentiment in the sector.

Around 92% of developers surveyed by the property developers’ body CREDAI are looking to launch new projects this year if ease of doing business improves. Around 74% of surveyed developers are expecting the ease of doing business to improve.

“With the onset of the new third wave, we are expecting the government to look at additional measures for preparedness and controlling any further impact of Covid19. The survey report underlines top concerns of the developer community including controlling the input cost, introducing credit input on GST, increasing availability for funding, streamlining and faster approvals for projects which require urgent interventions to keep up the upbeat sentiment and encourage them to invest more in business,” said Harsh Vardhan Patodia, President, CREDAI National.

The survey was conducted amongst 1,322 developers from 21 states including 8 tier-1 cities in India including Mumbai Metropolitan Region (MMR), Delhi, Bengaluru, Pune, Ahmedabad, Chennai, Hyderabad, and Kolkata. CREDAI represents over 13,000 developers across 221 city chapters.

According to the survey, around 60% developers foresee a 20% price rise this year due to increase in prices of building materials.

Around 55% of surveyed developers would be adopting Virtual Reality (VR) in their business this year. According to 39% developers, online sales is contributing up to 25% to their business. Around 65% developers are willing to explore new business models including coworking and co-living this year, the survey showed.

92% Real Estate Developers Planning New Launches in 2022 if Ease of Doing Business Improves: Report

 As many as 60 per cent developers foresee a price rise up to 20 per cent this year following increase in prices of raw materials

As many as 92 per cent of real estate developers are planning new launches in 2022, 65% are willing to explore new business model this year such as co-working and co-living and as many as 60 per cent developers foresee a price rise up to 20 per cent this year following increase in prices of raw materials, a recent report has said.

According to a survey titled Annual Real Estate Developers Sentiment Survey 2022 by the Confederation of Real Estate Developers Associations of India (Credai), nearly 35 per cent of respondents expect prices to rise by 10-20 per cent, while 25 per cent of builders see up to 10 per cent hike in rates. Another 21 per cent respondents expect property prices to rise in the range of 20 per cent to 30 per cent.

As many as 74 per cent developers surveyed want Ease of Doing Business, 55 per cent developers are expected to adopt virtual reality in their business in 2022.

The survey was conducted among developers from 21 states including 8 tier-1 cities in India namely Delhi, Ahmedabad, Bengaluru Chennai, Hyderabad, Kolkata, MMR and Pune.

"With the onset of the new third wave, we are expecting the government to look at additional measures for preparedness and controlling any further impact of COVID-19," said Harsh Vardhan Patodia, CREDAI-National president.

Most of the developers are focusing on digital transformation which has led to an increase in online sales, he said, adding "around 39 per cent of the developers are doing 25 per cent sales online which we think will increase substantially this year,” he said.

The report underlines top concerns of the developer community including controlling input costs, introducing credit input on GST, increasing availability for funding, streamlining and faster approvals for projects which require urgent interventions to keep up the upbeat sentiment and encourage them to invest more in business, Patodia said.

“Most of the developers are focusing on digital transformation which has led to an increase in online sales for at least 55% of them and are adopting new technologies like VR. Interestingly, 39% of the developers are doing 25% sales online which we think will increase substantially this year,” he added.

Credai is the apex body of private real estate developers in India. It represents more than 13000 developers across 221 city chapters in 21 states.

How Warehousing and Logistics Hubs are Impacting Neighbouring Residential Real Estate Markets

 Residential projects located close to warehousing and logistics hubs have experienced a spike in demand and prices. Land prices, too, have increased.

Residential real estate markets located close to established warehousing and logistics hubs have something to cheer. Demand-driven warehousing and logistics networks have had a direct impact on neighbouring residential areas, where property prices have firmed or increased.

There are scores of examples. The trend is exemplified by residential areas like Madhavaram and Redhills in Chennai, Hoskote in Bangalore, Chakan – Talegaon and adjoining areas of Pimpri Chinchwad in Pune, Bhiwandi near Thane Creek in Mumbai, Sohna Road in Gurgaon and regions adjoining Jewar in the National Capital Region (NCR) and Medchal in Hyderabad.

Some other examples of residential areas benefiting from warehousing and logistics hubs are Dholera in Gujarat along the Delhi-Mumbai Industrial Corridor (DMIC) and Dankuni in West Bengal on the Eastern Dedicated Freight Corridor.

Warehousing and logistics has been expanding. According to an update from ANAROCK Capital, the stock of Grade A warehousing space has grown impressively and is expected to expand 2.5X in the next five years. It is estimated that the market size is expected to touch approximately 80 million sq ft by 2026, posting a Compound Annual Growth Rate of 19%.

“This growth is primarily driven by the boom in e-commerce and 3PL companies. Together these categories account for over 50% of the total demand,” said Devi Shankar, president –industrial logistics & data centres, ANAROCK Capital.

3PL is short for third-party logistics.

To offer enhanced customer experience, on-demand warehousing has proven to be a flexible business model for retailers and brands, offering operational scalability and supply chain agility, Shankar added.

“These factors are expected to keep the demand for warehousing buoyant in the coming years.”

The impact is so profound that even upcoming warehousing hubs have had an impact on nearby residential markets. Take, for example, the upcoming Jewar International Airport in Noida, on the outskirts of New Delhi.

The airport will help the region to grow as a warehousing and logistic hub. A warehousing and logistics hub is expected to be set up in Tappal Bajna, some 7 km away from the new airport.

As a result, speculators are already betting on land prices in the area, said a study by property consultancy Knight Frank India. The Noida-Greater Noida region has seen an uptick in transactions of plotted developments.

The policy perspective

India aims to transform the logistics and warehousing space. The government’s proposed National Logistics Policy (NLP) is aimed at streamlining and strengthening the logistics sector, promoting seamless movement of goods across the country, and increase the ease of doing business.

With increasing trade competitiveness, the logistics and warehousing segment will not only create more jobs, but will also improve India’s performance globally. As a result, it will drive economic growth and business competitiveness through a sustainable and cost-effective logistics network, leveraging best-in-class technology, processes and skilled workforce.

“Moreover, the government’s push towards manufacturing and incentives, such as the PLI (production-linked incentive) scheme, is promoting the development of industrial hubs of Chennai, Pune, Ahmedabad and Bengaluru,” said Rajesh Jaggi, vice chairman –real estate, Everstone Group.

Impact on housing

“There is an indirect impact on real estate appreciation in some specific assets, especially budget residential and hospitality sectors suitable for industrial/ logistics land use apart from other allied support development with the cities’ expansion along these corridors,” said Chandranath Dey, head – operations, business development, logistics and industrial consulting, ports, airports and global infrastructure, JLL India.

And the trend is not just visible in metros. It is evident in Tier II and III cities as well. “Tier II and III cities such as Vapi, Surat, Lucknow, Patna, Coimbatore, Ludhiana, Guwahati, Siliguri and Bhubaneswar are already witnessing a surge in warehousing demand. These cities are witnessing a transformation in the adjoining localities and micro-markets where other asset classes are gradually emerging owing to the heightened economic activities,” added Shankar of ANAROCK.

Large-scale industrial logistics park developers agree.

“Whenever a logistics project is announced in a new region, it signifies an optimistic view towards the industrial potential of the respective land. However, a new location can typically take a decade before it can be considered established. The region witnesses price growth of anywhere between 20-50% in the short term and even more in the long term. For example, Land price growth in Luhari/Oragadam has been around 100% in the last 10 years,” said Jaggi of Everstone Group.

Everstone Group-backed Indospace has the largest network of grade-A warehousing in India with 44 parks across 49 million square feet and will continue to expand and support infrastructure development for a more robust supply chain in India, Jaggi said.

Tier-II cities

“We also expect to see the share of Tier-II cities growing much rapidly over the coming years as private consumption and e-commerce are the key drivers of the growth in Tier II markets. We already have a presence in Coimbatore and Rajpura and looking to enter emerging Tier II markets such as Lucknow, Guwahati, Surat and Ludhiana,” added Jaggi.

Real estate developers agree with Jaggi and have indicated that demand across cities has propelled growth.

“The shift to GST (Goods and Services Tax) and the Covid-19 pandemic have resulted in warehousing no longer being located largely in areas outside municipal limits because of Octroi,” said Niranjan Hiranandani, vice chairman, of the National Real Estate Development Council and managing director of the Hiranandani Group.

“Demand for in-city warehousing is shooting up in sync with e-commerce adopting quicker delivery options; similarly, demand for grade A warehousing is also shooting up. The outlook for warehousing is promising, with rising consumerism and higher economic activities… If one looks at any warehousing hub, one finds enhanced growth potential in warehousing having a positive effect on price points remaining stable in that micro-market. Specialization results in the formation of the hub; in turn, this positively impacts price points. It also has a similar positive effect on price-points of office spaces as also other forms of commercial real estate in the vicinity – with a matching impact on demand for residential real estate,” Hiranandani added.

Developers are already trying to capitalise on these developments, said experts. Warehousing and logistics hubs come with a huge workforce. As a result, the neighbouring residential projects and those in proximity offer good investment and renting options.

“This has become a good model and there are developers who are capitalizing on the trend,” said Shyam Arumugam, managing director, industrial and logistics services, Colliers India. It will be an area of concern for a majority of these regions

Budget 2022: A Year of Implementation for Indian Real Estate

 With annual budget in offing, Indian home buyers along with the industry doyens anticipate policy stepping up measures to rationalize tax, stimulate innate demand, and foster a favorable investment climate.

Indian Real Estate sector did not go unscathed from the menace of Covid-19 global pandemic, but with surprising resiliency of the economy and rapid shifts, the real estate sector pivoted without skipping a beat. The industry faced enormous challenges right from migrant labor migration, supply chain disruptions, acute liquidity crisis and other daunting hurdles. The pandemic acted as blessings in disguise for the property market, as the value of owning a home was underpinned on grounds of safety, stability, and flexibility it offered in the crisis.

Covid pandemic stimulated the perennial demand for housing, which saw translation of all time renters into first time homebuyers, entry of young millennials in home buying segment, existing homeowners seek an apt opportunity to upgrade into larger size homes and also safe bet investment asset appealed investor communities to park their funds for wealth generation.

As the year 2021 was about Resiliency, the ensuing year 2022 will be watched as the ‘Year of Implementation’- a litmus test for the economic and GDP growth. After a black swan event, precarious impact on the lifestyle and business continuity strategies with divergence trend, the real estate sector is astonishingly getting back in rhythm with strong end user demand, government stimulus and fundamental shifts in functionality of real estate assets. With annual budget in offing, Indian home buyers along with the industry doyens anticipate policy stepping up measures to rationalize tax, stimulate innate demand, and foster a favorable investment climate.

The budget wish list encapsulates few key recommendations as:

· Individual Tax should be reduced from 42 per cent to 25 per cent

· Subvention schemes ban to be uplifted as it doesn’t favor home buyers. As a large segment of these do not have the capacity to pay both, EMIs on their under-construction home loans as well as house rent.

· Enhance Quantum of Loan to boost home buying. The RBI, through a notification in 2017, allowed a loan-to-value ratio (LTV) of up to 90 per cent for home loans for affordable houses of Rs 30 lakh or less. The Budget can permit the extension of same facility to MIG and HIG segments

· Allow full interest on housing loans as a deduction under the Income Tax Act without any ceiling. In the alternative, the limit should be increased to Rs 5 lakh from the current limit of INR 2 lakh under Section 24 of IT Act 196 to incentivize home buyers and spur overall demand.

· Rationalization of taxation when it comes to Long Term Capital Gains from sale of House property. It should be pegged at 10 percent similar to section 112 for equity shares. Also, the period of holding of house property should be reduced to 12 months from existing 24/36 months to qualify the same as long term capital asset.

· In order to encapsulate a wide spectrum of home buyers under the umbrella of affordable housing in metro cities, the expansion of the definition by extending the price cap up to Rs 1 crore will bolster housing demand and attract many new players in the market. Also, extend benefits of CLSS and PMAY schemes to induce more first-time home and female home buyers

As the trend of ‘Work Anywhere, Live Anywhere’ garners traction amongst the working populace, the demand for rental housing will be on uptick. Career mobility, remote and hybrid work models will encourage the government to emphasize on rental housing in the form of taxation benefits for tenants like Enhancement in HRA Tax Exemption is one such option. The deduction allowed is up to 50 per cent of employee salary if he or she lives in Metro cities in India and up to 40 per cent in any other city. If the Budget enhances this limit, it will encourage uptick in rental housing across geographies. Another, positive announcement can include making rental income fully tax deductible to encourage creation of rental housing stock in order to meet the ambition of Housing for All.

Budget measures can also facilitate the real estate industry achieve its ESG pledges while charting a roadmap to address complex issues like climate risk, net zero emission, carbon neutrality, green living, and clean energy. This can be achieved by developing a strong collaborative and consistent policy environment through redefining building codes and other regulation framework. Incentivizing industry with SOPS and stimulus in order to adopt energy efficient initiatives on a large scale to meet long term goals of sustainable living will go a long way in green engineering.

Thus, gaps in demand and supply economics need to be bridged with greater sense of partnership between Government, apex authorities and industry bodies to address issues of housing and its affordability more effectively. Industry will continue to make meaningful progress with conducive policy framework and budget stimulus in order to help India achieve the target of a $5 Trillion economy.

4 Décor Ideas That Will Instantly Give Your Home an Elegant Makeover

 January 2022

A home that boasts elegance and luxury is a dream of many. But not everyone manages to fulfil it because of financial constraints. However, luxury and elegance don’t necessarily mean expensive things. Simple twerk in your basic décor can give your home a complete makeover given that you are using all your creative skills and seeking inspiration from the know-it-all source, Google.

If you still need help, here are a few ideas that will help you give your home an elegant makeover instantly.

Rugs

Rugs are an inexpensive and easy way to add elegance to your otherwise basic home. A simple white rug will give your home a luxurious feel, whereas those with darker colours will help you achieve beauty with minimal effort. So, fill that extra white space with a rug of your choice and see your home speaking of luxury in an instant.

Chandeliers

While this is a little expensive route of adding elegance, it is a sure-shot way of giving your home a makeover in an instant. So, replace those old light bulbs with chandeliers and see the difference. However, make sure you select the one that fits in your space best.

Sofa chair

Adding king size sofa chair in that empty corner of the house is an easy way of adding elegance to it. Moreover, this serves two purposes. One, being adding elegance and luxury instantly. Two, giving you some extra space to get cosy and unwind. This is probably why most of the luxurious homes that you surf on the Internet have, at least, one of these beautiful sofa chairs placed delicately in one corner.

Lamps

Lamps are another great way of giving your home a beautiful yet elegant makeover. Floor lamps not only add warmth to your home but also make it stand out from the clutter. So, if you don’t feel like investing too much in your home, floor lamps are a quick way of adding grace, uniqueness and beauty to your otherwise basic home.

Also read: Positive Energy Home Decor

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Positive Energy Home Decor

January 2022

A positive home is the biggest stepping stone on the way towards a positive lifestyle! And positive energy home decor makes your home a place where you can exist peacefully and enjoy the safe feeling of belonging. How to make this possible?

 

Home is a place where our energy is influenced the most, with the pandemic forcing us to stay at home for longer than we usually did, it is important for us to stay in harmony with the energies that are in flow at our home.

It is in fact, very easy to have a positive energy home decor ,only you must always remember to pick the things that match your vibe. Here are some suggestions that will transform your abode not only into a centre of positivity and joy, also makes it aesthetically appealing:

1. Charming Chimes

Wind chimes attract positivity into your home every time they chime. These beautiful objects hold significant importance in Feng Shui as well as Vastu.

According to Feng Shui it is essential to hang them in the right places to make better use of these lucky charms. Also, factors like the material of the wind chimes and the number of rods are advised to consider. Six or eight rods are commonly used to attract positivity, also five rods can be used to ward off negativity.

2. Light up Positivity

Candle is the Superstar of the positive energy room decor items. Placing candles on your night stand, on the coffee table and even the dining table brings an immense amount of positivity into your home.

They have a great ornamental value. Various types of scented candles are available in a wide range of colours. Lighting candles help you set the mood just right and scented candles can lift your spirit up. Aromas like Lavender, Lime Grass, Vanilla, Jasmine, and Cinnamon can be instantly stimulating.

Also, candles can be placed in beautiful tea light holders and change the vibe of the place entirely. Beautifully patterned tea light candle holders can alter the look of the room and bring in positivity.

3. Burn Off Negativity

Burning incense at homes is an age old practise and has now made its way back into positive energy home decor. Burning them helps clear off the negative energy and make way for positive energy. Incense is believed to have healing power and they calm your nerves.

Incense are available in cones and sticks. Incense can be placed in creative incense holders that distribute the smoke fascinatingly, holders are available for both the types.

Traditional incense are made of natural gums, wood and herbs. They have an elegant sense about them, they are usually available in flavours like Sandalwood, Marigold, and Jasmine. More modern variety of incense are available in flavours like Rose, Lavender, Patchouli, and Lemon Grass.

4. The Enlightened

Place a Buddha statue in your home to bring peace and positivity. You can place them in a yoga or meditation area which will help you to achieve better calmness that is required during practice, you can place them in your entryway, or bed side table.

There are different types of Buddha statues, each of them represents something different and something significant. You can place a teaching Buddha statue that represents the Buddha after Enlightenment, it symbolises destiny and wisdom. Reclining Buddha represents change, and the most common Laughing Buddha is believed to bring wealth, prosperity and good luck. Recently Buddha Head statues are trending in positive energy home decor but more than a fad it symbolises confidence and compassion.

Also, place the statue on a table or a stand, or anywhere the surface is higher than the most things. You can keep the statue at your eye level or where you can see them easily to get the most positive vibes.

5. Don't Let Bad Dreams Through

In some Native American cultures Dream catchers are used to protect sleeping people from bad dreams, it is believed that the web in the hoop catches the bad dreams and lets only good dreams through it.

A peaceful sleep is necessary for a positive life. You can tie the dream catcher above your bed or you can use it as a positive energy home decor in other ways, like hanging it behind a door, so every time you open and close it a whiff of positivity moves around. You can even hang it on the wall that you wake up to.

In addition, Dream Catchers are stunning to look at, they bring a sense of serenity each time you pass by them. They are available in multiple sizes, shapes, and colours. You can find wonderfully handmade dream catchers on multiple online portals including Esty, or you can make one yourself!

6. The Third Eye

Peacock Feathers symbolises many things like Pride, Grandeur and Beauty but one important thing it stands for Spiritually is the Third Eye. The bird holds a significant mythical and spiritual value across many cultures, in India too peacocks are of historical and cultural importance.

Peacock feathers is a positive energy home decor which can be used in various ways, you can place one or many feathers in a glass bottle or a mason jar for a simple yet chic look, or you can tie them in dream catchers, or use them as wall decor.

Peacock feather is undoubtedly one of the most beautiful decor ideas that wards off negativity and brings positivity. It can be placed anywhere that looks appealing and works just fine.

7. Make some room for mushroom

Mushroom decorative pieces, this must sound like an unusual idea, but it is used in different parts of the world as good luck charm. Mushrooms bring positivity, luck and a joyful vibe to your house.

Mushroom ornaments are available widely in online and offline stores, from key chains, to artistically made show pieces. You can place them in aquariums, planters and in your garden to make a cheerful fairy garden.

Also, mushrooms can be used to spread positivity in other forms, by hanging a painting of mushrooms, hanging tapestry or placing bed side lamps for a strong positive energy exude.

8. Let it Shine

The best way to let positivity shine in to your homes is by using crystals. They bring in to your life positivity, good luck, joy, love and all that glitters! They help in cleansing aura, manifesting desires and a holistic healing. They do not just belong in jewellery they belong in positive energy home decor too.

Particular crystal will vibe with individual persons, hence it is crucial to pick the one that is just right for you. Some of the crystals you can choose from are Alexendrite, Amethyst, Jade, Malachite, Pyrite, Rose Quartz, Turquoise, and Yellow Sapphire.

There are various kinds of artistic pieces made of crystals available on both online and offline Stores. Alternatively, you can place them in an elegant wooden box on the bedside table which will make a chic and positive energy room decor.

9. Plant Some Positivity

Plants are a living, breathing shelter of positivity. They have scientifically proven health benefits. They radiate positivity onto their surroundings, also they are good for the occupants mind, body and soul.

Keeping plants at home accentuates the decor, it is therapeutic to take care of them, and every time a new leaf springs it will bring a huge smile to your face!

Plants like Lily, Lavender, Lotus, Money PLant, Lucky Bamboo, Boston Ferns, Rubber Plant, Syngoniums, Chinese Money Plant and some succulents bring not only brings positivity but also remove pollution. Choosing the best indoor plants can be a little tricky so here is a comprehensive guide to help you choose the right indoor plant.

Apart from these things you can keep fresh flowers in beautiful vases, fishes in bowls or aquariums, elephant ornaments or paintings, tortoise trinkets, and Blue coloured souvenirs from places you have travelled to.

Also, always keep your place neat and tidy, declutter often, and giveaway or shelf the things that no longer have any use, brings joy or add any value as clutter disrupts the flow of positive energy.

Also read: 5 Things to Do When Closing a Home Loan

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5 Things to Do When Closing a Home Loan

 January 2022

Here is everything you wanted to know about home loan insurance policies in India.

Borrowers always feel a sense of relief, when they close their home loans, after months and years of paying the EMIs. At this stage, although one may feel carefree, there are several checks that you must perform, before you sit back and relax.

THINGS TO DO AFTER CLOSING HOME LOAN

obtain a no-dues certificate, stating that there are no further dues against your name.

Take back the original property documents that you had submitted to the bank, while availing of the loan.

Ensure that any lien against the property, created by the bank, is terminated.

Obtain an encumbrance certificate from the sub-registrars office, stating that there is no further liability or debt against the property

Ensure that the credit report has been updated,to reflect the closure of the loan.

1. Get hold of a no-dues certificate

As soon as you repay your home loan, ensure you get an NOC or an NDC. This is an acknowledgement of the fact that there are no further dues against your name and account. If a glitch comes up, this is the right time to verify it as well. Check the details, such as the name of the borrower, your account number from which the EMIs were being deducted, details of the property, date of closure, etc., and ensure that these are accurately documented. An NOC mentions that the borrower is henceforth the legal owner of the property and there is no role of the lender going forward.

2. Ask for your original documents

When you apply for a home loan for a property, the lending bank keeps all the original documents while you may have taken home photocopies of the same for your reference. Once you close your loan, the bank should return your papers to you. It is important to check whether you have received all the documents that were submitted and whether they are in good shape. These documents may include your sale deed, conveyance deed, builder-buyer agreement, power of attorney, payment receipts, possession letter, transfer permission, tripartite agreement, etc. Bring it to the notice of the lender, it if you feel that some document has been misplaced. In some cases, your lender may also have taken cheques, for security. Ask for these as well, since the bank will not need them anymore.

3. Confirm the termination of the lien

Banks always want to secure their position in case a borrower defaults. Hence, a borrower with a weak credit score may find a lien against his/her property. This empowers the lender to sell the particular property for recovery of dues, if necessary. The lien will also restrict the borrower from selling their property. Hence, it is important to get the lien terminated, so that it does not create any problems for you in the future. The local registrar will do this for you but their office may ask you for an NOC from the bank which is why an NOC should always be your first step.

4. Obtain a nil-encumbrance certificate

Visit the sub-registrar’s office to procure the nil-encumbrance certificate or an EC. This certificate is proof of the fact that there is no further liability of debt and thus, devoid of legal or financial tangles. It is an important document, in case you wish to sell your property. You can show the encumbrance certificate (EC) to a prospective buyer, to avoid any chances of your property being viewed as a problematic one.

5. Ensure that your credit score is updated

Once your home loan is closed, you must check your credit score. If it has not been updated, you run the risk of not being considered for another loan, or for a lower interest rate. In case your bank has not been prompt, do not forget to remind them. Your credit score is an important indicator of your performance as a borrower and your repayment capacity.

Also read: Home Loan Insurance: All You Wanted to Know

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Home Loan Insurance: All You Wanted to Know

 January 2022

Here is everything you wanted to know about home loan insurance policies in India.

Home loan insurance, also referred as mortgage insurance, is a cover that protects a home loan borrower from adverse situations. Availing housing finance means a long-term repayment responsibility for a borrower, hence a home loan insurance policy ensures a borrower is helped and covered in case he is not able to repay his home loan EMIs.

What is home loan insurance?

A home loan insurance policy ensures the home loan of a borrower is paid by the insurance company in case the person is unable to make the EMI payments due to unforeseen circumstances. Such situations may arise due to sudden death of the primary borrower, job loss, or major accident. The terms and conditions of your home loan insurance policy depends on the type of policy you have taken. Many comprehensive home loan insurance policies are available in India that offer different covers.

Home loan insurance providers in India

Almost all banks in India have insurance subsidiaries that sell home loan protection plans. The State Bank of India (SBI), for instance, has SBI Life; ICICI Bank has ICICI Lombard; HDFC has HDFC Life and HDFC Ergo. However, there are banks that don’t have an insurance subsidiary tie-up with life insurance providers and general insurers companies to sell home loan and home loan insurance packages.

Is it necessary to buy a home loan insurance policy?

You are not obliged to buy a home loan insurance policy, though the bank providing you the loan would make it sound like you must. Banks always budge the borrower to go for a home loan insurance policy as it guarantees him loan payment even if the borrower is not able to pay. The insurance company will help in such case. However, for their own good, home loan borrowers must buy a home loan insurance policy. Financial planners are unanimous in their opinion that home loan borrowers must buy a home loan insurance policy to get cover against any misfortune.

Home loan insurance premium

In majority of the home loan insurance policies, the borrower has to pay one-time premium to the insurance company. However, there are also home loan protection plans where the borrower can pay the policy premium in certain installments. The amount of money you pay as the home loan insurance policy installment depends on the home loan amount, and the type of cover you have opted for. Your age and medical records affect the home loan insurance policy premium amount. Basically, the older you are, the higher is the premium, and the more physically fitter you are, the lower is the premium.

Home loan insurance coverage period

A home loan insurance policy remains effective throughout the home loan repayment tenure. Once the loan is fully paid, the insurance protection ends. The home loan insurance policy would lapse after the death of the borrower. The same is true if the home loan is transferred to another bank. The home loan insurance plan coverage reduces as you repay the home loan. If you have already paid Rs 10 lakh out of home loan of Rs 30 lakh, the protection plan will pay only Rs 20 lakh to the bank, in case of a mishap.

Home insurance versus home loan insurance

Home insurance and home loan insurance are two different services. While the former protects your home in case of an adverse situation, the latter would take care of your pending home loan in case you are unable to pay due to some mishap.

Tax benefits on home loan insurance

Those who have purchased a home loan insurance policy can claim deductions under Section 80-C of the Income Tax Act, to pay the home loan insurance premium. But, if you have borrowed money to pay the home loan insurance premium, you will not be able to claim the deduction.

Also read: New Year Goals For Home Owners In 2022

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New Year Goals For Home Owners In 2022

 January 2022

The purchase of a property, may have a significant bearing on your monthly finances in 2022. We look at ways to deal with these changes smoothly

Housing affordability in India was probably at its peak in 2021, amid record low home loan interest rates and government-sponsored incentives towards housing ownership. This affordability was further boosted by developers offering waivers in the form of stamp duty or GST reduction as part of their festive deal for 2021. Monetary incentives along with a change in sentiment with regard to housing ownership in the year, also prompted many prospective buyers to take the plunge and seal the deal for their future homes, in 2021. The question is, what lies ahead for these new home buyers in the year 2022?

For those who purchased their new homes, this is just the beginning of a new era, where your financial management skills will be put to the test. We look at how to deal with the expenses of a new house, without much hassle.

Rearrange your monthly expenses

Owning a property involves taking care for it and ensuring that it is supplied with every necessity. Many new expenses will come your way in the form of EMIs, maintenance charges, utility bills, repair costs, upkeep bills, etc. This is precisely why renting has been very popular among the millennials. Nevertheless, for new home owners, the changed fiscal scenario would require you to rearrange your expenses in such a manner that your bills are paid in time, without causing too much strain on your monthly finance.

Go slow on furnishing the new home

While a new home may require new furniture, fittings, drapes, curtains, lighting, etc., getting all of them in one go might be disastrous financially. Thus, it is necessary to chalk out a detailed plan, to go about the re-modelling gradually. While the first year, your savings could be used to change the furniture, the next year could be used to improve the lighting fixtures. Adjust with your old furniture and other things till you have saved enough to make a new purchase.

Keep an eye on interest rate movements

Housing loans are already at record low rates. You could get a home loan at 6.40% annual interest, currently. While the chances of rates being lowered further are slim, as the Reserve Bank of India (RBI) is likely to tweak policy rates sometime in 2022, to tame a stubbornly high inflation, while also boosting consumer spending, it is a good idea to keep yourself updated with all changes in the world of home finance. Changes in the repo rate would eventually reflect in your EMI outgo. Even though the RBI held rates unchanged for the ninth consecutive time in December 2021, sector experts are of the view that the RBI may not have much leeway in the coming months, owing to persistent high inflation.

At this juncture, note that the RBI in its bi-monthly policy review takes a decision to make changes in key lending rates, following which, banks make changes in their respective interest rates. Banks will never intimate you about changes in rates. Hence, in your own interest, keep a track of these things.

Avoid taking fresh loans

Lending rates are at record lows. This makes auto loans, home renovation loans, etc., quite affordable. As banks present it, this could be a once-in-a-lifetime opportunity to own a vehicle or to get all those expensive furnishings for your new property. This might certainly tempt you to purchase a new car or go for a complete remodeling of the property right after your home purchase. This would, however, have an adverse bearing on your monthly finances. Overburdening yourself with new loans at this point would amount to poor judgement, as the economic conditions also pose a risk on job security and business safety. It is advisable to sit tight and maintain a wait-and-watch mode, right now.

It is only after a significant portion of your home loan is paid off that you should think of applying for a fresh loan. Having to serve two big loans would be a big burden, otherwise.

Do not opt for too many insurance products

As part of home loans, banks also push you to buy home insurance and home loan insurance policies, primarily prescribing all their arguments in favour of these products, playing on the fear factor. The kind of uncertainties we have seen in the recent times, may also prompt us to opt for insurance, in order to face any future difficulties in a planned manner. However, one should not lose sight of the fact that taking excessive insurance, makes a huge dent on one’s yearly earnings. Unless you understand the product properly and its intended benefits, do not purchase home insurance and home loan insurance products only because your banks recommend it.

Save up for small repairs and maintenance

With usage, your new property will be subject to the normal wear and tear. The paint on the wall will lose its sheen over some years. Grout lines may appear on the floor, despite regular cleaning. You would get a leaky tap or faulty electricity wire. Sometimes you would have to call an exterminator for pest control or a plumber to fix a choked pipe. These would, by and large, be regular occurrences that would not only need immediate handling but also cost you. Keep saving additional money every month. to address such issues in the new property. If left unattended, these issues could significantly impact the property’s health.

Adjust your social life to cut down unnecessary expenses

A new home also makes it incumbent upon the owner to make certain changes in one’s social life. You may have to significantly cut down the number of movie outings, fancy dinners and trips to malls, meant for leisure activities. House ownership also means you will be able to throw less number of parties in a year or at least reduce the number of guests invited at each such occasion. Even if you cut the numbers of these celebrations by half in a year, you will be able to save up a significant amount of money, to take care of your new responsibilities as a house owner.

Also read: Home Loan Guide: How To Decide The Lender And Tenure Of Your Home Loan?

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