Buyer's Guide

Loan Enquiries

Home Loan from Bank

To be eligible for a home loan, the applicant must be at least 21 years of age with a regular source of income from employment or self-employment. The loan must terminate before or when the applicant turn 65 years of age. The applicant should also posses at least 6 months of income proof.

Loan Amount

The loan amount depends on a number of factors such as age, income, number of dependents, qualifications, assets and liabilities, income stability, business, profits, etc. However, there are ways in which to increase loan eligibility and amount. If a spouse or fianc?e is earning, applying together as co-applicants can increase chances of a larger loan amount. In such cases, proof of marriage must be submitted. On the contrary, if there are any co-owners they must necessarily be co-applicants. Providing additional security like bonds, fixed deposits and LIC policies may also help to enhance eligibility. However, the most important factor in sanctioning loans is repayment ability. The total cost includes registration charges, transfer charges and stamp duties.

Documents Required for Home Loans

Documents required for self-employed persons:

  • Updated pass book or Xerox copy of the applicants statement of accounts for the past 6 months
  • A Xerox copy of the applicants ration card
  • A profile of the applicants business mentioning at least the nature of the business, client list, suppliers, employee strength, geographical spread, etc.
  • In the case of a business partnership a copy of the partnership deed, 3 years P & L a/c, B/S, computation of income certified by a CA and individual computation of income and tax returns for last 3 years is required
  • In the case of a proprietor or professional 3 years P & L a/c, B/S, computation of income certified by a CA and an income tax return file statement for 3 years is required
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  • If the company applying for a loan is a Pvt. Ltd. a remuneration certificate, the board resolution for fixing remuneration, the company's annual report and individual IT returns for last 3 years is required

Documents required for employed persons:

  • Latest salary certificate or the original slip
  • A Xerox copy of Form no.16 A (TDS Form) from the applicants Employer
  • The original certificate from the applicant's employer for any other allowances that are not reflected in the applicants salary slip.
  • A Xerox copy of the applicant's updated bank pass book or a statement of the applicants accounts for last 6 months
  • A Xerox copy of the applicant's voter I.D. card or the applicants Company's I.D. or the applicant's passport/ ration card.
  • A passport size photograph of the applicant & co-applicant
Stamp Duty

Stamp Duty:

Stamp duty is payable under Section 3 of The Bombay Stamp Act, 1958.

Stamp duty is payable on market value or agreement value whichever is higher.

Market value of any property is determined by the stamp duty authorities on the basis of the Stamp Duty Ready Reckoner issued by the government on January 1 every year.

Stamp duty for residential property is Rs. 7600/- plus 5 % of the value above Rs. 5, 00,000/- for the time being in force.

Stamp duty for non residential property is flat 5 %.

Legal

Signing a title report (received from the solicitor of the property) with any fine print and specific government reservations is unadvisable.

Accept clearance reports that are lucid and specific.

For instance, if you are interested in buying property that has been built over reclaimed land, make sure that building has been given clearance by the government.

Precautionary measures will prevent you from getting embroiled in any future disputes.

They will also help ensure that your home loans aren't scrutinized. Permissions & Approvals

Before a construction begins; the builder must seek several permissions and approvals from relevant bodies.

Sanction plan by NA & AMC.

Title cleared Deed.

Tax Benefits

When buying a property with loans from specific financial institutions, tax authorities provide certain benefits and exemptionsfrom tax payments.

Section 24 of the Income Tax Act states that an investor is allowed to deduct an amount equivalent to the total interest payable on the housing loan from his/her taxable income within the same financial year.

If an investor were to take a loan, he/she would receive a deduction of up to 1.5 lakhs on the interest rate paid. The only concern is that the property would have to be bought or constructed within 3 years from the end of the financial year in which the loan was taken and would have to be self-occupied.

According to Section 80c of the Income Tax Act: A deduction u/s 80C (2) (xviii) is available on repayment of the principal during a financial year of up to Rs. 1,00,000/-, this aforesaid limit is within the overall limit of Rs 1 lakh, specified in section 80C of the Income Tax Act.

Stamp duty, registration fee or other such expenses paid for the purpose of transfer of such house property to the assessee is also considered under this amount. This deduction is taken from the Gross Total Income.

NRI Guide

A Non-Residential Indian is a citizen of India who lives abroad for employment, business or vocation purposes for an uncertain amount of time.

NRIs do not require the permission of the Reserve Bank of India in order to purchase immovable property and can obtain loans for the purchase of such property from certain financial institutions.
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The eligibility criteria of NRIs differ from Resident Indians based on a few parameters. The parameters include:

Age: The loan applicant has to be 21 years of age.

Qualification: The NRI loan seeker has to be a graduate.

Income: The loan applicant has to have a minimum monthly income of $ 2,000 (although, this criterion may differ across HFCs).The eligibility is also determined by the stability and continuity of your employment or business.

Payment options: The NRI also has to route his EMI (Equated Monthly Installments) cheques through his NRE/NRO account. He cannot make payments from another source say, his savings account in India.

Number of dependants: The eligibility of the applicant is also determined by the number of dependents, assets and liabilities.

An NRI applicant is eligible to get a home loan ranging from a minimum of Rs 5 lakhs to a maximum of Rs 1 crore, based on the repayment capacity and the cost of the property, which although is variable by the priorities of the home loan provider.

Also Home Loan Tenure for NRIs is different from Resident Indians.

An applicant will be eligible for a maximum of 85% of the cost of the property or the cost of construction as applicable and 75% of the cost of land in case of purchase of land, based on the repayment capacity of the borrower.

However, a NRI can enhance his loan eligibility by applying for home loans with a co-applicant who has a separate source of income.

Also, the rate of interest for home loans to NRIs is higher than those offered to Resident Indians.
The difference is to the extent of 0.25%-0.50%. Some HFCs also have an internally earmarked 'negative criterion' for NRI home loans.

Documents required:

• Passport copy
• Passport
• Visa/work permit
• Copy of work contract
• The power of attorney
• A copy of the appointment letter and contract from employer
• Labor card/identity card
• Bank statement for last 6 months
• For self-employed persons, a business profile, the computation of income and balance sheets certified by a CA/CPA for the past 3 years is required.
• If the NRI is a person of Indian O Origin, a photocopy of the POI card also needs to be submitted. If the POI card is unavailable, the applicants current passport, with birthplace as 'INDIA', the Indian passport, if held by the individual earlier or the applicants parents/grandparents Indian passport/birth certificate/marriage certificate is required.
Some Relevant Information:
NRI's can invest in any immoveable property in India except the following
a. Agricultural Property
b. Plantation
c. Farm House
Payment of purchase price for acquisition of property can be made only through the following
a. Funds received by way of inward remittance through normal banking channels
b. Funds held in any non resident account
NRIs may acquire property in India by ways other than purchase: An NRI being a PIO can acquire immoveable property by way of a gift from the following:
a. Funds received by way of inward remittance through normal banking channels
b. Funds held in any non resident account
An NRI being a PIO can acquire immoveable property by way of inheritance from a person resident outside India (who has acquired the property as per the provisions of law as may be applicable with respect to foreign exchange).
Transfer of Immoveable Properties in case of an NRI citizen of India:
• An NRI can transfer the immoveable property other than the properties mentioned above to a person resident in India
• An NRI can transfer the immoveable property to another NRI; Income-tax Procedure
• Investment in a property in India should not give rise to any income-tax implications for an NRI.
• Income from letting out the property would be taxable under the head 'Income from House Property'.
Typically, the actual rent received being higher than deemed values, would be taxable in India, at regular slab rates [current maximum slab rate is 30.9 percent]. Deductions such as (a) standard deduction of 30 percent of the annual value (i.e., rent received/ receivable); (b) certain interest costs in respect of the property could be claimed by an NRI. Where the property is not let out, mitigating tax levy on deemed rental values could be explored having regard to facts.
Sale of property could give rise to 'Capital gains' implications, which would be taxable as per the provisions of the IT Act. In connection with the above, it should be noted that the benefit of indexation would not be available.
However, NRIs could explore the option of claiming certain specified exemptions (subject to conditions) in respect of capital gains arising from sale of property.

Property Documents
  • Original title deeds tracing the title of the property for a minimum period of the last 13 years
  • Encumbrance Certificate for the last 13 years
  • Agreement of sale/construction, if any
  • Receipts for payments made for purchase of the dwelling unit
  • Approved plan/license
  • ULC clearance/conversion order etc
  • Receipts for having invested the margin money through normal banking channels from the Non-Resident (External) account in India and/or the Non-Resident (Ordinary) account in India
  • Latest tax paid receipt
  • Allotment letter from the co-operative society/association of apartment owners
  • Agreement for sale/sale deed/detailed cost estimate from Architect/Engineer for property to be purchased/constructed/extended/improved
  • Copy of approved drawings of proposed construction/purchase/extension

Enquiry