Here’s why the latest increase in intimation of mortgage affects homebuyers and real estate
For most homebuyers, their dream home becomes a reality through a home loan. For homebuyers, especially middle-class families with limited resources, a home loan that is sanctioned is one of the biggest financial and emotional steps in their journey to owning a home. Along with the happiness of having your loan sanctioned also comes the paperwork and the taxes to get your mortgage and loan registered.
Several taxes need to be paid in order to register a mortgage with a home loan. Intimation of mortgage is one such fee that the homebuyer has to bear. Recently, civic authorities in Maharashtra increased this fee to more than pre-COVID times which has caused homebuyers discomfort. Here’s how this affects homebuyers:
Earlier, this charge of intimation of mortgage, which is a charge to be paid to prevent fraud on the home loan by declaring the bank or lender’s involvement on the mortgage of the property, was limited to Rs. 1000 irrespective of the home loan value. Now, however, intimation of mortgage will be charged at 0.5% of the home loan value. While, as per new rules, there is a maximum cap of Rs. 15,000 on intimation of mortgage, the charges exceed by five times the previous amounts.
Most homebuyers, as well as developers, are unhappy with this decision given the negative effects of the pandemic on real estate. Over the course of the pandemic, sales have slumped as the economic downfall of markets worldwide have restricted homebuyers from making a purchase.
In order to help the real estate industry stand on its feet again, Maharashtra and Karnataka governments had reduced Stamp Duty earlier this year. That coupled with attractive offers from developers has revitalized real estate in India with K-shaped growth in March Quarter.
However, more measures like the reduction of Stamp Duty were expected to promote real estate growth. Instead, according to experts, this astounding increase in intimation of mortgage will now discourage homebuyers, especially those aiming to buy mid-range affordable properties who already pay Stamp Duty, Registration fee, and more out of their own pocket along with intimation of a mortgage.
As a result, middle-class homebuyers may find it difficult to afford the added intimation of mortgage along with burgeoning prices and may choose to put a pause on their plans of owning a home. Following this, the growth of real estate in India may shrink.
Given an increase in intimation of a mortgage can cause such harmful effects, there may be a push to have the new 0.5% charges removed for a healthy recovery of the real estate industry post the pandemic.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
