Buy Resale Under Construction Property

Resale Under Construction Property

Resale Under Construction Property is most beneficial but least preferred option for a buyer. This is true for buyers who only want to buy Under Construction Property. Recently, one of my clients bought a property from leading builder of Mumbai. Price quoted by the builder was Rs 5999/- psf. Whereas Resale Under Construction Property in the same complex of same unit size was available for Rs 5350/- psf. Despite the direct monetary benefit of approx 9 lakh, my client decided against it. Honestly, i failed to understand the logic. As i keep highlighting that Rate card of a builder is always 10%-25% higher compared to the Market Rates. Builder also knows that rates are artificially inflated, but it is a compulsion for him. He has to create a perception among existing buyers that they have made the best decision of their life by investing in his project. Buyer in the project is getting 15%-20% annual appreciation which is far from reality. The second reason is that he has to adjust the … [Read more...]

How Prepayment Interest is Calculated?

Prepayment Interest

Home Loan Prepayment Interest calculation is one of the grey areas from the borrowers perspective. As the average Home Loan tenure in India is 7-8 years therefore Home Loan Prepayment is very common. Borrower prepays Home Loan as and when he/she receives an annual bonus or on the maturity of the past investment. Instances of overpayment, wrong effective date, calculation of Prepayment Interest etc are common points of dispute with the Home Loan Provider. In my post, Home Loan Prepayment - 5 Important Points, i discussed the general points. Based on the feedback/queries of my readers, i decided to write a post on How the Home Loan Prepayment Interest is calculated? Though the calculation of Prepayment Interest is not a rocket science but the staff of a Bank/HFC fail to explain the same to the borrower. Before we move to Prepayment Interest calculation, it is critical to understand the following points. 1. Monthly Rest: Rest is basically the period at which the outstanding principal … [Read more...]

Atal Pension Yojana – Social Security Scheme

Atal Pension Yojana Details

Atal Pension Yojana was launched by Prime Minister of India Sh. Narendra Modi on May 09, 2015. This scheme was launched along with 2 other insurance schemes i.e. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY). Atal Pension Yojana is a social security scheme. It is named after former Prime Minister of India Sh. Atal Bihari Vajpayee Ji.  The scheme will be launched w.e.f 1st June, 2015. As usual, when i searched internet i found hundred of articles on Atal Pension Yojana which are simply cut, copy and paste of information available on official website. The objective of my post is to give the 360-degree perspective of social security scheme. Trust me you can find much more details on Govt of India's website then what i or any other financial planners can share in 1000 words or so.Why Atal Pension Yojana is Launched? When i was going through deciding phase of my career, i remember there was a maddening craze for Govt Jobs. In fact, … [Read more...]

Property Title Search – Who is Responsible?

Title Search

Bank has done Property Title Search, Why should i waste my money on same?. This was a reply from one of my clients when i suggested him independent due diligence i.e. property title search. Fair enough but can you rely on Bank's Property Title Search?. The answer is Definitely NO. This was proved beyond doubt when today one of my client along with other buyers lost long-fought court case in High Court against one of the leading banks. It is very sad for me as my client is on the verge of losing her lifetime savings and suffered a major financial setback. The case was fought between 3B's i.e. the Bank, the Builder and the Buyer related to Property Title Search. The villain was Defective Property Title. In my post on 10 reasons for Defective Property Title, i discussed possible reasons for the same. This topic was discussed briefly in my earlier posts but after my client's experience, i thought to discuss it in detail with my readers. In the above-mentioned case, the builder sold flats … [Read more...]

Online Income Tax filing is Now Truly Online

Online Income Tax filing

Online Income Tax filing is now truly online, thanks to Income Tax Department. Online Income Tax filing is mandatory if your income is more than 5 lakh during the financial year. Though the tax filing process is referred as Online Income Tax filing, but it is not truly online. Reason being, after Online Income Tax filing, the taxpayer is supposed to send signed ITR-V acknowledgement through Speed Post / Ordinary Post to CPC-Bangalore. I remember standing in a queue for 3 hours to speed post ITR-V acknowledgement. In my opinion, it is not an online Income Tax filing in the true sense. I am filing my returns online from AY 2011-12 even though e-filing was not mandatory that time. All over these years, i used to wonder it will be great if the entire process becomes online. A couple of years back i decided to bypass this painful process of standing in a post office queue. I visited the office of one of the "Digital Signature" provider. As per the process if you digitally sign the income … [Read more...]

Mutual Fund Riskometer – Old Wine New Bottle


The new Riskometer for Mutual Funds is an old wine in new bottle. SEBI (Securities and Exchange Board of India) will replace the existing colour coding system for mutual funds with new riskometer. The new product labelling system will be implemented from 1st July, 2015. If any fund house would like to implement the new riskometer before 1st July, 2015 then they are free to do so. Riskometer will be applicable for both old and new mutual fund schemes.Existing Colour Coding System Mutual fund investors must be familiar with the following colour coding pictureIt basically shows the risk level associated with a particular mutual fund scheme. Normally you will observe that Debt Mutual Funds with low risk are labelled as BLUE. Balanced funds and Monthly Income Plans with moderate risk are labelled as YELLOW. Whereas all Equity funds with high risk are blanketly labelled as BROWN. Its a no brainer and existing colour coding system does not add any value to the investor. I will … [Read more...]

Revised Guidelines on Home Loan from HFC


It's all over for small HFC's (Housing Finance Companies). As i highlighted in my posts Home Loan from Housing Finance Company and Subvention Schemes that higher Loan to Value ratio and Subvention schemes were 2 critical USP's of the HFC's. In comparison to banks, potential borrowers preferred HFC / Housing Finance Company because of higher home loan disbursement. It was also beneficial for builders as HFC's were disbursing substantial Home Loan amount upfront to the builders under subvention schemes. RBI already banned subvention schemes for banks. HFC's are governed by NHB therefore they were still running such schemes. Disbursement under such scheme was not linked to Construction Linked Plan. As i always mentioned in my posts that higher LTV and special schemes were not good for the credit health of the borrower. It exposed them to higher credit risk thus result in payment default. On April 08, 2015 NHB (National Housing Bank) issued 2 very important guidelines through circular … [Read more...]