Sometime back, India witnessed the historic implementation of GST. It is expected to be one of the game changer steps for the Indian economy in the long run.
Though a lot of people are confused about its pros and cons, it is also true that it has come like a blessing for many people, especially property buyers.
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Property prices are expected to cool off a bit after GST implementation. Earlier, the builders had to pay several taxes like Customs duty, Central Sales Tax, excise duty, entry tax, etc. Under GST regime, all these will be rolled into one single tax. The actual tax effect is also expected to be much lower than mainly due to the input tax credit on raw materials that builders get against payment of taxes on inputs like steel and cement.
So there is a clear possibility that property prices might cool off at several locations by 3% to even 10%. Now lets see the kind of savings that you can make due to this.
Lets assume that you were planning to purchase a house before-GST for Rs 75 lakh. Now after GST, the prices have come down by about 5-6% to about Rs 70 lakh. So that is a straight saving of Rs 5 lac.
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Now you would be taking a home loan for this purchase. So assuming you bring in 20% down payment, the loan now would be of Rs 56 lac. On a 9.5% rate for a 20-year tenure, the total interest paid by you will be Rs 70 lac. Compare this with a loan of Rs 60 lakh, which you would have to take if it was for a pre-GST priced house. In that case, the total interest to be paid would be about Rs 75 lac. So that is again a saving of Rs 4 lac.
On a total basis, you have saved about Rs 9 lac (Rs 5 lac + Rs 4 lac).
So if you have been waiting to buy a house till now, it just might be the best time to do it with the help of a home loan. You will save several lakhs over the course of loan.