Why a vacant land/empty plot : From an Investment Perspective, a vacant land/plot is always a safe bet, not just in the long term, but also in the short term. If you are dreaming about moving into an Independent House in some locality (be it a colony or a private layout) 5 years down the lane, then a piece of land in that locality is exactly what you need. Further, if you buy it now, you get it a far cheaper price that you would 5 years later. Even if, you don’t have any plans to construct a house of your own on your land, it is still a good investment, as Real Estate Prices continue going upwards and on a resale, you can expect handsome gains.
Now that it is clear, one should own a piece of land, how do we go about financing it ?? What if you need to purchase a land for constructing your sweet home ?? Not just independent home, one can also purchase it for investment purposes. There are number of public and private sector banks and other non-banking financial institutions who give loans for land that is Plot Loan. This blog post lists out all relevant documents and the process involved in applying for a plot loan.
- You should have completed 21 years of age
- You should have a regular income either through your job or a business, which can be validated by banks on the basis of Income Taxes or Revenues.
- Maximum 80-85% of the cost of the plot, depending on which banking/financial organization, you chose for your loan
- May vary depending on the loan eligibility of the customer
Loan Tenure: It varies from bank to bank but in most of the cases, it is 10 to 15 years. However, some banks, especially the private ones, do allow the tenure to be less than or equal to 5 years, but here again, your tenure is dictated by your current income. Most of the financial institutions are somewhat reluctant in granting a loan-tenure < 10 years, so you may want to check this out with bank officials.
Process for plot loan: At first you have to fill an application form with passport size photo for applying the loan in related bank and submit it with proper documents. Bank will charge you 1-2% as processing fees.
Documents required by bank for land loan:
1. Documents related to customer:
- Two passport-size photos , PAN Card, Passport, Employee Id (if you are a salaried individual), visiting card
- Residential Address Proof : Ration Card, Telephone Bills (Land line, some banks only accept bills of government-run telecom operators’, like BSNL, MTNL etc), Mobile Bill (Postpaid) or letter from employer, confirming your residence address.
- Last 4 months payslips along with latest CTC (Cost To Company)
- Appointment letter, relieving letter/experience letter(if your present employment is less then 3 years).
- Form 16 for last 2 years along with acknowledgement from IT .
- Bank Statement of all account for 6 months).
- One cheque from salary account for processing fees.
- Qualification proof.
2.Documents related to plot:
- Mutation Register Extract
- Sale Deed
- Encumbrance certificate
- Document/Title deed in the name of the vendor/buyer
- NOC from the State Pollution Control Board
- Endorsement from the office of the competent authority confirming that the land is free from tenancy claims.
- Tax receipts for taxes paid by the owner of the plot of land.
- Layout plan, if it is a private layout
- Land record for the plot of land
There is some bad news in the offing for all Expats/International Workers, who are currently employed in India, by the EPFO(Employees Provident Fund Organization), which handles provident and pension funds for the organized sector employees in India. The existing norms have been tightened a bit. Earlier, contribution to PF (Provident Fund) and EPS (Employees Pension Scheme) was 12% of the monthly pay, this contribution was made mandatory by Indian Government in 2008. Withdrawals from these PF (Provident Fund) were permitted at the end of an expat’s employment in India. But according to these new regulations, now Expats/International Workers would be permitted to withdraw their accumulated balance only after they turn 58. Now, withdrawals are permitted only in case of Permanent Disability and Total Incapacity to work or in case of these suffering from three major diseases, Cancer, Leprosy and Tuberculosis.
However, an exemption has only been made in case of employees from three countries, Belgium, France and Germany, with which India has signed Social Security Agreements. Further details are available at:
Posted in Finance
Tagged Belgium, Employees Provident Fund, Employees' Provident Fund Organisation of India, Employment, EPFO, Expatriate, France, Germany, India, International Workers, Pension, PF, Provident Fund
Whenever we think of income tax, the first thing that immediately comes into our mind is how to save it !! One of the best options for Saving Income Taxes comes under Section 80C.
What Is Section 80C?
It is an investment option to save the tax. Government has specially promoted it for long term savings.
The maximum limit of Rs 1 lac can be deducted from your income under Section 80C. However, there is a provision for additional Rs 20,000, solely reserved for Infrastructure Bonds. In this way if you are in highest tax bracket of 30% and you have invested upto Rs 1 lac under section 80C then you are saving Rs 30,000. For example if your salary is Rs 16 lacs per annum but you are investing Rs 1 lac in 80C then your taxable income will be Rs 15 lacs only. Even if you invest more than 1 lac in 80C, you can show only 1 lac as investment in 80C .
Following investment options are eligible for Section 80C deduction.
- Provident Fund (PF) & Voluntary Provident Fund (VPF)
- National Savings Certificate (NSC)
- Infrastructure Bonds
- Public Provident Fund (PPF)
- 5-Yr bank fixed deposits (FDs)
- Pension Funds – Section 80CCC
- Senior Citizen Savings Scheme 2004 (SCSS)
- 5-Yr post office time deposit (POTD) scheme
- NABARD rural bonds
- Life Insurance Premiums
- Home Loan Principal Repayment
- Stamp Duty and Registration Charges for a home
- Children’s tuition fees.
If your Taxable Income is Rs.700000 and your yearly home loans principal repayment is Rs.40000 and you don’t have any other investments, then your Taxable Income for that financial year is Rs.700000 – Rs.40000 = Rs.660000.
If your Taxable Income is Rs.700000 and your yearly home loans principal repayment is Rs.100000, then your Taxable Income is Rs.700000 – Rs.100000 = Rs.600000.
If your Taxable Income is Rs.500000 and your yearly home loans principal repayment is Rs.140000, then your Taxable Income is Rs.500000 – Rs.100000 = Rs.400000. Because you can exempt maximum of one lac under this section.
So the overall conclusion is the main purpose of 80C is to encourage everybody for long term investment.But there are number of investment options under 80C so we should select the investment options very carefully. Like for younger age person, we should invest more in Market Linked Investment Avenues because by taking risk we can earn much money. On the other hand, for old aged person we should invest more in Fixed Income Investment where there is little risk.
Posted in Finance
Tagged 80C, Income tax, Income Tax Exemption Under Section 80C, Internal Revenue Service, Investment, Itemized deduction, POTD, Section 80C, Tax, Tax exemption, Tax Exemption Under Section 80C, Taxable income, TurboTax, United States
To take a home loan is a great commitment and one classic dilemma that all home seekers face is ,whether to opt for Fixed Interest Rate Loans or Floating Interested Rate Home Loans ?? Should you pay more premium in Fixed Interest Rate Home Loans or should we enjoy the changes to interest rate owing to fluctuating market in Floating Home Loans ? Should you ensure peace of your mind by opting for fixed home loans or take a risk by going for Floating Loans ?? These are some of the classic questions, most home-buyers have. This blog-post tries explaining the Pros and Cons for both, Fixed Interest Rate as well as Floating Interest Rate Home Loans.
So the first thing is to understand what is a Fixed Home Loans and a Floating Home Loans ??
Fixed Home Loans:
As the name suggests, we repay the loan amount at fixed interest rate with fixed EMI (Equated Monthly Installment). Interest Rate remains constant during the entire loan-tenure and does not change with market fluctuation.
Pros Of Fixed Home Loans:
- A rise in interest rate will not affect your loan repayment amount or your monthly EMI (Equated Monthly Installment)
- It allows you more freedom and peace-of-mind to plan your financial liabilities accordingly, as you have to pay a fixed EMI, even though market (and hence interest rates) could be fluctuating. Thus it also gives a sense of financial security.
Cons Of Fixed Home Loan:
- The interest rate for Fixed Home Loan is usually 2 % more than the interest rate of Floating Home Loan for same tenure.
- If the interest rate in market decrease by any chance, Fixed Rate Home Loan borrowers will not get any benefit out of it.
Floating Home Loans:
It is also called Adjustable Rate Home Loans. In this scheme, the interest rate is dependent on market and fluctuates according to economic situation in the country.
Pros Of Floating Home Loans:
- If interest rate in market is reduced,you will get immediate benefit of it and you have to repay lesser loan amount than earlier.
- Floating Rate Home Loan is availed at lower interest rate than Fixed Rate Home Loan.
Cons Of Floating Home Loans:
- If interest rate rises, the borrower has two options : The first one is to increase the EMI, keeping the tenure constant or to keep the EMI constant, thereby increasing the tenure. Irrespective of which option you choose for, you are essentially shelling out more money from your pocket.
- There is always an element of uncertainty surrounding your loan amount, especially during volatile market scenarios. So financially you run the risk of repaying an amount, more than you may originally have planned for.
The first thing that we should keep in mind is, this is not a one time decision whether to go for Fixed Rate Loans or Floating Rate Loans. Most of the banks and financial institutions allow their customers to change it afterwards, if they want to. So if you are having a Fixed Interest Rate Loan, you can switch to Floating Interest Home Loan and vice-versa. But, it is not free and there is a cost associated with the same, So it is always better to take a thoughtful decision at the start i.e, at the time of applying for the loan. Try to compare the interest rate that your Bank/Financial-Institution is offering for Fixed and Floating rate home loans and weigh it against your loan-tenure. If you are going for a long tenure and don’t want to take any risk, then a Fixed Rate Home Loan is recommended. But if you go for short tenures, then you should opt for Floating Rate Home Loans. In the short term, interest rates may not fluctuate much, so paying a 2% (or more) premium for a Fixed Rate Loan is not a very good idea. At present, over 90% of the home loan borrowers opt for Floating Rate Home Loans.
Posted in Finance
Tagged Business, EMI, Financial Services, Fixed interest, Fixed Interest Rate, Floating interest rate, Home Loan, House Loan, Interest rate, Loan, Mortgage loan
Festive season has come, but the great reason for our happiness is that the ICICI Bank which is country’s largest private sector lender, has come into festive mood and introduced a 1 year and 2 year fixed cum floating interest rate scheme for home loan.
The new ICICI schemes at a glance:
Fixed Rate of Interest (%)
Upto 25 lakh
10.50 – 1 yr
10.75 – 2 yr
25 – 75 lakh
11.00 – 1 yr
11.25 – 2 yr
Above 75 lakh
11.50 – 1 yr
11.75 – 2yr
The current base rate for ICICI bank home loan is 10% but the problem for customer is it’s increasing day by day, so these both schemes are very lucrative.
1 Year Scheme:
In this scheme, Interest Rate will be fixed for first 1 year, after completion of which which it will be same as current market rate. Interest rate also depends upon the home loan amount. For loan amount up to 25 lakhs the fixed rate of interest is 10.50% and for 25 to 75lakhs the interest rate is 11% whereas for above 75 lakhs loan amount it is 11.50%.
2 Year Scheme:
It is similar to 1 year scheme. In this the interest rate for loan amount up to 25 lakhs is 10.75 % for 2 year and 11.25 % for 25 to 75 lakhs whereas it is 11.75 % for the above 75 lakhs.
If we compare the interest rate across both these schemes, interest rate is more than current market rate, but we should also keep in mind that, rates are not steady and in fact are increasing gradually, so Fixed Interest Rate will help you save your money.
But some financial advisor as Suresh Sadagopan, principal planner, Ladder7 Financial Advisors has said “Borrower should definitely go for One Year fixed Rate Scheme, as there will not be any significant shift of rate cycle in the next one year. However, the Two Year Scheme does not look very lucrative for a home loan buyer. Rates may fall below fixed rates in next two years, as rates are expected to come down after a year, after witnessing a year of unprecedented interest-rate hikes”
So celebrate your festival and save your money by availing these attractive Home Loan Offers 🙂