What REITs (Real Estate Investment Trusts) Mean For Indian Real Estate

Kishor Pate 2Kishor Pate, CMD – Amit Enterprises Housing Ltd.

The real estate sector in India has been lucrative for savvy investors over the last decade, but it has not been without accompanying uncertainties.

The introduction of REITs (Real Estate Investment Trusts) will open up a platform that will allow all kinds of investors – even those with smaller budgets – to make safe and rewarding investments into the Indian real estate market.

The best thing about REITs is that investors can start with as small a sum as Rs. 2 lakh to secure units in exchange.

The REIT platform has already been approved by the Securities and Exchange Board of India (SEBI) and like mutual funds, it will pool the money from all investors across the country.

The money collected from the REIT funds will subsequently be invested in commercial properties to generate income.

A REIT will need to be registered via an IPO or initial public offering. REIT units, as such, will have to get listed with exchanges and consequently traded as securities.

The SEBI board has kept the minimum asset sizes to be invested in at Rs. 500 crore. However, the minimum issue size would have to be less than Rs. 250 crore.

As with stocks, the investors here would be able to buy the units from either primary and/or the secondary markets.

How does a REIT work?

REIT is a process to generate funds from a lot of investors to directly invest in profitable real estate properties like offices, residential units, hotels, shopping centers, warehouses and more.

All trusts with REIT will be listed with stock exchanges as they would be structured like trusts. Consequently, REIT assets will be held with independent trustees for unit holders / investors.

Role of the trustees

Trustees with REIT have defined duties which typically involve ensuring compliance and adherence to all applicable laws that protect the rights of the investors.

The objective of REITs

A REIT’s objective is to provide the investors with dividends that are generated from the capital gains accruing from the sale of the commercial assets. The trust distributes 90% of the income among its investors via dividends.

Apart from minimum entry level, a REIT is supposed to provide diversified and safe investment opportunities with reduced risks, and under a professional management to ensure the maximum return on investments.

The advantages with REITs include:

  • Income dividends: 90% of distributable cash at least twice in a year
  • Transparency: REIT will showcase the full valuation on a yearly basis and will also update it on a half-yearly basis
  • Diversification: According to the guidelines, REITs will have to invest in a minimum of two projects with 60% asset value in a single project
  • Lower risk: At least 80% of the assets will have to be invested into revenue-generating and completed projects.

The remaining 20% of the properties that include properties like under construction projects, equity shares of the listed properties, mortgage-based securities, equity shares that derive a minimum of 75% of income from Government securities or G-secs, money market instruments, cash equivalents and real estate activities.

The REIT concept has been in the news for some time now. However, the real estate regulations rolled out so far have not quite helped bring them to Ground Zero in India as yet.

REITs’ exemption from tax on the distribution of dividends would make it much more attractive for investors.

According to a recent report by Cushman & Wakefield, commercial properties in India that are ‘REITable’ investment opportunities are between $43 billion and $54 billion across the top cities.

Are REITs more attractive than actual property purchase?

Investing in REIT can be compared to investing in Gold Bonds. Indians are partial to buying physical gold rather than in Gold Bonds, implying that having one’s own investment in property will always provide Indians greater satisfaction than mere paper investments.

The Indian property market is now almost stabilized and it is the right time to buy self-owned homes. While it is human tendency to wait and watch, the bottom of the market cannot be fathomed accurately at the best of times.

At the end of the day, REITs are investment instruments and not a means to acquire actual property – which is always high on every Indian’s wish-list.

A budget that clearly favours purchase decisions for first- time home buyers and is a step closer to the Prime Minister’s mission to provide Housing for all by 2022 is in place. 2017 is certainly the year to make home ownership a reality.

About The Author

Kishor Pate, Chairman & Managing Director of Amit Enterprises Housing Ltd. is the driving force behind one of the most successful real estate development firms in Pune and beyond.

Apart from its signature luxury projects like Montecito in Sahakar Nagar and other premium gated townships, AEHL has also launched highly successful affordable housing projects like Astonia Classic and Colori in Undri and the Mediterranean-style township Astonia Royale in Ambegaon.

 

Reaction To Union Budget 2017-18

Kishor Pate 2Kishor Pate, CMD – Amit Enterprises Housing Ltd.

The Union Budget has announced that 1 crore rural houses will be created by 2019, and the outlay for rural housing under PMAY is Rs. 23000 crores from the previous Rs. 15000 crores.

This will help address the housing needs of the homeless and those living in ‘kachha’ houses in the rural areas, and potentially help reduce pressure on urban areas if it is in conjunction with employment generation

The total allocation for infrastructure is a whopping Rs. 396135 crores in 2017-18. This is very good news for the real estate sector, as the correlation of infrastructure with real estate growth is a well-established fact.

Affordable housing has finally been given infrastructure status. This will mean cheaper loans for developers of budget housing and significantly boost the Government’s target of Housing for All by 2022.

The Affordable housing has seen a significant change in the Government’s existing scheme, with the qualifying size requirements now changed from built-up area to carpet area of 30 sqm and 60 sqm for projects within the municipal limits of the large 4 cities.

On the all-important front of personal income tax, the existing tax rate for incomes between Rs. 2.5 lakh to 5 lakh has been reduced to 5%, and taxpayers in other categories will also save Rs. 12,500.

While this will definitely boost the overall consumption story, it, unfortunately, will not have any significant impact on housing demand.

However, the FM did indicate that lending rates are likely to come down in the wake of the demonetisation move. A decline in interest rates would have positive implications on housing demand.

8 Expectations the Real Estate Sector have from Union Budget 2017

Kishor Pate 2Kishor Pate, CMD – Amit Enterprises Housing Ltd.

The real estate sector has been the second biggest employer for India after agriculture, and market estimates suggest that it will grow by as much as 30% in the next decade.

Consequently, stakeholders have high expectations from the 2017-18 Union Budget. Here are 8 such changes that the industry and its stakeholders are unanimously looking forward to:

  1. Income tax relaxation

As of now, the tax deduction limit for home loans is just Rs. 2 lakh, which becomes insignificant when you take into account the high prices of properties in our larger cities.

In Mumbai, for instance, the standard housing price is Rs. 1 crore, so the current tax deduction limit is insignificant for homebuyers in the financial capital.

Apart from extending the tax exemption for home loans to at least 5 lakh, the budget should also introduce concessions on insurance premiums to encourage buyers insure their property.

  1. Increase in HRA deductions for the self employed

Salaried individuals already get HRA (house rent allowance) as a component of their income, and can also claim deductions on it.

However, self-employed individuals are limited to only Rs. 2000 as a maximum deduction on HRA as per the provisions of Section 80GG. The 2017-18 Union Budget should address this dichotomy.

  1. Standardize construction materials

A major reason for increasing home prices is the constantly escalating cost of construction materials like cement and steel.

Standardization of such materials can help reach tax clarity and also make real estate a viable opportunity for investment.

  1. Single window clearances for real estate projects

As per the usual process, real estate projects need to go through a long line of approvals, and this bureaucratic process has been resulting in delayed deliveries.

Single window clearances have been a long-awaited step to reduce these bureaucratic setbacks. Once in place, it can give a major boost to the market.

Union Budget 2017

  1. Simpler tax norms of REITs

Until today, the real estate sector has not benefited from any REIT listings, with the model in its current format still weighed down with multiple taxes.

Taxation for REITs needs to be simplified to allow developers and investors to benefit from REIT listings. It is necessary that the Union Budget 2017-18 recognizes the importance of REITs and provides:

  • Lower taxation on REIT income
  • Reduction/removal of service tax with leased premises
  • Waiving capital gains during transfer of property to REIT
  1. Better GST Clarity

Although the GST (Goods and Services Tax) structure has been declared, stakeholders are eagerly waiting to understand the rates applicable to the real estate / construction industry.

We seek clarifications on abatement schemes, and scenarios when developers use composition schemes and the resultant credit for input tax.

  1. Financial protection with project delays

Currently, the interest deductions associated with self-owned homes has been limited at Rs. 2 lakh. However, for projects under construction, the deductions applicable are just Rs. 30,000. Further, the applicable period for the interest is 3 years, starting from the year that the loan was approved.

This has proved to be a hardship for property buyers and investors. Union Budget 2017-18 should focus on further interest deductions in late deliveries and also amend the period of repayment from the year the possession was due.

  1. Clarification on PMAY beneficiaries

According to a recent announcement by the Union Government, a 3% interest rate is applicable for loans up to Rs. 12 lakh and 4% up to Rs. 9 lakh, as per the PMAY (Pradhan Mantri Awas Yojana) scheme.

The scheme also states that two new income categories have been added to avail higher loan amounts with higher subsidies. We look forward to further clarifications on the definition of these beneficiaries.

About The Author

Kishor Pate, Chairman & Managing Director of Amit Enterprises Housing Ltd. is the driving force behind one of the most successful real estate development firms in Pune and beyond.

Apart from its signature luxury projects like Montecito in Sahakar Nagar and other premium gated townships, AEHL has also launched highly successful affordable housing projects like Astonia Classic and Colori in Undri and the Mediterranean-style township Astonia Royale in Ambegaon.

 

The Advantages of a Pre-Approved Home Loan

Kishor Pate 2Kishor Pate, CMD – Amit Enterprises Housing Ltd.

A self-owned home is the dream of every Indian, and all of us want to see ourselves being able to go in for it one day. When that day comes, the last thing we want is any reason for delay or insecurity to cloud the decision.

This is especially true if one is a first-time home buyer. Obviously, the most challenging and confusing part of the home buying process is the financials.

Confusion here can relate to which the best lending institution is, what type of loan is best and what the conditions are, and what size of home loan one can comfortably pay off over the years of tenure.

However, one of the biggest worries for a first-time home buyer with regards to a home loan is how long one needs to wait for its approval. In this scenario, the best bet for a first-time home buyer is to apply for a pre-approved home loan.

Getting a pre-approved loan means that you have already dealt with one of the trickiest parts of the purchase process, and can now focus your time and attention on finding the best property options available. Pre-approved loans also give you an upper hand when you at the negotiation table with a developer.

Understanding the difference between loan pre-approval and pre-qualification

Pre-approval and pre-qualification of home loans are completely different things. Pre-qualification is more like an educated guess on the part of the bank or lending institution about how big a loan you qualify for.

This estimate or loan eligibility is based on your current earning power, credit score, financial history, and so on. A pre-approved loan, on the other hand, is a written guarantee by the lender that you have secured a loan.

To grant a pre-approval certificate, loan officers will conduct an employment, remunerations and ‘credit worthiness’ check.

This will include collecting all past financial data like loan of credit card repayment history, credit card statements, disposable income, current debts, and more. Generally, all of this would be done using special software.

Home Loan

How to get a pre-approved home loan

The first step towards obtaining a pre-approved loan is finding a lending agency you can trust. It might be one that you know, one that an acquaintance works for, or one that has been reliably referred to you.

While any lenders would conduct an extensive credit check, you must find one that is not only willing to lend to you but also has a good reputation on the market.

Another important thing to check is the rate of interest that will be charged on your home loan. The best agencies will come up with competitive rates and also offer helpful customer service.

In these cases, the loan officer will actively help you out to get the pre-approval, and discuss the type of settlement you would be eligible for given your salary, investments, tax returns, debts, credit score, etc.

How does a letter of pre-approval help?

An important advantage of a pre-approved loan is that you know your spending limit. You are precisely aware of what kind of property you should be searching for. This eliminates from your search properties that you are not eligible for.

Secondly, with a pre-approval letter, you will not have to wait for many of the formalities of property purchase once you come across a suitable option. You have the advantage of being immediately able to book the property using the pre-approval letter. A pre-approved loans also gives you a lot of credibility with builders/promoters, and increases your negotiation power.

Getting a pre-approved loan is the easiest way to buy your dream home in the current market scenario. It is not only assuring but also keeps you within the limits of your affordability – and makes you a highly credible buyer whom any seller will take seriously and extend the best possible deal.

The approval should give you an opportunity to make a choice at leisure, but should not lead to the trap of landing in a circle of indecision and complacency. The pre-approved home loan should be a tool which lets you make a decision when you find a house of you and your family’s choice, and to act on it.

About The Author

Kishor Pate, Chairman & Managing Director of Amit Enterprises Housing Ltd. is the driving force behind one of the most successful real estate development firms in Pune and beyond. Apart from its signature luxury projects like Montecito in Sahakar Nagar and other premium gated townships, AEHL has also launched highly successful affordable housing projects like Astonia Classic and Colori in Undri and the Mediterranean-style township Astonia Royale in Ambegaon.

Wait For The Real Estate Regulator Bill (RERA) Or Buy Now?

Kishor Pate 2Kishor Pate, CMD – Amit Enterprises Housing Ltd.

Across the country, aspiring property buyers are waiting for RERA – or the Real Estate Regulation Act – to be implemented by the States.

Time and again, it has been stated that the consumer must consider the reputation of the builder prior to taking a decision to buy a property/asset which is likely to remain for generations.

On implementation of RERA, only builders with sound reputations will remain in the fray – this probably its most important function in protecting consumer rights and interests.

Once RERA becomes a enforceable law, it will change the ways in which residential housing projects are planned, offered, sold and possessed across India. Property buyers will no longer need to worry about unfair contracts, delayed possessions, non-notified alterations in building plans and other risks.

The aim of RERA is to make real estate purchase simpler by bringing in better accountability and transparency. In doing so, it will also infuse a lot more confidence among buyers – who, at the end of the day, should feel as comfortable about investing in a home as they are about buying gold.

RERA lays forth several ground rules for real estate buying and selling, including:

  • Registration of every real estate project with the appointed tribunal (with some exceptions). Non-registered projects cannot be offered for sale or booked by promoters.
  • Mandatory uploading of project details by the developer on the RERA website, including layout planning and completion schedule.
  • 70% of the advance collected from buyers needs to be maintained in a separate bank account and be used only for the stipulated project construction. These funds cannot be hived off for other purposes – a practice that has contributed majorly to delayed projects in the past. The individual state governments have reserved the power to alter the amount, but the principle is very much in place.
  • Establishment of Real Estate Appellate Tribunals that will handle any issues related to property disputes, with the intention of delivering quick and unambiguous resolution.
  • Setting up of an advisory body to deal with matters related to government-sponsored real estate development.

In one of the most important addendums to RERA, real estate brokers and the way they conduct their business now also fall under its ambit. The days of unscrupulous property agents either acting solely in their own interest or in collusion with developers are now numbered.

In fact, RERA will protect both the buyer and the seller – for instance, it protects developers from non-payment. While the promoter is required to obtain necessary documentation such as the completion certificate, the buyer is liable to be fined for delays in payment. Failure to register the property or comply by other regulations of the Act will lead to hefty fines and even imprisonment in certain cases.

All this may sound too good to be true – and in fact, it is for now because RERA is likely to come into full force from May 2017. All the individual state governments need to get their ‘acts’ together to comply with its requirements and adopt it.

The good news is that they do not have the option of not doing so – the Central Government has amply demonstrated that it is determined to push the Real Estate Regulation Bill through come hail or high water.

The Indian real estate market is currently showing positive signs of revival. Even as smaller builders struggle – now also because of the recent demonetization of larger currency notes – credible developers continue to launch new projects and raise funds to meet the committed completion timelines.

With RERA in place, several not-so-credible developers will go out of business. Buyer will be protected from players with ulterior motives – in short, fly-by-night operators. This will, in turn, infuse a much-needed positive sentiment among buyers and consequently help increase demand.

Increased sales will improve the cash situations of the credible developers that remain after the weeding out, and projects will be automatically delivered in time.

real estate law

Should You Wait For RERA Or Buy Now?

At the current point in time, because of the lower demand seen over the last 2-3 years, property prices across India’s major cities have sunk to incredibly low levels. Buyers have a wide range of options in locations, budgets, amenities and – perhaps most importantly – in developers.

In previous times, buyers with budget constraints could only consider projects by builders with doubtful reputations and questionable business practices. This is no longer the case – today, a home in a quality project by a trustworthy and reputable developer is very much an option even within a modest budget.

RERA will take another year to be implemented; meanwhile, there are other dynamics which are changing on the Indian property market. Reduced pricing coupled with attractive deals in most cities, and the fact that more and more fence-sitting buyers have run out of patience and are coming onto the market with firm ‘buy’ decisions, have kick-started the modest but very real recovery we are seeing on the residential market.

In Pune, we have witnessed a 25% increase in buying activity in high-demand areas like Undri-Pisoli, Ambegaon, Bhugaon and Wagholi in the last 4-5 months alone. In Mumbai, buying activity in Navi Mumbai, Thane and some other relatively affordable areas has also picked up significantly.

What does this mean for property buyers? Very simply – any revival in buying activity eventually leads to increased prices. Such is the immutable law of demand and supply. Given that demand is increasing steadily even now, property prices will begin rising even before RERA becomes a market reality next year.

What Experts Say

Industry watchdogs unanimously agree that there is no scope for current property prices to decrease further. Whatever correction in prices could happen has happened, and developers cannot reduce prices further even if they wanted to – doing so would, in many cases, seriously impact their ability to stay on the market.

In fact, RERA will mean that promoters will be bound by more procedures, and this may increase the cost of their projects – costs which are likely to be passed on to the consumer. In other words, RERA could be instrumental in inducing cost escalations in many cities.

It should be noted that while RERA will ensure that unscrupulous developers and their business practices will be driven off the market, it will simultaneously ensure that builders with sound reputations and impeccable track records will become stronger.

One of the most important intentions of the new law is to support such developers so that they can continue to serve the needs of property buyers in the wholesome and transparent manner which they are known for.

In short, for buyers who have no intention of dealing with any but the most reputed developers, there is no real advantage in waiting for RERA to kick in. If one is working with a reputed developer, the privileges, benefits and safeguards that it will bring already apply today.

Another valid argument against waiting for RERA before buying a property is that that once the Act is in place, it will become mandatory for builders to invest extra time with regulatory bodies to work along the extensive details of construction plans, clearances, approvals and other details related to their new projects. Paradoxically, this will in fact result in delayed deliveries where the opposite effect was actually intended.

Even though many buyers feel that they should wait for RERA to be implemented before buying a flat, the fact remains that there are already many builders with strong reputations and credible market practices.

Buying a property from such a player now instead of later can turn out to be wise decision if RERA results in upward pressure on prices. Also, if one is looking to make the most of current attractive pricing and offers, there is actually no better time than now.

The time and effort spent in taking advantage of the favorable market dynamics existing today will prove to be the soundest investment. The sole proviso is that one should only patronize a reputed developer with a good track record for delivery and construction quality.

About The Author

Kishor Pate, Chairman & Managing Director of Amit Enterprises Housing Ltd. is the driving force behind one of the most successful real estate development firms in Pune and beyond. Apart from its signature luxury projects like Montecito in Sahakar Nagar and other premium gated townships, AEHL has also launched highly successful affordable housing projects like Astonia Classic and Colori in Undri and the Mediterranean-style township Astonia Royale in Ambegaon.

Kishor Pate’s Reaction To Maharashtra Budget 2016-17

Kishor Pate 2Kishor Pate, CMD – Amit Enterprises Housing Ltd.

Maharashtra Budget 2016-17 has taken due heed of the plight of the state’s drought-affected areas with an allocation of Rs. 5282 crore for their development.

This is definitely the need of the hour, as better water management in these areas requires considerable investment by the state government.

With the Rs. 500 crore provisioned for the development of rural road infrastructure across Maharashtra, we can look forward to better connectivity between rural and urban areas.

From a real estate point of view, the allocation of Rs 700 crore towards the state’s share in the Central Government’s Affording Housing for All by 2022 programme is generous and will surely help bridge the housing gap in Maharashtra.

We look forward to the timely and intelligent utilization of these funds towards creation low-cost housing where it is needed the most in the state.

India’s Finance Minister Delivers A Balanced Budget

Kishor PateKishor Pate, CMD – Amit Enterprises Housing Ltd.

We welcome the budget. The fact that the annual housing rent reduction limit has been increased from Rs. 24000 to Rs. 60000 could lead to an almost immediate uplift for rental housing across the major cities. This can also potentially encourage the sentiment for home ownership in the long run.

Also, first-time home buyers have been given the benefit of an additional deduction of Rs. 50000 on home loan interest for loans not exceeding Rs. 35 lakh, where the value of the house is no more than Rs. 50 lakh.

This will result in improved home buying sentiment in smaller cities with lower housing costs, such as Pune. An improvement in sentiment will also be seen in the cheaper far suburbs of the metros.

The approach of the Modi Government is laudable and needs to be congratulated as the Budget is taking care of the interest of the common man.

Real Estate’s Demands From The Union Budget

Kishor Pate 2Kishor Pate, CMD – Amit Enterprises Housing Ltd.

Real estate stakeholders in every Indian city are looking forward to the upcoming financial budget 2016 to see whether it will provide any relief to the sector.

Developers have their own expectations, because positive announcements for real estate buyers made during the budget will help increase the market sentiment, and therefore sales.

The general hope is that the budget will provide cheer to intending home buyers who have been deterred for various reasons.

Make Home Loans More Affordable

The Union Budget should make the rate of interest specific to home loans more reasonable. Currently, the banks are offering interest rates which are still too high.

Paying so much interest has serious implications on the family budgets of most middle-class wage earners. It is not surprising that many of them currently shy away from home loans.

The budget should bring the interest rate on home loans down to between 7.5% to 8.0%. The new government has clearly stated that it wants to make Housing For All Indians a reality by 2022. It is impossible to achieve this goal if home loans do not become affordable to all, as well.

interest-rate-149879_640

Additionally, the home loan interest amount exemption under Income Tax benefit should be increased from the existing limit to Rs. 3 lakh. Further, this exemption should be made applicable for more than single property purchases.

This is not an unreasonable expectation. In the current times and in many cases, a single home is not enough to accommodate all family members. The finance ministry should take due note of this fact and accordingly provide relief for both first home and second home buyers.

Eliminate Multiple Taxation On Property Purchase

The budget should also do away with the multiple taxes involved in the purchase of residential property. As of now, home purchasers are required to pay service tax and value-added tax (VAT) on top of stamp duty and registration charges. Goods and Service Tax (GST) should be introduced in the place of these taxes.

Bring In The Real Estate Regulatory Bill

The real estate industry expects the Budget to finally make the Real Estate Regulatory bill a reality this year, so that the industry has the benefit of an apex body via which all concerns can be addressed transparently and efficiently.

Reduce Cost Of Property Registration

Another expectation from the Union Budget is a reduction in the cost of property registration. Stamp duty and registration costs are as high as 6% in most cases, and this needs to be reduced by a few basis points to aid consumers.

Alternatively, a slab-based approach should be introduced. Stamp duty falls under state government purview, but the Center can nevertheless issue a directive to reduce stamp duty costs.

About The Author

Kishor Pate, Chairman & Managing Director of Amit Enterprises Housing Ltd. is the driving force behind one of the most successful real estate development firms in Pune and beyond. Apart from its signature luxury homes towers and premium gated townships, AEHL has also launched highly successful affordable housing projects like Astonia Classic and Colori in Undri and the Mediterranean-style township Astonia Royale in Ambegaon.

 

RBI Rate Cut Positive, But A Ways To Go

Kishor Pate 2Kishor Pate, CMD – Amit Enterprises Housing Ltd.

The RBI’s big repo rate cut is encouraging, but definitely not a game-changer as yet. The cut in repo rate is magnanimous and bigger than expected, and surely make a difference in sentiment.

However, there is invariably a lag between the directives given by the RBI with regards to lowering lending rates, and banks complying with these directives. Reduced lending rates are critical at this point, and the rate of loan purchases via home loans must pick up significantly to bring about a revival in the real estate market.

This is especially true for cost-sensitive markets like Pune. The leading nationalized banks must proactively take up the initiative of aligning their lending rates to affordability, so that other banks will respond to the need to stay competitive and follow suit.

Important Home Buying Tips For Women

Kishor Pate, CMD – Amit Enterprises Housing Ltd

A decade ago, an Indian woman independent and capable enough to buy her own home was a rare case. However, things have changed today. Latter-day Indian women are very well educated, have good jobs with excellent career growth prospects, and even hold important government or corporate leadership posts.

In any case, they certainly have the ability and confidence to craft their own lives, and are very much able to fulfill their dream of owning a home regardless of whether they are married or not.

In fact, buying a home is fast beginning to figure as a bigger priority for many Indian women than marriage. This is not surprising, since a self-owned home is correctly seen as the #1 security anchor in India – and the best foundation from which to make long-term life decisions.

For women who investigating the market for suitable properties, here are some points to consider:

  • Prepare For The Initial Costs:

First-time home buyers tend to save a considerable while to get a sizable down payment together. However, keep in mind that property purchase involves several other initial investments like government duties, utilities connection charges, transfer fees in the case of resale flats, insurance and taxes.

Apart from your down payment on a home (or your contribution towards a home loan) you need to have an additional fund of 5-6% over the base cost of the property available.

  • Be Confident About Monthly Outgoings:

Anyone eyeing a property purchase should first figure out the monthly mortgage and whether they will be able to afford it. Online mortgage calculators can be helpful, but they will only tell you the value of the principal and associated interests.

There are other monthly expenses involved in home ownership, and these include insurances, taxes, maintenance charges, utilities charges, etc. For working women, it is important that all these amounts put together do not exceed 35 to 40% of their net income.

Do not neglect to figure out your overall cost of living before deciding on how big a home loan you can safely service, and keep in mind that property is not the only investment you should make towards your ongoing financial security. You should also put at least 10% of your monthly income into a retirement plan.

woman buying house

  • Be Realistic And Maintain Forward Focus:

Home ownership is a great step ahead in a woman’s life, and towards independence in your retirement age. But your first home is not necessarily the only home you will ever buy.

Remember that you can always upgrade in the future if required or desired, so there is absolutely no need to buy the biggest-possible flat now. Never compromise your current financial viability by buying a needlessly expensive home.

  • Shop Around Extensively For Home Loans:

When it comes to choosing the right lender, do not go by the recommendations of friends or relatives alone. Do extensive research on the several different lending institutions available to you.

Ideally, you should get pre-approved for a home loan the interest rate should be the most competitive. Remember that as an Indian woman, you are entitled to ask for a lower rate of interest on a home loan – be sure to insist on this benefit.

  • Be Sure Of The Developer’s Credibility:

Every day brings new stories about buyers who have been hoodwinked by unreliable developers. Either the project has been unreasonably delayed, has never even taken off or the delivered property (or amenities and facilities) are grossly different from what was initially promised.

Do not fall into such a trap – no woman looking for the security of home ownership should have to deal with such a setback. Make sure the developer has a strong reputation on the market by doing multiple checks with reliable agents, the home loan company and also on the Internet.

About The Author

Kishor Pate, Chairman & Managing Director of Amit Enterprises Housing Ltd. is the driving force behind one of the most successful real estate development firms in Pune and beyond. Apart from its signature luxury homes towers and premium gated townships, AEHL has also launched highly successful affordable housing projects like Astonia Classic and Colori in Undri and Astonia Royale in Ambegaon.