Bait named Subvention payment plan in Real Estate Market

(1/2/2015 India-as-superpower post) - We all know that Real Estate market of India is going from the most rough phase from last 2-3 years, thanks to recession and downturn in Global economic scenario and economic paralysis created by previous Indian governments by stalling infrastructure projects. This situation is here to stay for another 2-3 years until some demand picks up. This economic slowdown and subsequent decrease in demand of housing sector has forced Real estate developers in India to offer payment plans which act as bait in bringing new buyers to their projects. One of such payment plan which came up during recession time was interest subvention plan or subvention plan.

Now the question arises:

Whom does subvention payment plan help the most?

Any answer....yes the obvious answer to this question is 'Builder' and 'bank' and I would explain the how part of this answer.

Private banking players act smart here as all of the subvention payment plans are financed by Private banks rather then government bank. They have opened up a huge credit market for private banks who are ever desperate for giving credit cards or personal loans or home loans.

Let me explain the working of subvention plan wrto other payment plans and how is it very expensive.

present basic price of flat in Flexi or CLP plan - 2900 per sqft basic rate for subvention plan - 3400 Let super area of flat - 1000 sq ft basic price of flat in Construction Linked Plan or flexi payment plan(excluding any PLC charges, parking charges) - 2900000
basic price of flat in Subvention payment plan - 3400000
difference - 500000 Time frame for which builder pays installment - 3 years Another catch is that in subvention plans prevalent in real estate market is that builder would pay the interest amount to bank for a period of 3 years only. It's damn sure that the possession would not start in 3 years rather going by present construction trend in real estate market, a project takes minimum 5 years for completion(for majority of the builders). Add some 6-1 year of halt period due to any farmer issue, environment clearance issue for particular project etc and it the time could be easily extended by 1 year to 6 years till buyer gets possession. So builder pays interest on disbursed money for 3 years and then according to flat buyer agreement with buyer, the owner starts paying EMI after this 3 year period is over.

For flat of worth 3400000(under subvention plan):
payment schedule - 10:80:10
initial payment by buyer - 10 percent =340000
Bank pays 80 percent - 2720000
Buyer payment(on offer of possession) - 10 percent = 340000
Time lapse between offer of possession and handing over of keys by builder - ~6-12 months.

If any builder offers subvention plan where EMI payable by buyer would start on handing over the keys of flat is much better plan for the buyer as it would save atleast 6 months burden when EMI and rent would go simultaneously.

Carrying on with the example:
Lets consider that a interest demand for 10 percent comes after gap of 6 months. Hence for 1st demand of 340000: Interest part for 6 months for loan term of 20 years: 2975*6 = 17850 (total for 6 months) After next demand is raised: 5950*6 = 35700 (total for 6 months) After next demand is raised: 8925*6 = 53550 (total for 6 months) 1 year of subvention plan is complete After next demand is raised: 11900*6 = 71400 (total for 6 months) 2 years of subvention scheme are complete After next demand is raised: 14875*6 = 89250 (total for 6 months) After next demand is raised: 17850*6 = 107100 (total for 6 months) 3 years of subvention scheme complete Total Interest paid by builder in three years - 374850, therefore excess amount charged from buyer - (500000 - 374850) = 125150. After completion of 3 years the EMI would start which needs to be paid by the buyer, there are good 2 years remaining in actual possession of flat to happen. Hence donot fall into the trap of subvention scheme, instead opt for construction linked or flexi payment plan. Both these plans are almost similar with the only difference is that in Flexi plan initial payment is 10-20 percent(dependent on builder) more then construction linked payment plan. CLP plan is 200 per sqft dearer then flexi plan however.

Another demerit of Subvention payment plan is that it makes 80 percent loan amount mandatory for a buyer(which is again trap by the banks(majority of which are private players with direct setting with builder lobby.

This is my perspective of comparing different payment plans prevalent in India. Other might have an argument that subvention plans is confirmation of house in just few lacs rupees which is is so good deal to resist. But Donot fall into this trap of subvention plans. If you donot have enough money and there is no other option then you should opt for subvention plan which offers No EMI till handing of flat keys and there is no clause in agreement about 3 year time as I mentioned before.

How to get Police Clearance Certificate (PCC) in India

(27-1-2015 India-as-superpower) - Getting Police clearance certificate in India is thought to be most difficult thing to get(If you donot want to pay the demanded bribe to police personal). Rightly so as one would probably not get his police clearance certificate if he doesnot pay the demanded money. In this blog post I would give detailed description of whole process of applying for police clearance certificate in India.

Getting a Police Clearance Certificate has different application phases from which every application must pass. I would also give information about government fees wherever applicable. Following are different steps for each Police Clearance Certificate application

1. Fill Police Clearance Certificate application form: Filling of police clearance certificate form is the first step for getting your police certificate. For this the applicant has to goto office of Commissioner of police and fill the application form for Police Clearance Certificate. This form includes information about your house address, Passport number and other personal details. Don't forget to carry your passport size photograph alongwith and attach it on the application form.

2. Submit completed application form: Once you have completely filled the PCC application form, you need to submit the form to the designated public counter(present at office of Commissioner of police office). Person would enter your application details to their database, one copy of passport's front and back page can also be submitted alongwith the form. After he fills your data onto system, get ready for getting your photo clicked on the spot. After photo is clicked then the person would forward your PCC application to the Police station under which your house address falls. He would give you application number.

3. Clearance from Police Station: Next step is to get a recommend PCC certificate from the police station of your area. Once your online application is taken up by police station, you would get a phone call from Police Station to come to police station with documents(2 identity cards - aadhar card, passport etc). You would get a form of neighbour evidence for each of the applicant. This form needs acknowledgment of two persons who know you. You need to paste two of their passport size photos and copy of one ID proof (voter card, Driving license etc). Submit this form to the police station along with your two id proof's. Application would now be moved for getting signature of the SHO on it. Once the SHO signs your application then the staff at police station updates your online application and step 3 is done after you get clearance from SHO. This step cannot be completed if you donot give the asked bribe or if you donot know any person of police links in your district. So you need to do any one of them.

4. Clearance from ACP of your area: After the SHO signs your form, he would give the form to you for getting it signed by the ACP of your area. This step doesnot need any bribery and can be completed without paying any money(other then legal fees). Deposit INR 50 per application as legal fees and paste the receipt along with your file. Now your this step of getting clearance from office of ACP is done. They would update your online application from their perspective.

5. Clearance from Commissioner of Police - Once an applicant completes step 1-4 he is ready to submit his application form at office of commissioner. This step happens at the same counter where you submitted your application form (Step 2). Attendant would check your processed data online and would show you the details of application data(for any errors in name, address), check details carefully and give ok for this data. This person would now take print of the Poilce Clearance Certificate and get it signed from office of Commissioner of Police and hand it over to you.

Cheers Now you have your PCC in your hand and probably whole process is now clear to you.

The same process can be applied through website of Passport seva

Did you like this post? Do share this link and like it on fb. You can also follow this blog by email and would get posts in your email regularly. Thanks for reading!

Applying passport in tatkal quota in India

(26-1-2015 India-as-superpower) - Many of the passport applicants have not so good experience of applying passport in India. Since now taking an appointment for passport application is automated and available online, It has become much easier now to get an Indian passport.

Recently I applied passport for my minor son and thought of penning down all the sequence of events/steps which everyone has to follow while applying for minor's passport under tatkal service.

Following are the steps which a person has to undergo while applying for minor's passport under tatkal seva:

1. Get online appointment: One has to sign-up for the government of India, ministry of external affairs website passport application website. After sign up one has to fill all the fields required for fresh passport application and fill all the fields for minor applicant. User has two options for filling up passport form:

a)Download form and fill it offline and then upload it after completing the form
b) fill and save the data online.

Both the methods need good internet connection. There are some 4-5 screens which would ask for information needed for completing the application, Press SAVE button after filling all the mandatory fields of each page. Once you have entered all the data then verify it's correctness and press SAVE and SUBMIT button. This would save your information and give you a ARN number. Now click on pay fees and book appointment link. You would probably get appointment of next working day, If applying tatkal quota. If you are applying under normal quota then you would get slot available on closest date(which can be 10 days away). Since I applied for appointment on saturday, I got appointment for monday morning.

2. Gather your required documents: I started gathering below mentioned documents needed for minor's passport for tatkal passport:
a) Passport copy of both parents (front and back page). If Spouse name is endorsed on at least one of the parents passport then police verification is not needed

b) Birth Certificate of minor: Carry a photocopy and original birth certificate of minor applicant.
c) Marriage certificate of parents: Marriage certificate is not mentioned on governments website but is often asked by documents collector/verifier at the suvidha center.
d) Identity proof/address proof of parents: Carry Identity proofs of parents(aadhar card, ration card, voter card, landline bill, bank passbook) would do. I gave Aadhar card for me and spouse.
e) Annexure H on plain paper: Fill the annexure H declaration and print it on a plain paper(A4 size).
f) Notary attested Annexure I: Annexure I declaration by parents is needed for applying minors passport in tatkal category, get it attested by notary. This costs INR 100 at my city and 10-15 mins to get it from courts. Carry the original parents passport's, marriage certificate, address proof's, minor applicants birth certificate. Stack all the documents in a file and keep printout of appointment letter along-with it.

3. Reach designated PSK: On your day of appointment for passport, it is advised to reach the Passport seva kendra at least 15 mins in advance to your scheduled timing.

4. Get your appointment letter checked: Security personal at entry of PSK would ask for your appointment letter and check the timings and would allow you to enter the Passport seva kendra. Now the whole process would passport application process would take at least an hour.

5. Get token number: When you get entry to PSK then you have to go to counter and get token number for your appointment. Person at counter would ask for all the documents which I have mentioned in step 2 and check the originals too. Then they would give you token number. for applying in tatkal your token is prefixed with letter 'T' followed by number.

6. Document uploading and completion: Next step is going to counter number starting with 'A'. There are numerous A counters inside a PSK. Here they would collect all the photocopies of documents and upload it to their database. Person would get your biometrics, thumb impression in case of minors. It is generally done in 15-20 mins

7. Document verification: After completing counter 'A' formalities, you have to wait till the tv screen shows a 'B' counter number against your token number. Once it is displayed goto corresponding counter 'B' and get your original documents verified. Time taken is generally 5-10 mins.

8. Grant Section Counter 'C': After finishing document verification at counter B, wait till your token number is assigned to officer at counter 'C', C number counter's are passport grant counters and may verify your documents again. Time taken 5-10 mins.

9. You are done: After counter C processes your file, you would get a receipt for passport application and minor's passport would arrive in 3-5 day's time at your address mentioned while filling the online passport form. This is because of no police verification step involved in case of minor's passport.

Hope that now you would get a good pre-understanding of passport application process and different steps involved in it. If you feel like thanking for this post then do press like button or share this post with friends.