When
you think about investment, the very first thing that probably comes to mind is
owning a home. The property is playing as a hedge against the stock market.
However, while the real estate has become a popular investment vehicle over the
last 50 years, buying and owning brick and mortar is a lot more complicated
thing than investing in equities and bonds. In this blog, we'll give you few
valid reasons to invest in a property.
Buying
real estate is widely considered as a safe bet by Indian investors. Like every
other market, real estate market too has its highs and lows. For citation,
between 1988 and 1994 the real estate market had boomed, and the prices for
most of the properties went up by over 10 times during this period.
Recently,
the market has witnessed a huge amount of decline in the number of people buying
residential properties.
The most important reasons for this is the fact that property prices remain
high as compared to the average income of individuals.
There
is end user interest, but what our buyers are waiting for is reasonable and
affordable prices.
Now,
the government has announced two new subsidy slabs to stimulus our real estate
market.
· The slabs now can apply to loans with a tenure of up to 20
years.
· Income bracket of homebuyer will now decide their subsidy at
different rates
If
you are earning up to Rs 18 lakhs per annum, buying your first house will cost
nearly Rs 2.4 lakh less as the government will contribute a part of your home
loan interest. At present, this contribution is available to only those earning
up to Rs 6 lakh per annum.
The
government has declared two new subsidy slabs to induce the real estate market
and achieve housing for all by 2022. The slabs will apply to loans with a
tenure of up to 20 years, as against the limit of 15 years now.
On
December 31, 2016, PM of India, Mr Narendra Modi had announced two subsidy
schemes under Prime Minister Awas Yojana (PMAY).
Now,
Homebuyers will get their subsidy at different rates depending on their income
brackets. People who are earning less than Rs 6 lakhs per annum will get a
subsidy of 6.5 percentage points on a principal component of Rs 6 lakh,
regardless of their total loan amount. If they have borrowed money at 9%
interest, they will pay only 2.5% interest on Rs 6 lakh, and 9% on the remaining
amount.
In
the next bracket, people who are earning up to Rs 12 lakh per annum will enjoy
the interest subsidy of 4 percentage points on a principal component of Rs 9
lakh, and the highest income category of Rs 18 lakh per annum will enjoy a
subsidy of 3 percentage points on a principal component of Rs 12 lakh.
The
net benefit for all the three categories over 20-year loan tenure is roughly Rs
2.4 lakh, and the monthly instalment is decreased around Rs 2,200. This subsidy
benefit under PMAY is in addition to the income tax benefits on home loans,
which can go up to Rs 61,800 per annum for someone in the 30% tax bracket.
Under
the scheme for the low-income group people, the government had subsidised
around 18,000 first time homebuyers, at a cost of around Rs 310 crore. A senior
NHB official has also said that the disbursal rate is likely to go up as the
middle-income category has been brought under the scheme.
The
right approach in the current market environment is to invest in home property
projects by reputed developers like Venkatesh Oxy Group in Pune, in growing locations. These developers will
surely deliver the promised quality as well as possession timelines.
With
several big infrastructure projects like from Venkatesh Oxy Group, here is the
opportunity to make yourself lucky enough so that you can enjoy the various
schemes of government.
For
those who wanted to buy homes but were sitting on the fence because of the high
rate on loan interest amount or the one who are hoping for further rate cuts,
this might be the right time to take the plunge.
