With the tax benefits which will accrue on the purchase of a house for your own use, it is better to buy a house than to live on rent. PRABHAKAR SINHA explains
If you are living on rent, this is the time you should plan to buy a house for yourself. And there are a slew of excellent places to choose from — markets like Noida, Greater Noida, Raj Nagar Extension, Faridabad, Sonipat and Grugaon-Manesar, where apartments are available at affordable prices. With the tax benefits that you will get on the purchase of a house for your own use, it is better to buy a house than to live on rent. If your household income is Rs 30,000 per month and you are paying Rs 8,000 rent for a two-bedroom house, you may as well buy a similar apartment for around Rs 17 lakh. You will have to stretch your finances a little, but it will not only reduce your tax liability to almost zero but will also enable you to create an asset.
A number of housing projects have been launched by developers in Noida Extension (Greater Noida, Sector 1-4) where two-bedroom apartments are available for Rs 15 lakh to Rs 17 lakh. Similarly, a number of projects are coming on Noida-Greater Noida Expressway in the affordable price range. Other areas which meet the requirement of middle-class buyers are Raj Nagar Extension in Ghaziabad, Kundli, Nahar Paar area in Faridabad and Gurgaon-Manesar.
All of these locations like Noida Extension, the Noida sectors on Noida-Greater Noida Expressway and Raj Nagar Extension are well connected to central Delhi through wide roads. However, public transport system in these areas has not fully developed yet. It is expected that by the time developers give possession over the next three years, a public transport system would become commercially viable because of the large population that would eventually settle in these areas.
If you want to buy a two-bedroom apartment in any of these areas, you will have to shell out around Rs 16 lakh. After paying 15% of the total amount as your own contribution, you will have to borrow around Rs 13.50 lakh to buy the flat. The monthly instalment for this kind of loan at 9% rate of interest for 20 year repayment schedule would be around Rs 12,000.
However, you may think that during the initial period, you may have to give the instalment to repay the loan as well as rent for the house you are living in. Normally this acts as a big deterrent to buy a house. But to avoid this situation, you can go for the constructionlinked loan from banks. In this case, the amount is released in certain proportion to builders as they achieve certain milestone in the construction of the condominium. At the same time, your liability will be created on the basis of amount released to builders.
Not only this, there are banks which extend moratorium period on the repayment of loan till the possession is given. Till then, the instalments that are due are added to the principal amount. But, this saves you from paying the instalments for the repayment of loan as well as the rent of the house you live in simultaneously. At the same time, after three years, when you have to pay the instalments, your income should have also increased considerably.
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