Home loan borrowers have experienced a rollercoaster ride of highs and lows over the past few years. The interest rates hovered around six to seven percent about four years ago. Until a few weeks ago, they had touched 13-14 percent. Today, some banks offer a modest eight percent home loan interest rate. The fluctuations in interest rates have an impact on a borrower's EMI dues and loan tenure.

Scenario 1: When rates go up

Increase in the interest rates translates into greater burden on the borrower. The borrower has to pay more from his pocket towards his home loan. When rates go up, the borrower has the option to either increase his EMI or tenure. Increase in EMI keeping tenure constant means greater cash outflow every month towards your loan. Increase in tenure keeping EMI constant amounts to increasing the number of years you'll be repaying the loan.

Scenario 2: When rates go down

A reduction in rates is good news that borrowers yearn to hear. When interest rates go down, the monthly EMI amount comes down automatically. Otherwise, the borrower can keep the EMI constant and bring down his loan tenure. This way he will be free of debt sooner.

Scenario 3: When you switch

When a borrower switches from fixed to floating, or vice versa, the EMI and loan tenure depends on the principal outstanding. The new rate of interest applicable after you pay the conversion fee also determines the quantum of loan. The borrower could fix at a higher rate or float at the prevailing market rate. It is up to the borrower to adjust the EMI or tenure of the loan to his convenience.

A home office should be comfortable and spacious

Designing a home office offers a convenient space to work from home. This room should be sophisticated and offer all the top-end facilities that you would require to work comfortably.

Space

While constructing your house, you can pick a space that has an attached terrace or opens out to the outdoors. If it is located on the second floor, it should offer a good view and provide good natural lighting and ventilation. A sliding glass door can lead to the terrace. Blinds are helpful to control the amount of sunlight falling into the room at different times of the day. The terrace can have recliners to relax when you want to take a break. Potted plants in both corners of the terrace will keep it looking simple and cheerful. If you have a large expanse, then you could design your home office on one side with a wall partition. On the other side, you can decide to have another room, maybe a bedroom or a study cum library. The partition can have two doors that can open into the room.

Furniture

If you have a casual, eco-friendly theme in your home, a huge wood and wicker chair will be comfortable and sober. A contemporary desk in wood with drawers designed aesthetically will allow space for storage and look good. The surface should be expansive to accommodate a desktop or laptop, personal memorabilia, a telephone, a pen stand, an artifact or a plant in a vase. Chest of drawers for storage on both sides of the desk can be used to keep important files, folders, and books pertaining to your field of work. Small artifacts can be placed on top or you can place a fresh flower in a tall vase with a small glass bowl with coloured glass pebbles. Contemporary artifacts in wood will give a modern, stylish look. Keep the wall colour neutral since you need many pieces of furniture in this room. A painting with a simple subject or theme in bright colours will enhance the wall space above the cabinet. A small wicker basket can be used to keep the latest copies of magazines. Another one can be used to throw any waste.

If you have business associates coming down frequently to discuss project proposals, then additional seating is required. A plush, comfortable sofa with leather, suede, or silk upholstery will allow you to carry on discussions or watch a presentation. On the wall opposite to your desk, where there is a wall partition, a wood cabinet can be designed to place an LCD TV and a music system. This can have sliding doors from the side or from the top to conceal and lock it at times when you don't use it. The space on top and by the side of this system can be used to keep a bust in marble or a small bamboo plant.

Flooring

Vitrified tiles are popular these days and give a clean, contemporary feel. To distinguish the seating area from the rest of the space, there can wood flooring only for this area. The flooring in the rest of the space can be done using vitrified tiles. Marble is another option that gives a smooth, sophisticated look.

Some rights a buyer of property has been given by the Transfer of Property Act

Abuyer of a property has some rights and liabilities. According to the Transfer of Property Act, a buyer of a property is entitled to some rights and has some responsibilities, which need to be fulfilled statutorily.

• Interest of seller

A buyer is bound to disclose to the seller any fact about the nature or extent of the seller's interest in the property of which the buyer is aware, but of which he has reason to believe that the seller is not aware, and which materially increases the value of such interest. An omission to make such a disclosure is fraudulent.

• Payment

The buyer is liable to pay, at the time and place of completing the sale, the purchase money to the seller or such person as he directs. The payment should be as per the agreed terms and conditions. Where the property is not sold free of encumbrances, the buyer may retain out of the purchase money the amount of any encumbrances on the property existing at the date of the sale, and should pay the amounts so retained to the persons entitled to it, to get the encumbrance released.

• Charges

The buyer is liable to pay all public charges and rent which may become payable in respect of the property, the principal money due on any encumbrance subject to which the property is sold, and the interest due. Once the ownership has been transferred to the buyer, the buyer is liable to pay all the statutory charges like municipal taxes, property taxes, cess, electricity and water charges etc.

• Loss or damage

After the ownership of the property has passed to the buyer, he has to bear any loss arising from damage or decrease in value of the property, not caused by the seller. The buyer becomes liable for any loss or damage to the property as soon as he becomes the owner and the seller ceases to be the owner of the property.

The buyer is also entitled to a charge on the property, against the seller, to the extent of the seller's interest in the property, for the amount of any purchase money paid by the buyer in anticipation of delivery. In case of a default by the seller the buyer has a right to get back the advance paid plus reasonable interest. He may also compel the seller for specific performance of the agreement.

• Benefit of improvements

The buyer also has some rights given statutorily by the Transfer of Property Act. In case the ownership of the property has passed to the buyer, he is entitled to the benefits of any improvements that increase the value of the property, and to rent and profits from the property. Any benefits or increase in value of the property accrues to the buyer only and not the seller.

All these rights given by the Act can be enforced as they are bestowed by the statute. However, the operation of such rights and liabilities may be modified by the contracting parties, subject to mutually agreed conditions.

Here we compares a short and long tenure loan to analyse the impact of tax benefits

The repayment of housing loans is through equated monthly instalments (EMIs). Some banks provide an accelerating or step-up EMI facility to borrowers. The step-up EMI facility intends to reduce the repayment burden in the initial years and helps in increasing the loan eligibility of the borrower. The facility helps young borrowers particularly. They prefer borrowing early but at the same time do not have high incomes and can't afford higher EMIs in the initial years. However, over time, as their income increases, they can afford to pay higher EMIs.

In this facility, the EMI portion is recovered in parts. During the first few years, a lower EMI is to be paid by the borrower. During the latter part of the loan tenure, the EMIs are increased, so that a higher EMI is payable during the later years. This way the burden of repayment in the initial years is reduced for the borrower.

The step-up facility involves a lower outgo in the initial periods. Borrowers who are likely to earn more in future can avail this facility to get higher loans and adjust their cash flows over a period of time. In this process, the borrower takes on a higher interest rate risk if the loan is based on a floating rate of interest. A rise in rates would mean that a portion of the interest would remain unrealised and added to the borrower's principal.

Since a large part of the initial instalments go towards interest payments, the borrower can avail of tax benefits for a longer period. Interest on the loan is a cost. However, tax benefits reduce the cost of borrowing. This way the borrower can deploy his savings in other investment schemes.

The principal repayment under the step-up loan may start immediately, thereby reducing the interest rate risk for the borrower. In other cases, the EMIs for the first few years are just enough to cover the current interest rate. The process of step-up can be in different phases. In some cases, two phases are offered - one at a lower rate and the other at a higher rate. In other cases, the step-up can be a gradual process. It can be done yearly, every five years or some other frequency. Some banks also offer the step-up facility with a fixed interest rate, but the rate of interest on such loans is higher than that on a floating rate loan.

The borrowers need to understand that in the step-up facility, the interest rate risk exposure is quite high. In the initial years, the interest component is more and the principal component is less - lower EMIs in the initial years would mean that lesser of the principal is being repaid. This deferral of principal to the later part of the loan tenure will increase the interest cost of the loan. This may turn out to be costly in case of a floating rate loan where the interest rate increases. The higher interest rate would have to be paid on a higher outstanding principal loan amount. In case of a rise in interest rates, the difference is recovered through higher EMIs towards the end of the loan tenure.

How a home loan’s tenure, interest amount and EMI are linked? Here is how....
The repayment of a loan taken to buy a house is made through EMIs (equated monthly instalments). EMIs are the fixed instalments which a borrower needs to pay over the tenure of the loan to repay the debt as well the related interest for the period to the bank.

Usually, the EMIs remain constant over the tenure of the loan. The loan amount plus the interest for the loan tenure, divided by the tenure of the loan (in months) gives you the EMI. The amount of EMI to be paid depends on and varies with the amount of loan, tenure of loan, and rate of interest. One of the important parameters governing the EMI is the tenure of the loan. Nowadays, you can avail loans for various tenures - between five and 20 years, and in a few cases upto 25 years as well.

Arriving at tenure

Here are two most significant factors that determine tenure:

1) Age: If you decide to borrow early, you can opt for a longer tenure loan - 15 to 25 years. This way, your monthly EMI payment would be less. Although the amount of interest paid would be higher as compared to other options, you can have the benefit of availing the loan for a longer period of time. However, if you are borrowing towards the end of your career, you may have to opt for a shorter tenure.

2) Income: This means both the present as well as the future income. You should be able to repay his EMIs without compromising drastically on your quality of living. The cash flows available after payment of EMIs should not entail a dent in the living standards. As such, a judicious planning of cash flows is required.

Tenure and interest

The longer the tenure, higher will be the interest rate. This is because of the increased risk the bank has to take. Also, the interest amount in absolute terms is higher, because of the longer tenure. However, the EMI is lower because the loan and interest are spread over a longer span of time.

The shorter the tenure, lower will be the interest rate. This is because of the relatively lower level of risk the bank takes. Also, the interest amount in absolute terms is lesser, because of the shorter tenure. However, the EMI is higher because the loan and interest are to be repaid over a shorter span of time.

Tax benefits

You should try to avail the maximum tax benefits available under the Income Tax Act. Presently, interest upto Rs 1.5 lakhs per annum paid on housing loans is deductible from the taxable income of a borrower. You should structure the housing loan amount and tenure so that your annual interest component paid in the near future is Rs 1.5 lakhs per annum. Of course, this would be contingent on other factors as well, like your annual income and savings potential.

Some rights a mortgagee of property has in the case of a mortgage contract

A mortgage is the transfer of interest in a property to secure payment of money advanced. The transferor is called a mortgagor. The transferee is called a mortgagee. The principal money and interest secured are called as mortgage money. The instrument by which this transfer is effected is called mortgage deed. The provisions related to mortgage of property are contained in the Transfer of Property Act.

A mortgage can be of various types. These include simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, mortgage by deposit of title deeds and anomalous mortgage.

A mortgagee can take possession of mortgaged property in case of default. Under the Transfer of Property Act, if there is default in payment of mortgage money, the mortgagee can take possession of mortgaged property and sell it without intervention of a Court only in case of English mortgage. In addition, a mortgagee can take possession of mortgaged property where there is a specific provision in the mortgage deed and the mortgaged property is situated in Kolkata, Chennai or Mumbai. In other cases, possession of property can be taken only with the intervention of a Court.

English mortgage


It is a type of mortgage where the mortgagor binds himself to repay the mortgaged money on a certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a provision that he will re-transfer the property to the mortgagor upon payment of the mortgage money as agreed. This is also called registered mortgage.

This is the safest form of mortgage for a bank. No documents of the property are required to create this kind of a mortgage. The borrower just needs to enter into a mortgage deed with the bank which needs to be stamped and registered in order to make it enforceable. However, this is an expensive way to create a mortgage as charges have to be borne by the borrower for stamping and registration. Further, the mortgagor binds himself to repay the money at a certain date and transfers property absolutely to the mortgagee subject to the condition that he will re-transfer it to the mortgagor on payment of the mortgaged money.

A mortgagee has a right to sue for the mortgage money in these cases:

• Where the mortgagor binds himself to repay.
• Where the mortgaged property is wholly or partially destroyed or the security is rendered insufficient. The mortgagee must have given the mortgagor a reasonable opportunity to provide further security to render the security sufficient and the mortgagor has failed to do so.
• Where the mortgagee is deprived of his security due to a wrongful act or default of the mortgagor.
• Where the mortgagor has failed to deliver possession of the property to the mortgagee.

If a suit is brought, the Court may stay the suit and all proceedings until the mortgagee has exhausted all his available remedies against the mortgaged property, unless the mortgagee abandons his security and re-transfers the mortgaged property.

Section 67 of the Act gives the mortgagee the right to foreclosure or sale. As per this provision, in case the mortgage money has become due to the mortgagee, before a decree has been made for the redemption of the mortgaged property, the mortgagee has a right to obtain a decree from the Court that the mortgagor be absolutely debarred of his right to redeem the property, or a decree that the property be sold. This suit to obtain a decree that the mortgagor be absolutely debarred of his right to redeem the mortgaged property is called a suit for foreclosure.

Fall In Interest Rates, Property Prices Makes It Tempting To Invest In A House, But Do A Reality Check
WITH interest rates on a downward spiral and prospects of getting a good deal on a house, the real estate sector could witness some buying in the coming months.

Though property consultants recommend waiting for a few months for the right price, some home seekers may be tempted to kick off their house hunting expedition soon.

Time for short listing

While there is no need to rush into a decision, you can start looking out for a house right away. Once the market bottoms out, home-seekers will start making a beeline for properties and loans. If you have identified your ideal home beforehand, you will be a step ahead. You can jump at the earliest opportunity available — in terms of price and interest rate. Lack of buying activity means that the market is skewed towards the buyer at the moment.

You can start quoting a price that seems reasonable to you. Try quoting a price that is 50% less than the highest price of a property in the locality commanded in the past. Another method of determining a property’s price is to ascertain, if you want to buy it in five years later, too. If the answer is in the affirmative, you can consider sealing the deal. Approaching an agent posing as a seller could be a good idea to determine the real price of the house — chances are that the selling price would be considerably different from the buying price quoted to you.

Identify your needs and capacity

Your heart may be set on a plush residential complex replete with state-of-the-art facilities, but that should not make you lose sight of your basic needs. For instance, if the well-equipped complex is not close to a railway station/bus stop, and you do not own a private vehicle, then commuting could turn out to be a nightmare. Hence, when you commence your house-hunting mission, it is advisable to keep a list of must-have attributes ready. In addition to quality of construction, evaluate the existing infrastructure. Finding a perfect house is nearly impossible, but comparing short listed properties will help you zero in on one that meets majority of your requirements.

This apart, the present and future market drivers, financial ability and personal investment objectives should be borne in mind. A ruthless assessment of your financial situation — current as well as future — is essential; factor in possible pay cuts and job loss. If you are planning to sell your old flat and buy a new one, it is better to do so only after securing the sales proceeds. Though bridge loans meant for such funding gaps are available, in the current scenario, it is better to steer clear of avoidable liabilities.

Consider old flats

If you are not fixated on ‘ultra-modern’ amenities, you can consider buying an old flat. If you locate a well-maintained house in the desired locality that boasts of robust ancillary infrastructure, there is no reason why it should not be considered. After all, the strain on your budget will be minimal. The difference in prices of new and resale properties would depend on various factors, but would usually be a third less than that of a new property. However, a comparison between the new and old houses should also cover renovation costs, the latter would necessitate.

Check if the property is already mortgaged

Many times, builders start developing properties after mortgaging the same to institutions that extend finance to the project. If it is mortgaged, you must insist on getting a no objection certificate (NOC) from the lender or satisfy yourself that your rights under the purchase contract are not subservient to the lenders. You must insist on an Occupation Certificate, sanctioned building plan and the Building Completion Certificate.

Get clarity on refund

While signing the contract, the buyer should enquire about the time frame within which the project will be completed and the penalty that the builder would be liable to pay in the event of delay.

The builder would be legally liable to render a refund, if it can be proved that he has not met his part of the pact. This would include unreasonable delays in construction, flawed construction, flawed title or evidence of previous claims on the property or the land on which it stands.

Buyers should enquire about the portion of advance paid that will be forfeited and the time frame within which the balance will be refunded, in case they choose to cancel the booking.

A tenancy agreement is entered into between the owner of a property and his tenant. A tenant is a person who takes any property on rent or lease from the owner of the property. Tenant also includes any person by whom or on whose behalf the rent of any premises is payable. He is not the owner of the property.

A tenant includes:

A sub-tenant of a tenant A person who continues in possession of the property after the termination of his tenancy In case of death of the person continuing in possession after the termination of his tenancy, it includes his spouse, son, daughter, and daughterin-law in case she is a widow of his pre-deceased son. This is subject to the condition that they had been living in the premises with him as a member of his family up to the date of his death. This won't include any person against whom an order for eviction has been made. Also. it won't include any person to whom a licence has been granted by the owner

The right of every successor to continue in possession after the termination of the tenancy is personal to him. On the death of a successor, it does not devolve on any of his heirs. So, it does not pass on to other heirs automatically.

In case a person who acquires the right to continue in possession after the termination of the tenancy by succession was not financially dependent on the deceased person on the date of his death, he will acquire the right for a limited period only .The right of this successor to continue in possession after the termination of the tenancy is terminated after the expiry of that period or on his death, whichever is earlier.

In case the right of any successor to continue in possession after the termination of the tenancy is terminated, the termination does not affect the right of any other succession of the same category to continue. In case there is no other successor of the same category, the right to continue in possession after the termination of the tenancy will not pass on to any other successor.