The loan availed to purchase a new residential property ( builder purchase or resale) is called Home Loan.
Loan taken by hypothecation of property (residential / commercial) is known as Loan Against Property.
The money procuered by this type of loan can be used for many different purpose.
Any one qualifying the parameters of income & property can avail Home Loan or Loan Against Property.
The procedure to avail a Home Loan is quite simple –
You need to call us on 09699251100 or fill up the form with us, we will call you up & take the essential financial & personal details required for the loan like Age, Net salary, Company employed with, Designation, Total experience, Current experience, Period of stay in the city & the Current Residence & Details of the obligations being serviced.
Also we would need the Property detalis like Type of Purchase, Location of the property, Built-up area, Rate per square feet, Agreement Value, Occupation certificate & so on.
We then revert to you with the quotation of the lenders who would sanction the loan & also suggest the best lender suiting your needs, the final decision for which lender to go with lies with you.
We would then mail you the "List of Documents needed to apply for the loan, once the said documents are ready same would be picked up, the form signed & filled up, then the case would be logged in with the bank.
The Thumb rule for calculating eligibility:
Net salary per month is calculated after tax deductions then 40% to 65% of that amount is taken as loan servicing capability [appraised income].
If one has additional income like Incentives, Overtime, LTA, Medical Rembuirsments, Car Allowance, it is averaged out to per months income & only 25% of the same is considered for eligibility.
If you have any ongoing obligation then it is deducted from the appraised income, this amount is then divided by EMI per lacs for the considered term, the arrived figure is the eligibility in lacs.
Example shown below
Net Salary pm after tax deduction = 80,000/-
Averaged out incentive pm = 20,000/-
Averaged out LTA pm = 2,000/-
Current Personal Loan EMI = 5,500/-
Loan Calculation based on the above information:
50% of Net salary = 40,000/-
25% of Incentive = 5,000/-
25% of LTA = 500/-
Appraised Income = 45,500/-
Appraised Income [-] less] on going EMI = Final Income to be considered.
45,500 [-] 5,500 = 40,000/-
Suppose the loan is @ 10% for 20 years; then EMI per lac @ 10% for 20 years is Rs.965/-
The eligibility would be Final Income / EMI per lac for the tenor.
40,000 / 965 = 41.45 lacs
Hence, the eligibility is Rs. 41.45 lacs @ 10% for 20 years
.
Every banks has its own method for calculating eligibility. It is advisable to check the eligibility with the concerened person.
Yes ! The banks also add-up the co-applicants income to determine the eligibility.
The eligibility is based on the years remeaning for retirement & the income.
The banks readily add-up Spouse & parents income.
Some financers also add the income of brothers & other closed releatives this has to be categorically clarified with the lender as this is not a norm.
It would also be advisable to clarify if the daughters [married / unmarried] income is clubbed with their parents as this is also an exception.
Most of the Lenders sacntion Home Loan for salaried customer in 7 working days; for Business persons the tim taken for sanctioning a case can be longer as various calculations are involed & there is also "Personal Discussion" done at the place of customer work.
The Income Tax Act, 1961 states that one can avail tax benefit under 3 sections for home loan
1. Section 80 (c)
2. Section 24(b)
3. Section 2(28A)
1. Section 80(c) - In this section the EMI component paid towards repayment of principal amount of the loan can be deducted from income.
The borrower is eligible for a tax deduction for a maximum amount of Rs. 1L each year under section 80(c) irrespective of the tax bracket.
To avail this deduction the property needs to be self occupied.
2. Section 24(b) - The interest paid towards home loan is treated as an 'expense' under 'Income from house property' and is deductible under Section 24(b) from the total income.
The maximum deduction permitted under this section is Rs.1.5L per annum.
3. Section 2(28A) - Processing fee can be treated as interest and a deduction can be claimed according to Section 2(28A) of the I-Tax Act
"EMI" is Equated Monthly Installment.
The installment paid while servicing the loan is equal for the whole tenure.
The composition of EMI = Principal Amt + Interest.
Rate of interest which is applicable on the whole loan amount (principal amount) through out its tenor.
Interest which is charged on the reduced outstanding principal amount.
It is also called Variable Rate of Interest:- Here the rate of interest changes according to the banks policy, it is also know as floating Rate of Interest.
The rate of interest applicable at the time of Sanction / Disbursement remains the whole tenure.
Can the loan amount be decreased after sanction ? Yes !! The bank would disburse only the amount need if it is lower than the sanctiuon amount..
Can the loan amount be increased after sanction ? No ! To increase the loan amount one needs to submit latest financial documemts. Enhanced Fresh eligilbility is then decided based on the incerased income. This is called a revalidation.
Pre Approved property is also called APF [Approved For Finance] property. This means that the developer had got the legal aspect of the property approved form various lenders.
To approve a property the builder submits all the legal documents, such as Development Agreement; Goverment Permission & Cleareances; IOD; Tittle Deeds, Commencement Certificates & Approved Plans; Sale Deed and so on.
As the Legal aspect of the property is now clear the lenders will easily finance the property, only the valuation of the property takes place.
Carpet Area is the area enclosed within the walls, actual area to lay the carpet. This area does not include the thickness of the inner walls. It is the actual useable area of an apartment, office, unit, showroom etc.
Built up Area is carpet area + the thickness of outer walls and + the balcony.
Super Built Up Area is the built up area plus proportionate area of common facilities such as the lobby, lifts, shaft, stairs, etc. The plinth area along with a share of all common areas are proportionately divided amongst all unit owners, this makes up the Super Built-up area.
Sometimes it may also include the common areas such, swimming pool, garden, clubhouse, etc.
This term is therefore only applicable in the case of multi-dwelling units.
The building plan made by the developer which is approved by the Municipal Corporation or the concerned authority is approved plan.
CC means Commencement Certificate : A commencement certificate is issued by the local authorities to allow the builder to begin construction once all norms have been met. Unless the commencement certificate is granted, the construction is illegal or may never happen. It is subsequent to the approved plan.
OC means Occupation certificate : This certificate issued by the local municipal body to the builder /developer once the said building is complete in all respects and fit for occupation.
Conveyance is the act of transferring ownership rights of the property (plot of land where the building is built) from the developer / builder / development authority to the society.
In a society share certificate is issued to its members (flat owners); it is a legal document that certifies ownership of a specific distinctive number of shares in a society. Share certificate will bear the seal of the society & will be signed by the Chairman, and the Secretary.
It is a duty collected by the state goverment, it is paid as per the true market value as assessed by the Stamp Office. Stamp duty is a decide by the respective State and hence would vary from state to state. When an agreement is to be franked, it needs to be unsigned and undated.
The agreement should be registered with the Sub-Registrar of assurances under the provisions of the Indian Registration Act. Stamp duty is to be paid prior to the Registration.
Chain Agreement is chain of all the agreement right from it first purchase from the builder / society to the current owner.
Minimum Area 400 sft built up area.
Legal is a process where all the agreements & documents related to the concerned property are given to a lawyer to ascertain the legal & tittel of the concerned property. A panel lawyer appointed by the lender dose legal.
technical is a process where the valuator assigned by the lender valuate the cost of the property, checks its permissions, the condition of the building & the property to be mortgaged.
OCR means Own Contribution Receipt : it is the amount paid by the purchaser to his seller and a receipt acquired for the same. It is advisable for the purchaser to pay his own contribution to the builder / seller by cheque and obtain receipts for the same.
NOC means No Objection Certificate : it is asked by the lenders form the builder / society. In this letter the builder / society mentions that they have noted in their books the charge created by them on the said property.
Society NOC: Almost all banks ask for society NOC in their formats. To obtain this all the dues & transfer charges of the society need to be cleared. It is mandatory to the committee to issue the NOC in the prescribed banks format under Maharashtra Co-operative Society Act, 1960 u/s 79(2) (a)
In Registration receipt : Customer name, Registration amount, Date, Bazaar Mulya, Mobadla.
In the Agreement
Names of the seller & the purchaser
Property details ( Area & schedules)
Agreement value & payment schedule
Signatures of the seller & the purchaser
Commencement certificate / Occupation certificate
Dast Goshwara Part I & II
Index II
In the Share Certificate : Front Side
Society name
First owners name
Share certificate issue date
Society Stamp with the sign of the Chairman, Secretary & Member
Share Certificate : Back Side -
Names of all the previous owner mentioned in the chain agreement & their date of transfer.
MV is Market Value :it is the actual on going cost of the property in the said area at that point of time.
COP - Cost Of Property.
It is the Total of Agreement Value + Stamp Duty + Registration.
It is also called ASR - Agreement, Stamp Duty, Registration.
LTV - Loan to Value Ratio
LCR - Loan to Cost Ratio.
It is the percentage of Loan amount that can be provided with respect to the Value of the property.
The case is disbursed & the cheque is given when all process is complete i.e. Loan agreement is signed, PDC's, ECS, NOC is given, original documents of the property to be mortgaged submitted & all the pre-disburse conditions complied with.
An equitable mortgage is the transfer of an interest in property to a lender as a security for a loan of money on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed. We give this loan by deposit of title deeds of the property (interest) with the lender.
In this case, mortgage is registered with sub-registrar. Charge is created against the property in Government records.
Yes ! This is call switiching - from fixed to floating & vice versa. Firstly to switch the lender must have attractive fixed / flotaing rate options. Lenders charge switching charges.This clause is genrally written the loan agreement which is signed before disbursement.
Though insuring the property on which the loan is being taken is advisable some financiers may insit to insure the property against which the loan is being availed.
It is always advisable to insure the property as it gives you & the lender cover against unfortunate events like Fire & earthqauke.
The permium charged is mostly for the whole tenor as that of the loan.
The general charges levied by the banks till disbursement are
1. Processing Fee
2 Stamp Duty for the MOE [Memorandun of Entry]
3. Miscellaneous Franking & Notary.
1. Processing Charges: These charges are levied on the sanction amount. They are generally 0.5% to 1% of the loan amount. For salaried customers most banks generally charge a lump some fee. Service tax is also applicable on the processing fee.
2. MOE [Memorandun of Entry] : In the state of Maharashtra according to Maharashtra ACT NO.XVII of 2009 for the deposit of title deeds made by the way of security for the repayment of money, stamp duty need to be paid. If the loan is under Rs. 5 lacs the stamp duty would be 0.1% of the loan amount & 0.2% for loan amount over Rs. 5 lacs.
3. Miscellaneous Franking & Notary : Most of the banks have some of their own Affidavits, POA, Undertakings which needs to be franked & notarized.
1. Late Payment charges
2. Cheque bounce Charges
3. Part premayment charges
4. Full closer charges
5. Switching Charges
6. Cheque / Instrument swap charges
7. Duplicate Statement Charges
8. Charges of photocopy of property documents.
Yes absolutely ! one repay part loan amount. Most of the banks do not charge pre-payment penalties.
Every banks have their own policies for repayment.
They may have lock-in periods; Part payment may be allowed in one financial year or one Loan year. Only certain amount may be allowed to be pre-paid without any penalty & so on.
One needs to clarify exist clause with the banks before submitting the loan application to them.
Such awareness will give peace of mind later as this is a long term commitment.
Closing loan prematurely is called full closer of the loan. This is very much possible.
One closes the loan If they have funds, they want to transfer the loan to another financier or are selling off the property.
Most of the banks do not charge penalty if the loan is closed by one's own funds or else penalty might be applicable.
This exit clause is always mentioned in the Loan Agreement signed with the bank.
NO ! One can not get Home Loan form banks over here to purchase property overseas.
Absolutely ! If one is working abroad they can avail a Home Loan. Banks are comfortable when one is employed in Europe, North America, Australia, Gulf Singapore & Hong Kong.Lenders have grading for different countries called "Country Risk Ratings" and lend to the customers working in those countries which are assumed to be the safest economically & politically.
There is also minimum salary criteria for applicants working in these countries.
Once the case is scanctioned the banks charge the customers Processing / Administrative charges. There is also certain validity of the sanction letter. After that time the bank may or may not revalidate the sanction letter on the charges paid earlier.
Even if one dose not avail disbursement banks rarely retun to charges taken earlier.
Of course it matters if the repayment is delayed. It adverly affect you credit rating & same is notified to the rating agencies the pattern of your payment.
A bad repayment history lower one's credit score & jeopardises chances of vailing futher loan, also one have to pay bounce charges & late payments fee. to top it all answer calls from the collection team.
If you have an Home Loan which is active & you plan to sell your home, this is possible. Here you can pay the outstanding loan amount & clear the loan or ask the buyer to do Balance Transfer of the Loan. Balance Transfer procedure is explained in detail in the following answer.
Payment of the outstanding amount by the buyers bank to the sellers bank is know as seller's Balance Transfer.
Collect all the normal documents necessary for login.
Additional Documentation for Balance Transfer is as follows :-
- List of Documents (LOD) deposited with the existing bank in the banks format.
- Foreclosure letter of the loan to be taken over
After the sanction of Loan, the disbursement process begins
The agreement is signed & the cheque is made favoring the existing bank.
This cheque Is then given to the existing bank which closes the loan account & hands over the property documents to the new lender as per its TAT.
