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Home Loan vs Mortgage Loan: Know the Difference

Posted on by HomeCapital Team

So you’ve decided to buy your first home. Since you don’t quite have the total capital needed to buy a home, you decide to go to the bank to take a loan. At the bank, the attendant introduces you to two types of loans to finance your purchase: Home Loan and Mortgage Loan. Both of them will provide you with the necessary funds to purchase a house. That begs the question, what’s the difference between home loans and mortgage loans. Read ahead to find out.

What is a home loan?

To understand the difference between home loans and mortgage loans, it is important to know what both of them are. A home loan is a financial product that allows you to borrow funds for the purpose of building, buying, or renovating a home. You can usually get up to 70-90% of the value of the house. The rest of the amount is paid as a down payment. The home which is purchased is kept as collateral. Besides that, home loans allow you to get tax deductions and other benefits.

What is a mortgage loan?

In a mortgage, another property is kept as collateral. Mortgages are also called loans against property. The loan given is based on the value of the property. Another difference between home loans and mortgage loans is that you don’t necessarily need to use these funds on the house. You can use this loan on any financial obligation of your choice.

Now that we understand what a home loan and mortgage loan are, let’s dive into the difference between home loans and mortgage loans.

Differences between home loans and mortgage loans

Usage of loan

The biggest difference between the two loans lies in the usage of their loan. If you take a home loan, you will only be able to use the funds on your home. Using capital from the loan on other obligations can result in a breach of contract and attract fines. On the other hand, you can use the funds without any restriction if you procure a mortgage loan.

Loan to value ratio

Another key difference between home loans and mortgage loans is the loan to value ratio. For home loans, you can borrow up to 90% of the total value of the property you want to buy. On the other hand, mortgage loans only allow the borrower to take up to 75% of the property’s market value. Thus home loan allows you to borrow more on the same value.

Interest rates

The interest rates of mortgage loans are quite high compared to home loans. Generally, mortgage loans are offered at an interest rate 1-3% higher than those of home loans. This is because mortgage loans have no usage restrictions. Thus, they act as a sort of personal loan which attracts higher interest rates.

Repayment tenure

When it comes to the period of repayment, mortgage loans have lesser repayment periods. Generally, the repayment tenure of a mortgage loan is up to 15 years. On the other hand, it is up to 30 years for home loans. The longer repayment period allows you to borrow more and split the loan into smaller EMIs.

Processing fees

Similar to interest rates, the processing fee of mortgages is higher compared to home loans. While mortgage loans may take up to 1.5% of the loan value in processing fees, home loans typically only require 0.8-1.2% of the loan as a processing fee.

Top-ups

Top-up loans are additional loans that are mostly only available in mortgages. This allows you to take up additional loans on top of your principal loan without any existing paperwork. However, this is only possible if you’ve taken a loan that is less than the total value of your mortgaged property.

Consider that you’ve taken a mortgage, and you are eligible for up to 70% of your property’s value. However, you’ve only taken a loan of 50% of the value of your property. If you wish, you can easily take another loan for 20% of your property’s value. You may also get this facility rarely in home loans if your lender deems you fit enough for repayment.

Tax benefits

To incentivize home loans, the Reserve Bank of India (RBI) and the Government of India have made several tax exemptions for them. You can claim a deduction of INR 1.5 lakh on a home loan principal under Section 80C. In addition, you can also claim a deduction on the interest under Section 24. No exemptions or tax benefits are provided for mortgages due to their general-purpose nature.

Conclusion

While both the loans can serve the same purpose, their intricacies are vastly different. That is why it is very important to understand the difference between home loans and mortgage loans.

That being said, in both the loans, you have to make arrangements for the down payment yourself. This is where HomeCapital, India’s 1st down payment assistance platform, can help you out. Our interest-free down payment program can help you buy your dream home. We add assistance to your savings that you use towards becoming a homeowner. Taking a down payment loan from HomeCapital will not affect your home loan eligibility either, so you can rest easy.

Why is “smart home design” an important criterion for selecting your new home?

Posted on by HomeCapital Team

What is smart home design? How does it improve your quality of life as well as increases the value of your property?

A smart home uses the Internet of Things to enable you to monitor various aspects of your interiors using technology and automation. An easy example of a smart home is an air-conditioning system that increases or decreases the temperature inside your home based on the time of the day.

Internet of Things (IoT) is a network of interconnected appliances and gadgets that can respond to each other, and even on their own. For example, using a motion sensor your CCTV camera can automatically start capturing video and can also send you a notification on your mobile phone that a motion has been detected inside your compound. You can set timings (9 PM to 7 AM, for example) when the motion detector must raise a warning when it sees something moving. There are many refrigerator boxes that can automatically place an order with an online retail store when you are running out of milk or bread. Wi-Fi-connected electric bulbs can switch themselves on when they detect a darker environment.

What are the benefits of choosing a smart home design?

It goes without saying that a home with a smart home design makes your life a lot easier by automating repeat tasks. Some of these tasks happen in the background and although you enjoy their benefits, you don’t have to take any physical action to make them happen.

One of the biggest advantages of choosing a smart home design is that you can make your home energy efficient. Constantly forgetting to switch off the lights or the water heater? Want your air conditioner to increase and decrease its power based on the temperature inside your room? Want to water your lawn every second day between 7-8 p.m.? All these, and much more, can be easily accomplished with a smart home design.

You can remotely manage the interiors and to an extent, the exteriors of your home. You can use a centralized mobile app to control all your devices and appliances (those that can be connected). Using Wi-Fi and carrier connectivity you can control the devices at your home remotely, from your mobile phone. You can switch off your air conditioner 20 minutes before you reach home. You can start your coffeemaker from the comfort of your bedroom. You can rotate the view of your surveillance camera from the inside to have a look at even those corners that are not currently in its view. This makes a difference between choosing a smart luxury home from a normal home.

Is it important to take into consideration “smart home design” when buying a house?

You can either create a smart home designed by yourself or you can purchase a house that comes equipped with a smart home design. It depends on your preference. If you are very particular about your tastes maybe it is better to get a blank canvas and then create your own ecosystem of smart appliances. If you don’t want to spend your time or don’t want to take chances, you can buy a home already equipped with Smart Home design technologies.

A smart design can help you:

  • Save energy
  • Simplify multiple tasks
  • Enhance your security
  • Perform household chores with efficiency and speed
  • Notch up your level of entertainment manifold

A smart home can come equipped with

  • Intelligent light bulbs
  • Temperature-controlled swimming pool
  • Gymnasium equipment with real-time health stats
  • Smart thermostat
  • Interconnected security system
  • Centrally controlled Smart Hub
  • Smart speakers and smart electrical appliances

Conclusion

A smart home design can immediately upgrade your life. From automating regular household tasks to creating an impermeable security and safety system to making life simple and more energy-efficient, there are multiple benefits of creating a smart environment or moving into a smart environment. If you create a smart home by yourself, it can increase your property’s market value, and many home buyers are eager to pay a premium for a well-equipped and well-connected smart home.

Know your rights as a homeowner

Posted on by HomeCapital Team

Once you become a homeowner, there are certain rights conferred to you. What are those rights and how do they benefit you?

Becoming a homeowner is considered to be a great feat. Although with rising incomes people can buy or build multiple home units these days, it is still considered a once-in-a-lifetime event when someone buys a home or a residential property. As a homeowner, you have certain rights and obligations that are immediately conferred to you.

Without these rights, it will be difficult for you to enjoy the fruits of your labor and effort. Hence, the laws of the country give many benefits and privileges to property owners. Some of the rights of home buyers are listed below.

1. Rights of a landlord

Although the government of India gives many rights to the tenants, eventually, the rights of the homeowners need to be protected against unlawful occupation and expectation.

Evicting tenants, for example, used to be a big problem for the landlords. It may still be, but now there are many provisions under the Draft Model Tenancy Act 2015 that enable the landlord to get the property evicted for various reasons, including breach of the rental agreement.

With due notice, a homeowner can get the property evicted if he or she needs the property for his or her own occupation.

2. Right of possession for homeowner

This is the document that you receive when you completely own the property as a homeowner. This happens when you have paid the amount (the value of the property) as a lump sum or if you have cleared all the dues with a finance company and you have received the clearance certificate. This document is also called the “Title”. This gives you legal ownership of the property. If you have taken a mortgage, this right of possession is normally owned by the creditor (the bank or the lender) and then it is transferred to you once you have paid all your dues.

3. Control and enjoyment rights of a homeowner

Although it depends on the restrictions applied by the local laws and the Residential Welfare Association (RWA), under these rights, a homeowner is within his or her right to use the property the way he or she wants. For example, if you hold the events (like late-night parties or musical gatherings) and if they disturb your neighbors, they may object to the event but otherwise, within the periphery of your house, anything that is legal and does not infringe the right to the peaceful existence of the others, you can do it. There are some designated domestic areas where you cannot run commercial services (having an office in your residential apartment with employees coming in and out) but you can obtain permission from local authorities on a case-to-case basis.

4. Exclusion rights of a homeowner

This is the right to privacy and choice. As a homeowner, and as a titleholder, it is your right to decide who enters your house and who doesn’t. You are well within your right to not allow someone to enter your house. Even the law enforcement authorities need a valid warrant to enter your property.

5. Title insurance

This is relatively a new concept in India and not many homeowners are aware of this. The “title” in terms of being a homeowner is the legal right to property. Whenever there is a new homeowner, the “title” of the property goes to that person.

This right provides you indemnity as a homeowner against losses or defects in the title. The title of the property must be impeccable when it changes hands and goes to the new owner. In case some faults exist (missing documents, legal case, lack of substantiation or government approval) and despite those faults, the title of the property is legally and properly transferred to the new owner, somehow, the new owner is indemnified against these discrepancies.

6. Disposition/selling right

Under this right, the titleholder (the legal homeowner) is well within his or her rights to sell, lease, or rent his property as he or she wishes, at whatever mutually agreed price. He or she has the right to sell the property to whomever he wishes. The only caveat is that if the loan is taken over the property, it must be cleared. Unless the loan or the mortgage of the property is cleared, the property cannot be sold.

Conclusion

The immovable property is also called a “bundle of rights” because it gives you a collection of rights over the property. Once you become a homeowner, you enjoy the full transfer of the property and you can use it, within the ambit of the law, in whichever manner you feel like. In some cases, the owner may have partial rights and the remaining rights may belong to the previous homeowner or another owner, but in most the cases, when you say that I own the “title” of the property, as a homeowner, you enjoy the entire “bundle of rights”.

What is a Builder Floor? What are its Pros and Cons?

Posted on by HomeCapital Team

Among various construction options such as freehold, apartments, condos, studio apartments, and such, there is another option that is becoming popular: builder floor. What is it and its pros and cons? Let’s find out.

Contrary to an apartment building, a builder floor has a few floors and is usually built by the landowner himself or herself, with the help of a smaller builder. These constructions are not more than 2-3 floors and every floor has a single residential unit. All the floors can be owned by a single owner or different floors can be owned by different owners, depending on the nature of ownership. Then what is the difference between an apartment in a multi-storeyed building and a residential unit on a builder floor?

Difference between builder floor and multi-storey apartment

A builder floor apartment is an independent floor unit in a lowrise, plotted, and a residential colony. It is barely 2-3 floors. Every floor is an independent residential unit, normally belonging to a single-family. One family may be living on the ground floor, another on the first floor, and then another on the second floor. The building is a complete unit in itself belonging to just these three families. There is more privacy and greater independence. Floors can be made as per the needs and choices of the owner/owners.

A residential apartment in a multi-storey building is one of the multiple units on the same floor. A typical floor in a multi-storey building may have 4-6 apartments and the entire floor is shared by multiple families. Multi-storey buildings are normally skyscrapers and they have more than 20-30 floors. All the floors have a consistent and uniform look and feel. Whatever the builder has made, people need to contend with. There is a common stairwell, a common lift, and a common passageway. Consequently, there is less privacy.

What are the pros and cons of having a builder floor?

Every type of residential unit, may it be an apartment in a skyscraper, a condo, a bungalow, a freehold housing unit, or a builder floor, has its distinctive pros and cons. But here we are going to learn about some pros and cons.

Advantages of having a builder floor

It is affordable

Compared to a freehold house or a bungalow, the home price of a residential unit on a builder floor is less costly. It may not be as private as a freehold plot or a bungalow, but it is not as congested as an apartment in a multi-storeyed building. Most of the people looking for a freehold plot want the independence and privacy of a bungalow but can’t afford it but at the same time, have a strong desire not to live in a multi-storeyed building. A builder floor is the best option for them. 2-3 families can come together and have it and each floor is shared among the families, considerably bringing down the cost of owning an almost independent residential unit.

No maintenance charges

When you live in a multi-storeyed building you need to pay maintenance charges every month because the upkeep of such a large structure can be quite expensive. There are multiple amenities. Whether you use those amenities or not, a portion of your maintenance fee goes into their maintenance.

But in the case of a builder floor, you are solely responsible for the upkeep of your residential unit. You spend money on a need basis. There may be an agreement among all the floor holders regarding the maintenance of the overall structure but that doesn’t need to be binding.

More design independence

Different floors can be built as per the tastes and preferences of individual owners as long as the overall structure remains solid. You don’t have this facility in an apartment in a multi-story building. For example, in the ground floor unit if you want to have more rooms you can have them but on the first floor, multiple rooms are not needed, and hence, the family can have fewer rooms, and then again, on the second floor, bigger rooms can be built if that is the preference of the family. Every floor is based on the capacity and the ability of the builder, and the preference of the floor owners.

More privacy

A builder floor gives you more privacy as there are fewer families living in a building. A complete floor is a residential unit. In a multi-storey building, there may be 5-6 apartment units on a floor and there is a common stairwell and a passageway. This is not the case with a builder floor. Since a complete floor belongs to a family, there is less interference.

No skyscrapers blocking the view

Many find skyscrapers claustrophobic. Builder floors are normally built in the localities where there are no skyscrapers and in fact, that is the reason why people go for such residential units. These houses are not very high – maximum they go up to 3-4 floors. They give you the old-world charm. There is ample space between different units. There is less concrete around.

Disadvantages of having a builder floor

Fewer amenities and facilities

A builder floor is an independent unit. There is no bigger RWA taking care of facilities and amenities, and hence, in most cases, they are missing. In a residential complex such as a skyscraper, there may be a swimming pool, a gym, a cafeteria, or a recreational center. These facilities are missing in the case of a builder floor.

Parking is also unavailable. There may be disputes between the various families living on different floors regarding the parking and it often needs to be sorted out because the vehicles are parked in front of the house.

Security and surveillance become a private matter

One of the biggest benefits of living in an apartment building is that the security is provided by the RWA. There is a common boundary wall. Each vehicle is checked and the vehicles that are not cleared are not allowed into the building complex. There are surveillance cameras installed everywhere. There are a couple of guards in every building unit or tower. Although these security and surveillance measures can be taken in the case of a builder floor, it can be quite expensive, and it also depends on the threat perception of individual families living on different floors.

Conclusion

Builder floor apartments are catching up fast. Until a few years ago there was a trend among property buyers to go for skyscrapers and apartment buildings but as the buyers have a wider array of choices and as travel becomes easier among various cities, there are many homebuyers who are opting for builder floor apartments for more privacy and greater independence.

How will RBI’s repo rate hike impact homebuyers?

Posted on by HomeCapital Team

Interest rates in the banking sector are bound to go up as in an off-cycle Monetary Policy, the Reserve Bank of India(RBI), on Wednesday, has unexpectedly increased the standard repo rate by 40 basis points from 4 percent to 4.4 percent. Such an unexpected hike in the repo rate has been observed for the first time since August 2018, while the inflation has been rising for 18 months amid a rebound in domestic economic activity. The rate hike is aimed at anchoring inflation while remaining supportive of growth.

What is repo rate?

The repo rate is the rate at which the RBI lends money to commercial banks. An increase in repo rate implies that banks will also increase their lending rates, such as home loan interest rates, auto loans, and other loans directly affecting and up ticking the EMIs for borrowers.

How does the hike in repo rate impact homebuyers?

The influence of the hike in repo rate will be felt across all major loan categories that come under Repo Linked Lending Rate (RLLR). Especially, home loans and loans against property will now cost higher and there can be a sequential increase in EMIs.

The increase in repo rate will immediately affect all the borrowers with the floating interest rate on loans for homes, cars, gold, or personal, making them costlier On the other hand home loans that have a fixed rate of interest will not get costlier immediately as it takes time for the effect to take place. All the new loans are now likely to be priced higher with a higher interest rate and EMI.

How will it affect your existing home loan and EMIs?

According to experts, more than 40 percent of loans are linked to external benchmarks and this increase will translate into a more expensive loan for new and existing borrowers.

For instance, on a home loan of Rs. 50 lakh for a tenure of 15 years at a 6.75% interest rate, the EMI is Rs. 44,245. If the interest rate increases to 7.25%, the EMI increases to Rs. 45,643. An increase between Rs.1400- 1600 per month approximately if your interest rate goes up by 0.5 percent.

On the other hand, if your EMI is set at a fixed amount, it may not increase the installment amount but the number of EMIs you pay may increase between 15-18 months.

How soon will the repo rate hike be effective for the borrowers?

For home loans with floating interest rates, the hike will be seen immediately. For fixed rate home loans, it will take some time as the banks have to hike their deposit rate as well as MCLR.

What should borrowers do to reduce the impact?

The best alternative to tackle this hike is that you could refinance to a lower rate, increase your EMIs, or make prepayments regularly.

Expected benefits

Interest rates on deposits are now predicted to move upwards, bringing some relief to the common man. With the regime of low-interest rates coming to an end, one is better off opting for a shorter-term Fixed Deposit, so that your deposits are not locked at a lower rate for long. You can opt for a longer-term fixed deposit when the interest rates are high and the benefit is being passed on to you by the banks.

How Does the Pradhan Mantri Awas Yojana Work?

Posted on by HomeCapital Team

Under the ‘Housing for All’ mission in 2015, the government launched the Pradhan Mantri Awas Yojana (PMAY). The purpose of this scheme is to promote affordable and sustainable housing for the urban poor and help them lead dignified lives. The scheme’s main proposal is to create two crore homes for the low and middle-income families and the economically weaker sections. Water connectivity, proper toilets, and such essentials are also aimed to be provided with the PMAY scheme. The two kinds of PMAY schemes are Pradhan Mantri Awas Yojana Gramin and Pradhan Mantri Awas Yojana Urban for rural and urban housing, respectively.

Eligibility criteria for the Pradhan Mantri Awas Yojana

The eligibility creates for this scheme is:

  • The beneficiary and their family must not own property in any region of the country.
  • The annual income must not exceed Rs. 18 lakhs for a person to be eligible for the PMAY scheme.
  • The beneficiary’s family should not have received any central support under any housing scheme by the Indian Government.
  • A residence that has already been built cannot use the benefits of the PMAY scheme.
  • The ground floor housing will be granted on a priority basis to senior or disabled persons.
  • The coverage of the scheme includes all statutory towns and towns announced after Census 2011.
  • Under joint application, either the person or their spouse may be eligible for the subsidy.

How does Pradhan Mantri Awas Yojana work?

The opportunity for buying homes at a cheaper rate by availing of interest subsidies in India is provided through the PMAY and the credit-linked subsidy scheme. Under the Credit Linked Subsidy Scheme (CLSS), the economically weaker sections and the middle-income groups can get reduced EMIs on their home loans.

CLSS – Weaker Sections and Lower Income Groups

Those who have a household income up to Rs. 3 lakh a year come under the economically weaker category and those whose annual income is between Rs. 3 lakhs and Rs. 6 lakhs come under the low-income category. The homebuyers in the weaker sections and low-income groups can get a subsidy of 6.5% for 20 years or the home loan’s entire tenure (whichever is lower) under the Pradhan Mantri Awas Yojana.

The procedure for getting the benefits of this scheme if you belong to this category is to go to a bank or an NBFC for a home loan, the lender from whom you are availing the loan will initially credit the incentive amount to your account. Then the EMIs for your home loan is lowered by the lender according to your credited value. Women, SC/STs, minorities, persons with disabilities, and backward classes are given preferential treatment in both of these categories.

CLSS – Middle Income Groups

The Middle-income group beneficiaries are split into the MIG I and MIG II sections. The MIG I section includes those beneficiaries whose household income is between Rs. 6 lakhs to Rs. 12 lakhs annually. The MIG II section includes those beneficiaries whose household income is between Rs. 12 lakhs to Rs. 18 lakhs annually. 

The interest discount availed by the MIG I section is 4%, while that availed by the MIG II section is 3%. Home loan tenure can be extended up to 20 years for both sections. The home loan amount for the MIG I section is Rs. 9 lakhs while it is Rs. 12 lakhs for the MIG II section.

Let’s take an example:

A person in the MIG II category wants to buy a home costing Rs. 60 lakhs. The down payment for this home will be 10%, i.e., Rs 6 lakh, and the remaining Rs. 52 lakhs would be arranged through a loan. If the Pradhan Mantri Awas Yojana scheme is not applicable here, the lender’s home loan interest will be applied to Rs. 52 lakhs.

Under the PMAY scheme, the 3% subsidy would be applied to Rs 12 lakh. Hence the interest rate of the lender’s home loan will be applied to the remaining Rs. 40 lakh.

Calculation of interest subsidy under CLSS

Calculation of the monthly payback obligation is essential when choosing any EMI payment. A PMAY EMI calculator can be used to know your payback obligation for each month. This will also allow for making an intelligent and informed borrowing solution. However, the calculation of home loan EMI through a calculator with PMAY subsidy can only be done once you know if you are a beneficiary of the Pradhan Mantri Awas Yojana – Urban (PMAY- U) or Pradhan Mantri Awas Yojana – Gramin (PMAY-G).

The Pradhan Mantri Awas Yojana (PMAY) subsidies can also be checked very quickly and conveniently through a Home Loan EMI calculator.

The PMAY eligibility can be checked online by following these steps:

  • Entering the entire household’s total income.
  • Choosing the home loan duration (less than or equal to 20 years).
  • Check for interest subsidies by entering the home loan amount.

After these steps are complete, the total amount of subsidies available will be calculated and displayed on your screen.

Conclusion

The Pradhan Mantri Awas Yojana was launched by the government to provide housing to the urban poor and provide housing for all. In the budget of 2017, affordable housing was given infrastructure status to help developers receive the associated benefits of the scheme.

However, exploring the affordable housing segment is still a risk even to first-time homebuyers because of the timely delivery of the house which is now getting mitigated with time. The previously allocated 3 years to complete the projects have now been increased to 5 years.

HomeCapital is a technology company that is on a mission of escalating homeownership to a billion home buyers. To fulfill this mission, we have created India’s first Home Down Payment Assistance (DPA) program. The assistance provided under the program is interest-free and the completely digital application process allows for faster and smoother transactions. Our program reduces your risk and doesn’t apply a lien on your house or affect your home loan eligibility.

5 Important Things to Know About a Home Loan Sanction Letter

Posted on by HomeCapital Team

Home loans usually consist of very substantial amounts. Every loan document has to be confirmed in order to get such huge amounts. This is why the banks or lenders ask for proof of identity, property, and finance. The process of loaning homes can hence get quite lengthy and complicated because of the paperwork involved. A home loan sanction letter is given after the home loan application is successful. The terms and conditions of the loan are written in the letter, along with other crucial details.

Five Important Details About a Home Loan Sanction Letter

Below are essential details every home loan applicant should remember about home loan sanction letters:

1. Sanction letter content

Crucial details such as the complete loan amount, tenure of the loan, unrest rate that is applicable, and more about the loan agreement are provided in the home loan sanction letter. 

The lender or bank will also include their own terms that they want in the loan agreement. These terms differ from lender to lender and, therefore, should be read thoroughly. You can also get to know your potential EMIs by going through the terms given in the sanction letter and using a home loan EMI calculator. After knowing these details, you can shop around for better offers, negotiate with the lender, or accept the loan and its terms.

The sanction letter is different from the final loan agreement. Background checks and additional documentation/ paperwork will still be applicable to the applicant even after the sanction letter has been provided. There is also a sanctioned period, usually, six months, which varies from lender to lender for which the sanction letter is applicable. The letter cannot be accepted based on the terms stated in the sanction letter after this period is over.

The sanction letter should be read slowly and carefully. To completely decipher it, you can also take the help of a financial advisor or a lender. Once you have decided that you want to further the process of the loan, you will be asked to present a copy of the sanction letter and the requisite documents to the lender.

3. Documents required for the home loan sanction letter

 The documents required for the home loan sanction letter include:

  • Any one of your identification cards: Aadhaar card, voter ID card, driving license, or passport for KYC
  • Employee ID card for salaried individuals
  • Bank statement for the last 3 months
  • Salary slips for the past two months or Form 16 for salaried applicants
  • Proof of business and Income Tax Returns for the past three years for self-employed applicants

4. Your eligibility is important for a home loan sanction letter

The home loan eligibility of the candidate decides the amount that he/she can avail. The credit history, income, age, outstanding debts, etc., all make up the individual’s eligibility. After applying for a home loan, the application is processed, and the lender, based on your eligibility, either offers you the exact term of your application or adjusts the terms accordingly.

The current property value and possible value appreciation are also taken into consideration by lenders and banks when filing for a home loan application.

5. Difference between a sanction letter and an in-principle approval and disbursement letter?

The home loan sanction letter is a document that states that you are eligible for availing of the loan amount, while the in-principle approval is an agreement between you and the bank which grants you the home loan in principle. If you meet the conditions stipulated by them, the financial institution goes ahead with the approval of the home loan.

Generally, in-principle approval is issued for the lender’s pre-approved home loan products. A certain processing fee is charged and then adjusted in the total loan processing fees of the final amount provided.

In sanction letters, the bank or lender sends a legal representation to finalize the loan agreement.

Conclusion

The sanction stage of the home loan process is followed by the disbursal of the home loan amount. Whether you will receive the loan is decided in the sanction stage itself. This is why it is very important to understand the key details of the home loan sanction letter, making the entire process much easier.

The architects of India’s 1st home down payment assistance program, HomeCapital, can help you in buying your dream home. The process is completely digital and the down payment assistance is disbursed to your account within 24 hours. There is also no effect on your home loan eligibility or any lien on the house in the program.

Why is Mamurdi Pune’s next big residential destination

Posted on by HomeCapital Team

The decision to buy a new property comes with many questions and decisions. Affordability, location, convenience, green cover, accessibility, and social infrastructure development of an area are some that come into mind when you go looking for homes in your desired neighborhood.

If you are looking for a place to escape the busy city life in Pune, then look no further than Mamurdi. This peaceful place has everything that makes it an ideal residential destination.

Mamurdi’s location benefits:

Mamurdi is a quaint suburb of Pune with a rich natural heritage. It’s just 30 kilometers away from the main city. A low-density suburb that offers easy access to state highways and railway networks. The natural heritage in this area makes it rich, with beaches like Alibaug Beach, Mandwa Beach, and Murud Beach.

The famous hill station of Lonavala is just an hour away from Mamurdi. With the Pune-Mumbai expressway, you can easily get any retreat in that area and enjoy some historical heritage too!

Mamurdi’s landscape:

The landscape of Mamurdi is a verdant green blanket that stretches as far as the eye can see. Plenty of trees provides residents with not only a feeling of being close to nature but also a home to many bird species, making this an ideal destination for those who want to get away from it all!

The climate of this region is conducive to peaceful living. Though it can be warm during the day, evenings are calm and breezy partly due to an abundance of green cover that maintains cooler temperatures than expected throughout the wet season months.

Jurisdiction and development plans for Mamurdi:

Mamurdi is a small town that falls under the jurisdiction of Pune Municipality. The ‘Master Plan 2025 of Pune Municipal Corporation for Sewage Treatment and Disposal’ has set several rules and regulations for both citizens as well as those who live in this city, making sure they follow them strictly to maintain cleanliness. The reason why Mamurdi is such a clean and well-maintained place with strict rules for its inhabitants to follow can be attributed largely in part due to these regulations.

Location highlights:

  • Excellent connectivity to the famous Bhosari industrial area
  • Talawade MIDC IT Park is easily accessible

Mamurdi is a city that has great potential for property investors. With new properties, IT parks, and industries coming up in the near future there are many advantages to living here such as an efficient public transportation system, schools, and other soon-to-come social infrastructures. There will be even more opportunities to invest in property here. The Pimpri Chinchwad Municipal Corporation (PCMC) and their willingness have made it possible for more development, which will be beneficial not only to home buyers but also to investors in property prices.

The cost of property in Mamurdi is around INR 4200 per sqft, but the average price for an apartment is up to about INR 3978. The asking rent on these properties can be anywhere between INR 10,000 – INR 13,000 for 2 BHK and INR 15,000 – INR 17,000 for 3 BHK.

With its greenery, countryside charm, and excellent connectivity, Mamurdi is quickly becoming the next residential hub for Pune’s millennials. The young people are flocking here because of this area’s natural beauty as well as robust employment opportunities near their location. Located in the lap of nature, with excellent connectivity to other parts of the city; Mamurdi is a rapidly flourishing suburb. The real estate rates have spiked lately and investment here will yield rich rewards for you down the line! If you’re looking forward to an investment that will pay off big time then this area should be at the top of your list.

Disruptive real estate technology trends in 2022

Posted on by HomeCapital Team

There are many technology trends that are turning the real estate industry over its head. Although known to be one of the slowest segments to adopt technology, the ingress of technology is hard to resist even in this industry.

Technology is all-pervasive. Whether you live in a village, town, or city, you remain untouched by technology. From using a mobile phone to check the news to driving a car without having to bother about controlling the steering wheel, technology is as mainstream as eating food or drinking water.

Studies have shown that real estate buyers are getting younger by the year. Millennials are turning out to be the biggest market sector for the real estate industry and many of the millennials have been using technologies like mobile phones, tablets, and computers as young as 2-3 years. There is a disconnect among them if they can’t use technology to interact with particular segments of the industry, real estate being no exception.

What is disruptive technology?

Disruptive technology overhauls the way businesses operate or the way people interact with day-to-day services and facilities. It does away with the old habits of doing things and elevates experiences and outputs. The recent technological disruptions that may come to your mind include food delivery, music streaming, and cab hiring services. The tastiest food items are delivered to your doorstep. You no longer purchase music cassettes and CDs. Your local taxi stand is becoming a thing of the past.

Listed below are pivotal technology trends that are fast disrupting the real estate industry.

Virtual reality

The amazing technology of virtual reality dismantles the tyranny of distance. No longer is there a need to physically visit a property to get an idea of how it looks and feels. Although, nothing can be compared to the real physical and emotional experience that one goes through when one physically visits a property, if done right, virtual reality is as real as it gets. You can walk through the property. You can rearrange furniture and objects. You can change the floor tiles. You can even rearrange plants in the garden.

Virtual reality presentations can be used in place of two-dimensional maps. Before purchasing a property, a complete three-dimensional sense can be obtained of the various interiors such as the bedroom, the kitchen, the living room, the balcony, the bathroom, and other rooms. The virtual reality video file can be hosted on a server and hundreds of prospects can access it at the same time.

Drones

Long gone are the days when small airplanes and helicopters were needed for the aerial shots of real estate properties. These days drones can be used, and they can directly telecast what is being captured on a mobile phone. Drones can significantly reduce the cost of elevated photography and videography.

The good thing about drones is that they don’t just take aerial shots, they can also create videos of the interiors of a house. A drone can be easily flown through the door and then it can travel through every room. With the help of a drone, buyers and sellers can experience virtual tours without even virtual reality. Voice-overs can be incorporated to record real-time commentary, using a mobile phone. The entire video can be directly broadcast to the buyer’s screen in real-time using drone technology.

Drone technology is also used to survey large farmlands and farmhouses.

Artificial intelligence

From matching properties to the tastes and preferences of consumers to going through millions of documents in seconds to matching the exact color through multiple parameters, artificial intelligence (AI) is altering almost every aspect of buying, selling, and home financing. Artificial intelligence technology is being used to gauge user preferences. Land records, title documents, pricing, online house registrations, and mortgage liens, almost everything is being processed extremely fast and accurately using artificial intelligence. AI algorithms can go through millions of documents in seconds to match property values and debt levels to consumer choices, sometimes even based on the personal information of the homeowner using social media.

Blockchain technology

Blockchain technology can convert even real estate properties into NFTs (non-fungible tokens) enabling buyers and sellers to trade in the tokens digitally. Real estate properties can be tokenized using smart contracts. Months of processing efforts can be truncated into a matter of a few taps on a mobile phone. A great thing about blockchain technology and why it is catching on in real estate is that no intermediaries are required. These blockchain-powered smart contracts can replace legal documents that cannot be fudged. Since it is practically impossible to alter records existing in a mainstream blockchain, they can be trusted from all angles and real estate property transactions can be carried out within seconds on many occasions. Of course, payment through cryptocurrencies is also one of the biggest attractions of blockchain technology vis-à-vis real estate.

Conclusion

There are many other technologies such as 5G, the Internet of Things, fractional property investments, and various mobile applications that are constantly disrupting the real estate industry. This is just the beginning. New entrants are constantly staking their claims. There are immersive technologies. There is big data analytics. Property aggregation platforms are popping up. Data security and integration have reached unprecedented levels. The real estate industry is heading for exciting times.

Smart financial planning tips to help you buy a home within 3 years

Posted on by HomeCapital Team

An increasing number of youngsters are realizing that there is great merit in taking financial planning seriously to buy a home as early as possible. Can you buy a home in 3 years? With the right financial planning, yes.

Whether you want to buy a home for investment purposes or for living, the sooner you start, the better it is. The conventional wisdom was that people waited to get settled in life – get married and have kids – before buying a home. Until then, they either lived with their parents or planned to live in a rented home for many years. The question of buying a home arose near the retirement age.

It was because there were no efficient financial tools available as they are now. You can get a home loan and in fact, it is easier to get a home loan at a younger age. You can even get a loan to make the down payment these days so it’s not like you need to first save a huge sum of money. With good salaries, good employment opportunities, and a little bit of financial planning, you can buy a home sooner than later.

Recent studies have shown that the average unit size demand for homes has increased by 4%. With better salaries and the standard of living improving constantly, prospective homebuyers are looking for apartments and houses that are at least 1300 sq. feet. There has also been a construction boom concurrent with the demand for high-quality housing units.

Listed below are a few financial planning tips you can implement to buy a house or home early, even within three years.

Give an early start to your financial planning

Long gone are the days when people started thinking of buying a house in their middle age. It is better to start early, in fact, as early as possible. There are many youngsters who start saving towards their home investments from the first job itself these days.

Although it is a bit difficult to get a home loan when you have had a job just for a few months, there are many habits that you can start implementing from the word go. Build a good credit score and for that, make sure that you make all your credit card payments on time, or even earlier. Avoid spending money on wasteful activities thinking that you are too young to save. Get qualified advice on financial planning on how you can start saving as much as possible as a youngster.

Prepare a monthly budget that accommodates savings

Even in the early stage of your career decide how much money you are going to save every month. For proper financial planning, you can prepare a budget. A budget will allow you to remain within the peripheries of your expenditure expectations. Prepare a list of all your expenses. Build separate columns for necessary and unnecessary expenses. You don’t have to remove all the unnecessary expenses as you don’t want to live a spartan life but try to minimize them as much as possible according to the amount of money you want to save every month.

Suppose in the next 3 years you want to save Rs. 5,00,000 for the purpose of down payment. You have 36 months. Approximately, you must save Rs. 14,000 per month. Create a budget that no matter what happens, you can save Rs.14,000, preferably in a separate bank account.

Research your dream home, realistically

Given the choice, everybody would want to buy a mansion. You may set your eye on a duplex apartment in the heart of the city that is INR 2 crores upwards. If your monthly salary or income doesn’t match the property you would like to buy in a period of three years, it is better to look for a property that does.

How much down payment are you going to be able to save in the next 3 years? Take the previous example: Rs. 5 Lakh? With this much down payment available to you, how much loan will you get? Use home loan calculators available on various bank websites as well as credit websites. Then, according to the down payment, you are going to have and the loan you are going to get, look for properties. Select a few properties and according to them, begin your financial planning.

Invest along with saving money for a better financial plan

Do you know you can save more than you actually save? The money that you are saving can grow on its own if you invest it properly. You can invest in mutual funds that can give you a return of 10-15%. You can put your money in a recurring deposit that gives a 7-8% per annum interest compared to just 4% per annum for a savings account. Fixed deposits and recurring deposits are risk-free. By chance, if you inherit some money or chance upon some extra cash, buy a smaller property somewhere. You can sell the property later when its value has increased. You can also work with a portfolio manager to strategically invest your money in various financial assets so that it grows faster.

Improve your credit score

For better loan prospects, maintain your credit score above 750. Almost everyone these days uses credit cards. Unbeknownst to you, you can sully your credit score by not settling your dues on time. You keep receiving calls from your bank, but you don’t get time or you don’t prioritize paying your credit card bills. This affects your credit score.

A good credit score gives you bargaining power. Remember that when you take a loan, you pay the EMIs for many years, sometimes even for more than 30 years. Hence, if your interest rate is adjusted even for a small decimal point (6.7% per annum to 6.5% per annum), it can make a huge difference. The ability to bargain for a lower interest rate can only be obtained if your credit score is good.

Conclusion

When you have just started your financial planning, or even when you are just thinking of how to plan financially to buy a home in the near future, maybe in 3 years, it may seem like a distant dream. But as your savings grow, as you alter your habits to grow your wealth and grow it at least to a level that enables you to make the down payment for your home, to your pleasant surprise, you will discover that it is not as insurmountable as it seems.