Provident fund may get you a home loan!!

The Employees’ Provident Fund Organization, also known as EPFO is considering the decision of letting the subscribers pledge their future PF contributions to buy a house.  Here is how to use your Provident Fund to finance a home purchase. 

Purchase of a house/plot or Construction of the house:

Under the Provident Fund scheme, a subscriber can withdraw his PF money after the contribution of 5 years for the purchase or construction of house. The loan amount would depend on the purpose for which you are taking the loan. For purchasing a plot, the loan available shall be restricted to 24 months’ basic salary and dearness allowance (DA) and in case of the loan, to purchase or construct a house; availability shall be enhanced to 36 months of basic salary and DA. It is pertinent to note that the property cannot be purchased jointly with anybody else, except your spouse.

In case you withdraw from your provident fund account, the construction should begin within six months and be completed within 12 months of the withdrawal. In case you intend to buy a ready house, the purchase also needs to be completed within six months. The withdrawals for the purchase or the construction can be made in one or more installments, depending on the circumstances.

Subscribers can also avail the withdrawal facility again for additions or improvement of the house, only after 10 years from the first withdrawal, subject to the same eligibility criteria, vis-à-vis the amount.

Repayment of housing loan through Advances

For the repayment of the outstanding balance of home loan taken by you, the provident fund scheme allows you to avail of the withdrawal facility. The advance amount cannot exceed 36 months of basic salary and DA. This withdrawal can only be made for loans availed from specified entities like public financial institutions, Municipal Corporation, governments and state government, registered co-operative society, state housing board, nationalized banks, or a development authority.

The proposal, however, is in preliminary discussion stage and the government is exploring the possibility for providing a suitable low-cost housing scheme for subscribers of Employees Provident Fund.

Things To Remember Before Buying A House

Every individual wishes for their own home at a certain age and aspires to invest in their new home without any hassle. Purchasing a new house comes with many prerequisite responsibilities. It is very important to consider certain things before making the investment. Given below are few basic points that everyone needs to consider before purchasing a house. 

Buy or Rent

It is always better to do a practical analysis whether you need to buy or rent a house. There are varied online forums that enable you to understand all parameters of home buying including amount for down-payment, prices of houses, home loan ROI, house price projected appreciation, rental charges and more. This would give you a better idea of what you should invest on.

  

Duration of Stay

With job opportunities stretching all across the globe, there are possibilities of moving to different locations. This implies renting a house. Under such circumstances you need to know if you can buy a house and pay the EMIs along with paying the rent. Make sure you buy a house if you are planning to stay there for at least 10 to 15 years.

Calculate Additional Cost

Always consider additional expenses like legal costs, charges for maintenance and parking, location charges.

Affordable Home Loan EMIs

Please note that EMI for home loan should be 40% of your net income if you have not taken any other loan. If the EMI exceeds over 50% you are likely to fall under other financial downscales. Therefore, do not leverage on loans that disturbs your finances.

Rise of Property Value

It is essential to evaluate whether the price of the property would appreciate quicker than the rate at which the loan is being paid. This would let you understand if it is a wise investment.

Possession of Contingency Fund

Selling property at short notice and breaking it up in parts in not an easy task as real estate market is not a liquid investment. It is necessary to have an emergency fund that takes care of subsequent expenditures for at least 3-6 months. Moreover, several banks offer home equity loans, top-up loans and overdraft facility. These can unlock property value only if it has no outstanding loan against it. It is advisable to possess adequate investments in near-cash instruments that could be used in case of emergency.

When Source of Income Stops

Always be prepared for the worst circumstances. In case your income is in standstill you must avail insurance cover that is equal to outstanding loans. Note that certain simple term plans would help you cover your lives for permanent amount.

Analyze Rental Income From Property

Investors may want to avail dual income from the property, like rental income and price hike capital gains. One might think that rental income is adequate for the EMI payments. However, in many Indian cities it is much low. Hence, it is important to understand the rental income of a property before investing on it.

Therefore, it is very important to have a thorough knowledge of the property before buying a house. An unplanned purchase might put your finances in trouble. So, plan wisely before buying your new home.

The Real Estate Market Could Crack In 2015

Speculation into Real Estate or properties for a middle class Indian has been the irrefutable blast for the cash. On the off chance that we watch, we will find that property estimations have duplicated in the late decade. In any case now there are growing signs that the dream that land and land division has regarded in the latest decade may arrive at an end. Land experts and land operators have put a point in front that arrangements are moderate and inventories are rising. There is an abundance of free homes on the off chance that you pursuit Best Property in Noida Extension In NCR and other locale. All around the country, in autonomous littler markets, this story is the same. Subsequently an idea may come into individuals mind that, could 2015 be the year when land business sector begins to split?

Inside of the term of six months since the time new Government has taken the control, there has been a developing and creating motivation in the area part. It can now look for after another time of advancement. It could either be in private part or plugs area. So to get best property in Noida Extension would not be intense either.

The Government has made various moves to make a domain of advancement for the portion. The systems have been two dimensional that joins giving more unmistakable access to financing from one point of view and at the same time extending liquidity for the end-customer to invigorate reasonableness as well. Watch a crisp lease of life particularly in the private fragment that had been torpid in most of 2014. The land market part should enter a time of element expedient deal, which will, for most clear reasons, greatest in the key metropolitan locale of NCR, Mumbai, and Bangalore et cetera.

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