Sprucing up one’s home for the festival of Diwali need not be an arduous task. Here are some simple and creative ways, in which homeowners can make their homes look warm and welcoming

How to give an inexpensive makeover for the walls

Painting the house makes it clean and fresh. There are a lot of inexpensive painting options available in the market, which are of good quality. Homeowners can also opt for wall coverings such as wallpapers, to add color to one’s house. There are a variety of wallpapers with exquisite finishes and attractive prices, which can be installed in a day’s time. Alternately, one can use festive wall stickers which can be removed, without damaging the wall or the paint. They can be applied on walls, wood, glass, etc. Swarovski crystals and studded decals can also add glitter to your living rooms.

Furnishing and accessories for the festive season

Changing the drapes and furnishings, are the easiest ways to add a festive look to your home, this Diwali. While doing so, first select a color theme that complements the furniture and then, opt for floral, geometric or plain fabrics, accordingly. If your home is done up in classy white or soothing beige, then, you can brighten it up with touches of vibrant green or feisty orange. Intricate patterns and soft fabrics like silk, which connote luxury, are ideal for festive seasons.

Metallic touches and ornamental accents also add to the festive feel of a house. Gold or sparkling silver items, handcrafted vases, lamps and ethnic artwork, can transform a festive space. For the dining area, use tableware in lovely colors and designs, made of porcelain, steel, silver, earthenware or and glass.

Decorating the entrance of the house

Decorate the main door, with a floral toran or colorful bandhanwars designed with pearls, gotas and fancy flowers. As rangolis are considered auspicious, make one with powder or with fresh flowers like marigold, mogra and rose petals, near the entrance of your house. You can also opt for readymade acrylic or studded rangolis and arrange it with hand-painted earthen diyas.

Diwali lighting options for your home

Lighting plays an important role, in the overall look of a house. “Indirect cove lighting gives a warm and cozy feel to the house while direct lighting or spot lighting is used to create focal areas. Other light fittings like wall bracket lights, may be used to highlight a painting on the wall or artifacts. A chandelier can brighten up the décor of a house, as well. Metal, Brass and Silver are ideal décor elements for Diwali – the festival of lights. Similarly, fairy lights and rope lights create a festive atmosphere. One can be creative, by using paper cones around the light fixtures, to change the shade of the light, from greens, to blues and oranges. You can also use discarded wine bottles and stuff it with Mirchi lights and arrange it around the house for a unique statement.

Fresh flowers uplift one’s mood and add a feeling of positivity to the home. Mogras, roses, carnations, chrysanthemums, orchids and other exotic flowers can be used to give an eye-catching makeover to the home.  Use a lot of flowers to decorate the home for Diwali. Marigold balls, hung at the entrance and strew flowers around the temple to create a festive look that complements the overall décor of the house.

Quick ways to decorate your house, this Diwali

• Give your home’s windows a quick makeover, by changing the curtains or opting for classy blinds.
• Keep a plant in a vibrant colored pot and decorate it with fairy lights.
• Gold-coloured décor pieces can be a lovely addition to a neutral environment.
• For the bathroom, use matching colored napkins, towels, dispensers and door mats.
• Use potpourri, reed diffusers and fragrant oils, to create a refreshing ambiance.
• Add mirrors with fancy frames, to enlighten a dull space.
• A wide range of silver and brass accessories, used along with fresh flowers, lanterns and diyas, can beautify the temple area.

Indian constitution advocates same parity for both men and women. Somehow it is not practiced in day-to-day life. It is generally observed that till it is necessary, the home or any property is purchased in the name of male members of the family. The central and many state government for women empowerment provide benefits for women property buyers. A peep in as to what is the benefit when a home is bought in wife’s name.

There are several benefits to buying a property in a woman’s name, either as the sole owner or as a joint owner, with governments and banks offering several sops. Aspiring homebuyers can seek certain benefits including tax exemptions if a home is bought in a woman’s name. Such offers can also attract more women buyers to the realty sector. Encouraging women to register assets in their name, also boosts women’s empowerment.

Tax benefits

Experts explain that some of the obvious tax benefits of buying a home in the wife’s name include an extra deduction of interest up to Rs 1.5 lakh every financial year if the house is self-occupied. If a husband and wife are the joint owners of a property and if the wife has a separate source of income, then they can both claim tax deductions individually. The tax benefit will depend on the ownership share of each co-owner.

Discount on stamp duty charges

Several state governments in north India are now offering a partial waiver on stamp duty, for buyers registering properties in a woman’s name – either as a sole owner or as a joint owner.

You can save 1%-2% on stamp duty if the property is in a lady’s name. In Delhi and Haryana, the stamp duty rate is 4% for women, compared to 6% for men. Moreover, if you are undergoing some financial setback and have some debts to repay, the property held in your wife’s name, does not come under the cover for your loss.

Discount on home loan interest rates

Many banks like SBI, ICICI and HDFC Bank, offer discounted rates on home loans for women borrowers. The prevailing interest rates for women borrowers are as mentioned below:

Interest rate for woman borrower vs. men borrowers

Note: For amount less than Rs. 1 Cr.

Things to keep in mind when buying a home in the wife’s name

Experts maintain that it is a good idea to buy a home in the name of one’s wife or in co-ownership. However, the wife can enjoy the tax benefit, only if she has a separate and genuine source of income. Moreover, if there is any legal dispute on the property, then both, the husband and wife will be involved in the case. Therefore, homebuyers should evaluate all possibilities, before making a final decision.

In India, the needs of children are not considered before buying a home. Their say and requirements are not on the agenda set for home buying. The maximum consideration in regards to children in a home is that there is a minor consideration for the provision of a separate room. Parents generally do not pay heed to the children’s requirements, when they buy a home. As children usually spend more time at home than their parents, property owners and buyers should ensure that the home fulfills their requirements. Moreover, the house should also be able to meet the child’s changing needs, as they grow and mature.

We shall now examine the needs of children that buyers need to consider before finalizing a house purchase and the impact on property prices.

There are many good reasons why children should be an important consideration while buying a home. Everything that transpires within a family, directly or indirectly involves its children. Even young couples, who do not yet have children, will still consider this as an important factor while choosing a residential property. In a country like India, where emotional ties are strong, it is common for people to make significant investments, based on the present and future needs of our children.

Things to consider, as per children’s requirements

Experts suggest that buyers on a conservative budget should focus on connectivity, rather than location. One should invest in a location that is well connected and not in a location that is centrally located. Builders are also recognizing the importance that children’s needs play, in property transactions and are, therefore, coming up with projects that cater their requirements.

While buying a home, the factors that need to be considered, depend on the various phases of life – a toddler, a teenager and an adult.

Medical facilities should be readily available, not only for children but also for other members of the family. Everyone will agree on the importance of good educational institutions being available. Today, people also look at connectivity to nearby amusement parks, theaters, pubs, malls and food outlets.

Children’s requirements and its impact on property costs

Nevertheless, the availability of good schools, colleges, green spaces, connectivity, hospitals, malls, etc., will add to the cost of property. As the comfort and convenience that a particular location offers increases, so does the price. It all boils down to what kind of a budget you are working with.

However, a home is essentially a family-oriented property and should not cost more because it is children-friendly. If certain developers want to charge a premium for specific children-oriented features or services, there should be a clear and visible justification and its price should be comparable to any other property, with similar lifestyle amenities.

The competition among the institutions disbursing the home loans is on the rise these days. These institutions vie with each other to woo loan seekers to their organization with promises of interest rate cuts and better services. For this, they try to lure existing borrower with marginal rate cuts and easy repayment terms.

While it may be tempting for a home loan borrower to transfer his/her loan to a bank that offers lower rates, there are several charges and procedures that the applicant should consider.

The facility to transfer one’s home loan from one bank to another, allows borrowers to have a ‘plan B’ in case they are not satisfied with their existing lender. Besides deficiency in services, a borrower may also want to switch banks if their existing bank does not allow a renegotiation of the loan’s terms, such as changing the tenure or reworking the EMI.

Earlier, banks would not pass on home loan interest rate cuts to existing borrowers. Allowing the same would have benefitted customers and led to greater savings during repayment. In such a case, transferring a home loan would have been beneficial.

Take an example where a home owner’s home value increased significantly when compared to the price at which it was bought. When he wanted to renovate his home and his bank was unwilling to increase the loan amount, he switched to another bank. However, he also faced several problems while transferring the loan.

Tedious process

To transfer a home loan, the borrower first needs to submit an application to his/her, current lender. The bank will then provide a consent letter or NOC, along with a document mentioning the outstanding amount. These documents should be submitted to the new bank to which the borrower wants to shift the loan.

The new bank will treat the application as a fresh loan and the documentation process, including submission of the employer’s letter, salary slip, photo identity proof, bank statement, etc., will have to be done all over again. Transfer of a home loan requires diligent documentation, coordination, and follow-up. Problems may arise if the original loan is jointly taken and one of the borrowers has retired or income levels have reduced. The new bank may also refuse to take over the loan if the customer has not been paying the EMIs regularly.

If the new lender is satisfied with all the documents, he will sanction the loan amount to the previous lender in order to close your account.

Open-ended risk for the new bank

Once the transaction is completed, the property’s papers are handed over to the new lender and remaining post-dated cheques or ECS payments are canceled. The bank that agrees to give the loan, runs an open-ended risk because the existing bank releases the mortgaged documents of the property only after receiving the payment. However, they take this risk solely to acquire a new customer.

Pay the fee, again

As the new bank treats the application as a fresh loan, all charges associated with availing a home loan will be applicable. Consequently, the borrower will have to pay the processing fees, stamp duty, notarization charges and franking charges. This can easily be 0.5% to 1% of the loan amount.

Not a formal procedure

There is no formal procedure for carrying out the loan transfer process and this is deliberate. The Anand Sinha Committee that was set up by the RBI to look at issues surrounding consumer service briefly touched upon the balance transfer issue. However, no action has been taken, yet.

To avoid hassles, most customers prefer to stay with the same bank, as long as they are allowed to switch to a lower cost loan by paying a fee.

The competition among the institutions disbursing the home loans is on the rise these days. These institutions vie with each other to woo loan seekers to their organization with promises of interest rate cuts and better services. For this, they try to lure existing borrower with marginal rate cuts and easy repayment terms.

While it may be tempting for a home loan borrower to transfer his/her loan to a bank that offers lower rates, there are several charges and procedures that the applicant should consider.

The facility to transfer one’s home loan from one bank to another, allows borrowers to have a ‘plan B’ in case they are not satisfied with their existing lender. Besides deficiency in services, a borrower may also want to switch banks if their existing bank does not allow a renegotiation of the loan’s terms, such as changing the tenure or reworking the EMI.

Earlier, banks would not pass on home loan interest rate cuts to existing borrowers. Allowing the same would have benefitted customers and led to greater savings during repayment. In such a case, transferring a home loan would have been beneficial.

Take an example where a home owner’s home value increased significantly when compared to the price at which it was bought. When he wanted to renovate his home and his bank was unwilling to increase the loan amount, he switched to another bank. However, he also faced several problems while transferring the loan.

Tedious process

To transfer a home loan, the borrower first needs to submit an application to his/her, current lender. The bank will then provide a consent letter or NOC, along with a document mentioning the outstanding amount. These documents should be submitted to the new bank to which the borrower wants to shift the loan.

The new bank will treat the application as a fresh loan and the documentation process, including submission of the employer’s letter, salary slip, photo identity proof, bank statement, etc., will have to be done all over again. Transfer of a home loan requires diligent documentation, coordination, and follow-up. Problems may arise if the original loan is jointly taken and one of the borrowers has retired or income levels have reduced. The new bank may also refuse to take over the loan if the customer has not been paying the EMIs regularly.

If the new lender is satisfied with all the documents, he will sanction the loan amount to the previous lender in order to close your account.

Open-ended risk for the new bank

Once the transaction is completed, the property’s papers are handed over to the new lender and remaining post-dated cheques or ECS payments are canceled. The bank that agrees to give the loan, runs an open-ended risk because the existing bank releases the mortgaged documents of the property only after receiving the payment. However, they take this risk solely to acquire a new customer.

Pay the fee, again

As the new bank treats the application as a fresh loan, all charges associated with availing a home loan will be applicable. Consequently, the borrower will have to pay the processing fees, stamp duty, notarization charges and franking charges. This can easily be 0.5% to 1% of the loan amount.

Not a formal procedure

There is no formal procedure for carrying out the loan transfer process and this is deliberate. The Anand Sinha Committee that was set up by the RBI to look at issues surrounding consumer service briefly touched upon the balance transfer issue. However, no action has been taken, yet.

To avoid hassles, most customers prefer to stay with the same bank, as long as they are allowed to switch to a lower cost loan by paying a fee.

There are several taxes to be paid while buying different properties. What are the legal taxes that a buyer for home has to pay on the purchase of a home? Here is a sum-up to the types of the taxes and duties payable by the buyer.

Apart from the cost of the house, a large chunk of net home cost consists of taxes and duties. The purchaser of a home in India has to primarily bear the burden of four duties payable at the time of purchase of a home. They are –Stamp duty, Value added Tax or VAT, Service Tax and Registration charges. The amount of Stamp duty, VAT and registration charges may vary from state to state but the rate of Service Tax is common throughout the country as it is levied by Central Government.

 Stamp duty

Stamp duty is payable to the state government. Payment of this duty denotes the legal status of the transaction. A sale agreement that is not appropriately stamped, is not acceptable as confirmation in the court of law.

Value-added tax (VAT)

VAT is typically levied on the sale of goods and is applicable for house property, as it involves the transfer of ownership rights from the seller to the buyer. It is pertinent to note that VAT is applicable, only in the case of under construction properties.

Registration charges

The agreement executed between the buyer and seller (owner/developer) of a house property, should compulsorily be registered, as per the Registration Act. If the agreement is not registered, it is not admissible as evidence in a court of law.

Service tax

Service tax is payable to the central government. This charge is only applicable for under construction properties. Service tax is charged at a specific rate on the basic cost of the property (cost of land and construction) and at a different rate on other cost items, such as preferential location charges, floor rise charges, initial maintenance charges, club house, etc.

Who should pay these charges?

Payment of stamp duty and registration charges is the responsibility of the buyer. However, due to poor market conditions in recent times, some developers have offered to bear this cost. With respect to service tax and VAT, it is the responsibility of the developer to collect it from the buyer and deposit it with the concerned department.

If the stamp duty and registration charges are not paid, the registration procedure itself will not be complete and therefore, the property would not be legally transferred in the name of the buyer.

Are taxes the same for all classes of homebuyers?

According to experts, most of the above taxes and charges are applicable on a similar basis, to all categories of home buyers, except for service tax. The service tax brackets are as follows:

• If the value of the house property is more than Rs 1 Crore, then the service tax chargeable is 4.50% on the sale consideration and 15% of floor rise and other charges.
• If the value of the house property is less than Rs 1 Crore, then, the service tax chargeable is 3.75% on the sale consideration and 15% of floor rise and other charges.

From a tax perspective, the following points are important for homebuyers:

• In the case of an under-construction property, all the taxes are applicable.
• In the case of ready-to-move-in homes, where the buyer is buying from a developer and the occupancy certificate and completion certificate have been received, service tax is not applicable.
• In the case of ready-to-move-in homes, where the buyer is not buying from a developer, service tax and VAT are not applicable.

Owning a home is becoming a very costly affair these days. A large amount is required to finance a house purchase. Though, the buyer will venture into house buying only when he has a significant corpus to substantiate his purchase. Home apart from being a basic necessity of human being is an object of his endeavor.

Buying a home has become easier these days courtesy affordable home loans from Banks and financial institutions. An easy paperwork procedure and sound bank statement ensures a home loan to the borrower. The set of documents required by the financial institute differs from lender to lender. But there are some mandatory papers that every lender will ask for. A short synopsis of documents required for a home loan application is given below to time and effort of the borrower.

Home loan application form

This is the document that records name, address and other personal details of the applicant. If there is more than one applicant for the loan the same requirement is to be fulfilled by co-applicant The photograph of the applicant and those of co-applicants are mandatory too. The application for the home loan is to be submitted with processing fees, thus, it is advisable to the applicant to avoid filling multiple applications, as the accompanying fee is not refundable.

Applicant’s Identity and address proofs

Lenders generally ask for the copy of any one or all of these documents such as PAN card, valid passport, Aadhar card, driving license, and identity card issued by any government department or employer and Voter card for identity and address proofs.

Income Authentication proofs

The lender will always establish the ability of the borrower about his ability to repay the loan. The home loan eligibility of an applicant is determined only on the basis of his income. For salaried persons, lenders generally ask for the Form No 16 and/or a copy of his income tax return with the computation of the total income. The lender may also ask for the applicant’s latest salary slips, to ensure that he is still working with the same employer and that his income has not undergone any negative change.

Self-employed people

For self-employed people, lenders usually ask for the last three years’ income tax returns with the computation of total income. The bank may also demand copies of audited profit and loss statements and balance sheets, for the last three years. In case the accounts are not audited, you may have to get these documents certified by a chartered accountant. For self-employed professionals, the lenders will also insist on proof of educational qualification. In both cases (salaried and self-employed) the lending institution will also ask for copies of the bank statements where your salaries are credited or your business transactions take place, to verify the authenticity of your income.

Documents pertaining to the property

It is not necessary for you to identify the property, before making an application for home loan. Ideally, the loan application should be made before you identify a property. Doing so will help you to sort out any issue pertaining to eligibility, whether it is related to the quantum of the home loan, or any incorrect information related to your credit score or credit history.

Once you have identified the property that you intend to purchase, you will have to submit the documents related to the property. If you are buying a resale house, you will have to provide the copies and originals of all the documents constituting the chain, from the first buyer to your present seller. This will help the lender to establish that the property is not already mortgaged. In case the property is in a cooperative society, you may have to furnish a no-objection certificate from the society.

If you are buying the property from a developer, you will have to provide documents that establish the clearances obtained from the local authorities, the approved building plan, documents about ownership of the land, legal opinion about the title of the land, etc.

Every transaction of the Real estate needs to get registered for the sake of security for both buyer and seller. Registration of property is not only legally mandatory but is a document of terms & conditions and the amount at which the deal was affected. Registration of property is also necessary as it is a document of contract and registration of a contract is beneficial to all parties of the contract.

The law for registration of documents is provided in the Indian Registration Act. This legislation provides for the registration of various documents, to ensure conservation of evidence, prevention of fraud and assurance of title.

Section 17 of the Registration Act, 1908, mandates registration of all transactions that involve the sale of an immovable property for a value exceeding Rs 100. This effectively means that all the transactions of sale of immovable property have to be registered, as no immovable property can be purchased for merely Rs 100. Likewise, all transactions of a gift of an immovable property, as well as the lease for a period exceeding 12 months are also mandatorily required to be registered.

In special cases, when a party to the transaction cannot come to the sub- registrar’s office, the sub-registrar may depute any of its officers to accept the documents for registration, at the residence of such person. The term ‘immovable property’ includes land, buildings and any rights attached to these properties.

Procedure and documents required

The property documents that need to be registered should be submitted to the office of the Sub-Registrar of Assurances within whose jurisdiction the property, which is the subject matter of transfer, is situated. The authorized signatories for the seller and the purchaser have to be present along with two witnesses, for registration of the documents.

The signatories should carry their proof of identity. Aadhaar Card, PAN Card, or any other proofs of identity issued by a government authority are the documents that are accepted for this purpose. The signatories representing someone else will also have to furnish the power of authority.  In case a company is party to the agreement, the person representing the company has to carry adequate documents, like a power of attorney/letter of authority, along with a copy of the resolution of the company’s board, authorizing him to carry out the registration.

You need to present the property card to the sub-registrar, along with the original documents and proof of payment of stamp duty. Before registering the documents, the sub-registrar will verify whether adequate stamp duty has been paid for the property, as per the stamp duty ready reckoner. In case there is any deficit in the stamp duty, the registrar will refuse to register the documents.

Time limit and fee payable

Documents that have to be mandatorily registered should be presented within four months from the date of their execution, along with the requisite fee. In case the time limit has expired, you can make an application to the sub-registrar for condonation of the delay, within the next four months and the registrar may agree to register such documents, on payment of a fine that may be up to ten times the original registration fee. The registration fee for property documents is 1% of the value of the property, subject to a maximum of Rs 30,000.

Earlier, the documents that were presented for registration, would be returned to you after a period of six months. However, with computerization of the offices of sub-registrar, the documents (bearing the registration number and proof that the documents have been registered by the registrar) are scanned and returned to you on the same day.

Impact of non-registration

Failure to register the purchase agreement of a property could put you at a high risk. Any document that is mandatorily required to be registered but is not registered, cannot be admitted as evidence in any court of law.

Prices in real estate are subject to the location of the property. The more posh the address is more is the cost of land, The quality of infrastructure is also a crucial factor in the determination of property’s prices. There are many more price determinants that decide the cost of the property. Here we shall take a review of such elements.

As discussed above the prices of land in a posh locality are subject to the demand of the seller. Here, the buyer has very fewer chances of price negotiation. Resultant, buyers opt for an upcoming location that offers lower rates. But, buyers should also consider the potential and price appreciation, habitability of the area and its infrastructure before making an investment.

Rapid urbanization has led to the emergence of new suburbs and peripheral areas around metropolitan cities. These newly-created residential markets have their own set of development types (apartments, row houses, villas and plots), price points (affordable, mid, premium and luxury) and buyer-investor categories. However, the moot question is whether these new destinations offer a safe option for property investment.

The biggest advantage of buying a house in an upcoming residential destination is the relatively affordable price of units. Often, apartment projects in an upcoming region, come with inaugural discounts to lure early investors. Prospective buyers can strike a good bargain here. However, investing in such locations also has its own set of risks.

Negligible appreciation for a few years

An upcoming area is likely to lack certain necessary basic infrastructure. Hence, appreciation in property prices may be zero or negligible for several years. There could be multiple reasons for this, such as delay in the construction of a connecting road or surrounding infrastructure. It is a big risk for those putting in their money. Usually, it is advisable to put money into established properties and localities.

Construction hassles and habitability

An upcoming region where a number of developers are constructing their projects may not be habitable for several years. While apartments may be ready, the constant movement of heavy construction vehicles, dust and poor road conditions may make such areas inhabitable. A Person who buys  a flat in an upcoming area always plans to shift only after one or more year due to these problems, even though his flat is ready. While a few towers in the project are ready for possession, towers and projects nearby, are still under-construction. Thus he prefers to live on rent for such period.

Out of the many developers in an upcoming area, very few developers complete and offer possession to buyers. Many real estate brokers state the upcoming areas will take around 4-5 years to have the quality basic infrastructure, similar to developed areas.

What should you do?

While there are risks and challenges, there is a price advantage when it comes to making a real estate a viable investment in an upcoming area.If you are undertaking a property search, weigh your options before investing in an upcoming suburb that is far away from established localities. While the house may cost less, you may have to spend more on your daily commute.

Also, check the proximity to amenities and other developed localities. Localities that have a supermarket, a school, access to a major expressway or a train line, and local shops within a four-five kilometer radius, are likely to become future hubs for homeowners.

Provident Fund is a corpus on which every salaried individual relies upon to meet contingency and big expenditure. Although a majority of the salaried individual have a provident fund account, only a few are aware that they can withdraw from this fund, for various purposes connected with a house.

For purchase of a house or plot or for construction of a house

Under the Provident Fund scheme, an employee can withdraw money from his provident fund, after completion of the contribution of five years, for the purchase of plot and/or construction or purchase of a house. The loan can also be taken for the construction of a house on the plot of land owned by you or your wife, or jointly by both. The loan amount would depend on the purpose for which you are taking the loan. For purchasing a plot, the loan available shall be restricted to 24 months’ basic salary and dearness allowance (DA), subject to a maximum of the lower of either the balance in your provident fund account or the cost of the plot.

In case you want to avail of the loan, to purchase or construct a house, availability shall be enhanced to 36 months of basic salary and DA, with the maximum again subject to lower of balance in the provident fund account or cost of the house. It is pertinent to note that the property cannot be purchased jointly with anybody else, except your spouse, for withdrawing from the provident fund.

In case you withdraw from your provident fund account, the construction should begin within six months and be completed within 12 months of the withdrawal. In case you intend to buy a ready house, the purchase also needs to be completed within six months. The withdrawals for purchase/construction can be made in one or more installments, depending on the circumstances.

For addition/improvement of the house owned by self and/or the spouse

You are also entitled to withdraw money from your provident fund account, for making additions or improvements to a residential house that is owned by you or your wife or jointly. This withdrawal can only be availed, after five years from completion of the house. It is not necessary that the house for which you want to carry out the improvements should be the same, on which you had availed the withdrawal facility. This withdrawal for improvement can be availed, even if you have not availed of the withdrawal facility for purchase or construction of the house. The amount that you are eligible to withdraw, for improvement or addition, is restricted to 12 months’ basic salary and DA, subject to lower of the balance relatable to the employee’s share of interest in your account or the cost of such improvement.

You can also avail of the withdrawal facility again, only after 10 years from the first withdrawal, subject to the same eligibility criteria, vis-à-vis the amount.

Advances for repayment of housing loan

The provident fund scheme allows you to avail of the withdrawal facility, for repayment of the outstanding balance in a home loan taken by you or your spouse for the above purposes. The advance amount cannot exceed 36 months of basic salary and DA. This withdrawal can only be made for loans, availed either by the members or by the spouse, from specified entities like governments and state government, registered co-operative society, state housing board, nationalized banks, public financial institutions, municipal corporation, or any development authority, for the purchase of a house.

So, when you are on the outlook for the options for financing a new house purchase, construction on plot or repair, renovation or alteration to existing home which is in your or spouse’s name, then, Provident Fund is a viable option which one can explore.

The real estate sector in India got a fillip when the process of home loans became liberal and easy. This liberalisation has helped cherished dream to own a home became a reality for a common Indian. Now, as we all know that upon fulfilling certain parameters one is entitled to a home loan by Banks and Financial institutions. The applicant has though to go through a very strict scrutiny by loan giving institution but there are cases when the loanee defaults in servicing of the loan and when the banks or financial institutions take over the property for recovery of the loan then it is termed as distressed property.

Distressed properties are rare, as less than 5% of Indian borrowers default on their obligations, for periods long enough to warrant a bank auction. Property owners who have only a few cycles left to repay would prefer to restructure the loan rather than default on payment. The base price for the auction is determined by the loan amount outstanding – the further along the owner is in the loan term, the lower the base price.

Information, regarding the auction of distressed properties, can be obtained from banks’ advertisements in leading local newspapers, the schedules/annexures in banks’ annual reports, and from property consultants with expertise in the location.

When a bank places a property for auction, one needs to read the bid document carefully. This document contains all the facts covering the legal title and responsibility for pending dues. Generally, the property is sold on an ‘as is where is’ basis and till the date of the auction, dues are cleared.

Buying through a bank auction

The bank will first release an advertisement, setting a date for the auction and invite bids. It will then collate the offers and finally decide whom to sell the property to. It can be a cumbersome process if the buyer requires a home loan too. Moreover, the bank has to conduct a due diligence search on the incoming buyer, draw up contracts to transfer the property and obtain a go-ahead from the owner.

The bank will also obtain an NOC from the society before the auction. The society will highlight any liabilities that the new owner will have to bear and the same will be mentioned in the bid document. Many societies and their members have first right of refusal, or its members can match the highest bid to buy the property.

Buying directly from the owner

In this case, the owner and the new buyer would agree to the commercial terms, exchange a token deposit and then complete the bank process before signing the agreement and taking possession. The entire process can take two to three months. The property’s price will be higher than in a bank auction, as the seller will try to recover his/her initial investment.

Precautions

Buyers must aim for a win–win for the bank and the original owner, to minimize the scope for a legal challenge. They must understand the history of the property under discussion and also get any historical papers for title due diligence.

Risks

• It is difficult to know of all the distressed assets available.
• In an auction, one has no way of knowing what the highest bid will be, so there is no guarantee of securing the property.
• The original owner may sue the bank, resulting in legal delays for the buyer.

Opportunities

• Properties are priced lower than existing market rates.
• Potential to secure a property in a premium location.
• Generally, there is less need for legal due diligence, as the bank would have inspected the documents before giving a loan.

Like every deal going for a distressed property is an affair that has its own pros and cons. It is advisable to go through them before going through the deal.