But, employees can also draw out the amount before their retirement, subject to specific terms and conditions. For example, an employee can take out the Provident Fund to buy land, construct a property, or purchase a house. There are, however, certain criteria that a home buyer must meet to take out their Employee PF. 

Let’s look at how to use your employees provident fund to finance a home purchase.

What Are The Criteria For Taking Out A Provident Fund For Purchasing a Home?

A worker with at least five years of contribution to their provident fund account can extract money for the purchase of a plot and/or construction or purchase of a house. The purchaser can take out the amount for the construction of a house on the plot of land possessed either by the purchaser or their spouse or by both jointly. 

The qualifying amount to withdraw the provident fund would be based on the purpose of withdrawal. To purchase a plot, the withdrawal amount will be restricted to 24 months’ basic salary and dearness allowance (DA). However, the amount of withdrawal should not surpass the cost of the plot.

If you want to benefit from the withdrawal facility to construct or purchase a house, the availability increases up to 36 months of your basic salary and DA. This would be the maximum amount limited to the charges of the house. Bear in mind that you cannot mutually purchase the property other than your spouse, for withdrawing from the provident fund.

Once you withdraw from the provident fund account, the construction must start within six months. The construction must be completed within a year of the last instalment of withdrawal. If you plan to buy a ready-to-move-in house, you must complete the process of purchasing within six months. You can also make the withdrawals for purchase/construction in one or more instalments, based on the circumstances.

Luxurious residential projects in Noida Expressway such as ACE Parkway and ACE Starlit offer the ideal lifestyle for any homebuyer. With a plethora of amenities catering to residents of all ages, these projects are perfect to be considered as your next real estate investment.

If you’re planning to use your Employee PF to purchase one of the best projects in Noida Expressway, contact us today for more information. 

ACE PARKWAY – RERA REG NO. UPRERAPRJ4514 | www.up-rera.in/projects

ACE STARLIT – RERA REG NO. UPRERAPRJ677294 | www.up-rera.in/projects

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But before we delve into these benefits, let’s first take a quick look at an important question.

Who is a First-Time Homebuyer?

Not everyone who buys a home for the first time qualifies as a first-time home buyer. You will be considered a first-time home buyer if you haven’t bought a primary residence in the last three years.

Now that we’ve got it cleared, let’s head back to find out what are the benefits for first-time homebuyers. 

Read more: Tips For New Investors In Real Estate

What Benefits Do First-Time Homebuyers Get?

The Indian government has implemented a number of intriguing policies, such as tax benefits and other incentives, to encourage first-time homebuyers and provide them the chance to invest in real estate.

Section 80C

It is true that tax benefits up to Rs. 1.5 lakh can be recovered on a home loan’s principal payments. Only completed residences that were under possession for a minimum of five years from the date of purchase are eligible for this deduction.

Claim Timeline

Until 2016, only self-occupied homes that were developed or bought during the three years of the loan’s approval were eligible for tax benefits. After the 2016 budget, this has been increased to 5 years to reflect real estate trends in India.

Section 24

First-time homebuyers in India who pay interest on a home loan may also be eligible for interest deductions of up to Rs. 2 lakh per year. This is only applicable if the residence is owned rather than rented.

Through repayment of the loan’s interest, you can additionally claim an extra tax benefit of Rs. 50,000.

Section 80EEA

You can deduct an additional 1.5 lakhs from the interest on your home loan in addition to the 2 lakhs allowed by Section 80EEA. Only first-time homebuyers are eligible for this extra deduction advantage.

Read more: Tips For Home Buying

Pradhan Mantri Awas Yojana (PMAY) 

2015 saw the government’s goal of providing “housing for everyone” realised with the complete implementation of PMAY. First-time home buyers from lower- and middle-income households with a maximum family income of Rs. 18 lakh are benefited by this. Depending on income, different discount rates are applied to the main sum.

Furthermore, two new income groups have been included for the PMAY house loan subsidies. A 4% discount on a Rs. 9 lakh principal payment is available to buyers with an annual income of Rs. 12 lakh. Another is a 3% subsidy on the principal amount of Rs. 12 lakh for people making Rs. 18 lakh annually.

Conclusion

One may leverage the perks of buying a home in India by taking full advantage of these government initiatives. A proud and emotional moment in our lives is when we become homeowners, especially if it is our first.

Also, it makes you feel secure and content financially. You will need additional help, notably financial help, before buying a property, especially if it is your first home. We hope that you are now aware of all the benefits offered to first-time home buyers and wish you the very best on your journey to becoming a homeowner.

Are you looking for a luxurious 2 BHK flat in Noida? ACE Group is one of the most  renowned real estate builders in Noida, offering magnificent residential projects such as ACE Parkway, ACE Starlit, and ACE Divino.

Find out more about our lavish residential apartments in Noida by contacting us today.

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WHAT IS A CREDIT SCORE?

Let’s assume that you need to lend or borrow money from any loan sector, whether it’s for an educational purpose, medical, or personal issue. There would be a time limit to return the borrowed money. If you don’t return on time, it could negatively impact your credit score. Since a credit score predicts how likely you are to pay back on time, a poor credit score could lower the chances of you being granted a loan in the future.

CREDIT SCORE VS CREDIT REPORT

It could seem that both credit score and credit report are on the same page; however, that’s not the case. Although they are closely related, they are pretty different. Let’s see how!

A credit report is a statement which consists of complete information related to a person’s entire credit activity and their current credit activity. However, a Credit score is a three-digit number calculated depending on the information mentioned in the credit report.

IMPROVING YOUR CREDIT SCORE FOR A HOME LOAN

The top 5 main factors affecting the score of your credit are as follows:

• Length of credit history

The length of your credit history is significant in improving your credit score. It will improve more if the history of your credit lengthens.

• Payment history

Not paying your bills on time can become a severe issue for you. You might face various issues, but it can also affect your FICO score (Fair Isaac Corporation) if you avoid paying the bills. 

• Credit Mix

Your accounts’ diversity also helps you develop your credit score more. This proves your compatibility regarding handling debts, loans, credit cards, or mortgages. 

• Amount owed

Amount owed refers to the total amount of debt you owe compared to your current credit score.

Read More: 4 ESSENTIAL TIPS FOR BUYING PROPERTY FOR YOURSELF

RANGES OF A GOOD CREDIT SCORE

It falls within 300 to 850, with 300 being very poor and 850 being excellent. A suitable Credit score range varies based on the credit scoring model used, i.e. FICO model.

FICO RANGES

• A score between 800 and 850 or higher is generally considered excellent credit.
• A score between 670 and 739 is considered good credit.
• Scores between 580 and 669 are fair credit.
• And scores of 300 or 579 below are poor credit.

Read More: ACE GROUP: DELIVERING THE BEST COMMERCIAL PROPERTY IN NOIDA

FREQUENTLY ASKED QUESTIONS (FAQs)

• What should be my credit score for a home loan?
• You should have a credit score of more than 700 to be eligible for applying for a home loan at low-interest rates. 

• How to calculate a credit score for a home loan?
• You can visit your nearest bank or contact them to check your details. You can even check the credit bureau website portal for all details.  

• My credit score is 580. Am I eligible for a home loan?
• To be eligible for a home loan, your score should be around 650-700 f you want low-interest rates. However, you may get a home loan with a reduced amount and higher interest rates if you have a lower credit score than required.

ACE Group offers the finest and stellar residences with modern comforts. ACE Parkway is a residential property in Sector 150 Noida which offers 2, 3, and 4 BHK luxury apartments and penthouses designed for perfection.

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EMI house loans take away a considerable amount from your finances and may carry on for an extended period if you have taken a loan. Because of these reasons, buyers often hesitate to buy a house. 

Considering these reasons, real estate developers have introduced payment options for the benefit of buyers. Builders are now focusing on introducing offers that encourage buyers to invest in the property before construction and possession. There are now multiple payment plans available to opt for to get a hold of your roof.

Things To Consider Before Buying A House

Other than the amount required for your property possession, there are other factors to consider before buying a house. These considerations include ease of transport, schools, recreational areas, offices, gyms and other amenities. When applying for a land loan or for your home, you should analyze the cost and benefit to determine if the property is worth investing in and you are picking the right real estate financing option.

Payment Plans

When buying a house, if you run short on finances, different payment options can come in handy. Builders consider this and offer payment options such as the following:

• Construction-Linked Plan (CLP)
• Down-Payment Plan (DPP)
• Time-Linked Payment Plan (TLPP) 

These payment plans allow buyers to fix their prices even before they purchase them.

Whether it’s a commercial property loan or for a home you might need to consider that there are certain risks included in property financing, such as delay in possession, deliverance of the property that doesn’t correlate with the sample and also, increase in prices at the time of possession. These are crucial factors that can impact the buyers negatively from buying the property.

EMI Options

Builders have introduced EMI sharing options to make payments more manageable. EMI is advertised as “No EMI till possession,” however it operates differently for loan borrowers. “Full sharing of the EMI” option lets the builder pay the interest of your EMI. In contrast, “Partial EMI sharing” enables the builder to pay a proportion of the interest component of your EMI. This option for EMI is only applicable for a certain period, but after that, you would have to pay the complete EMI. Some real estate developers even have a fixed rate of interest which can become demanding for floating-rate borrowers.

There are many factors a person considers before buying a property. Even after fitting right in all aspects, you could still get confused about which options actually to opt for. To avoid this, it is better to do thorough research and get a helpful guide because buying a house is a one-time investment. 

Looking to purchase residential apartments in Noida? ACE Group are pioneers in delivering luxurious and contemporary apartments that bring your realty dreams alive. Contact us for more information.

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Budgeting

Firstly, decide your budget. If you are considering applying for a home loan, get the relevant information from the bank about how much home loan you are eligible for. To check eligibility criteria, the bank may ask you for documents for your current earnings, current age, amount of other outstanding loans and your past credit history or CIBIL score (maintained by Credit Information Bureau (India) Ltd.) All of these factors would have an impact on the criteria. While banks sponsor 80-85% of the amount, buyers usually need to arrange for 15-20% as the advance payment.

Equated Monthly Instalment

You can avail a home loan of 30 years maximum. Selecting a suitable tenure often causes loan borrowers confusion. Longer-term loans have a lower EMI. But, loans with a longer-term also have a higher interest rate.

Financial consultants think that people who are applying for a home loan should apply for EMI of less than 40 – 45% of their total monthly earnings. They strongly advise buyers to keep an extra amount as safeguards for unexpected costs that can come up.

Choose The Right Location

The daily commute will be a significant factor before you choose a specific locality. Try choosing places with easy access to multiple options of transport. Ask people in the neighbourhood about the advantages and disadvantages, research for development and infrastructure plans of the area, and discuss your plans with your family and friends to get an idea. 

Choosing The Housing Project

After deciding on the area, you now must decide what kind of housing you want. It is suggested by experienced real estate buyers that beginner home buyers should focus on a building project that has a good reputation and has strengths such as quality construction, timely delivery, financial stability and trust in its credit. Projects with a wide range of conveniences should be chosen.

Get Home Insurance

Getting home insurance on your newly purchased property will be beneficial. They provide internal and external protection. You can add items to your insurance policy such as electronics, furniture, valuables, insurance for natural disasters etc.

ACE Group offers the finest and stellar residences filled with modern comforts and decorum with its spacious 2, 3 and 4 BHK apartments If you’re looking to not let your investment go to waste, consider taking a closer look at our projects.

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Earners’ Advantage

As the saying “two heads are better than one”, two earners are better at working towards property ownership by saving up income than one of them working for an extended period and taking a long time to save.

Other than the cost of the property, purchasing a home involves duties and taxes, which may go up to a good percentage of the total expenses depending on the area and city you are buying a property in because the Stamp duty varies from place to place.

Additional Amounts

Other expenses apart from Stamp Duty are the following:

• GST on under-construction properties

• Registration charges

• and TDS which the buyer deducts from a certain amount of payment made to the seller. In the case of housing which is affordable, a chosen amount is reduced from the overall GST through a proposal. 

GST is not applicable to homes that have completion certificates, so ready to move in apartments can save you a lot of money.

After you purchase a house, along with the home loan EMI, you must pay Property tax each year which also varies from place to place. If you put the house on rent, then you must pay the tax on income too on house property. 

Home Loan Interest

The joint owners might face a significant deduction on interest paid on a home loan, but together they can save a more considerable amount of taxes by availing some amount of deductions every year.

Principal Repayment

In a financial year, the joint owners can also avail deductions. This can be done by dividing the home loan principal amount of a self-occupied property repaid in the ownership ratio.

House Property Income

The joint owners may divide the income generated from the rent of jointly-owned property. This measure would assist in sharing the tax liability which would have burdened a single earner.

The couple can open a joint account and put all their savings to pay back their home loan. Or else, claiming tax benefits could get troublesome for them. Other than the benefits, first-time buyers can claim additional deductions from their taxable income.

Planning to purchase an apartment? You can check our residential projects here.

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Although, the services provided by housing societies Resident Welfare Association will increase its amount under Goods and Services Tax. The RWA will only pay the GST if the payment is more than INR 5,000 per person per month along with the goods for the common use of all the members in a housing society.

On July 8th, The Federation of Noida Residents Welfare Associations wrote to Mr. Arun Jaitley, Union Finance Minister requesting to exempt GST for RWAs. In case the total turnover of an RWA is INR 20 lakhs per year, then supplies will be exempted from GST even when charges per member are more than INR five thousand. The RWAs will pay the tax under Input Tax Credit for goods like water pumps, generators, maintenance services etc. The ITC of Value Added Tax on goods was not there before GST period and was part of the cost to the RWA.

The residents are now experiencing GST free RWAs as they do not carry any profit for any business or any activity and are solely formed by the residents and for the residents.

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