BUYER’S GUIDE – HOME LOANS
With Interest Rates at all time low, this is the right time for everyone to own their dream home.
Lalani Group homes can be financed through leading financial institutions & banks. Please contact us to get details of approval numbers for our various ongoing projects & any other detail at email@example.com or firstname.lastname@example.org
How do I apply for a Home Loan?
(Information Source: Legalpundits International Services Pvt Ltd)
Step 1 Approach a Housing Finance Company with the latest salary slip and TDS Form 16 of the last two financial years of yourself and your co-applicant. The loan officer will informally tell you the amount of loan you are eligible for, the areas in which they finance flats and the terms of the same. Collect a loan application form and confirm the needed documents (mainly proof of income). Visit more than one company since you are likely to get better terms/ larger loan amount if you shop for the best deal.
Step 2 At your chosen HFC, submit the duly filled loan application, along with the requested documents and an application fee (around 1%). They will then interview you on the same. After conducting an appraisal of your application, the HFC will give an in-principle sanction of your loan.
Step 3 You now have to submit your property documents, which should show a clear title. The HFC will check these and levy an administrative fee (around 1%). It will then disburse the loan, either fully or in installments, directly to the builder/ seller of the flat.
How much housing loan can one get?
A number of factors such as your income, age, number of dependents, qualifications, assets and liabilities, income stability/ continuity of your employment / business etc. are taken into account when assessing your repayment capacity. However, there are ways by which you can enhance your eligibility: If your spouse is earning, add him/her as a co-applicant. The additional income shall be included to enhance your loan amount. Incidentally, if there are any co-owners they must necessarily be co-applicants. Did you know that your fiancée’s income could also be considered for sanctioning the loan on your combined income? The disbursement of the loan, however, is done only after you submit proof of your marriage. Providing additional security like bonds, fixed deposits and LIC policies may also help to enhance eligibility. While there is no need for a guarantor, having one might enhance your credibility with us. If so, our loan officer would provide you with the necessary details. However, the final amount to be sanctioned will depend on your repayment capacity. In the total cost, registration charges, transfer charges and stamp duty costs are included.
General Documents Required
- Updated bank passbook or a Xerox of the statement of accounts for the last 6 months
- Age proof: PAN card, Voters ID, Passport and License Xerox of ration card Business profile with details on the nature of business, list of clients, suppliers, staff strength, geographical spread, etc.
- Xerox of education qualifications certificate and proof of business existence
- Xerox of last 3 years Income Tax returns Last 3 years profit/loss and balance sheet Processing fees cheque
- Documents required for applying for a home loan (for employed professionals)
- Latest salary certificate/slip in original
- Age proof: PAN card, voters ID, passport, license
- Xerox of Form no.16 A (TDS Form) from employer. Certificate in original from employer for any other allowances, which are not reflected in salary slip
- Updated bank pass book / Xerox of statement of accounts for last 6 months
- Xerox of your company’s ID or ration card
- Passport size photographs of applicant and co-applicant
- Processing fees cheque
You may be asked to submit further legal documents if required by the bank or its approved lawyers. Retain photocopies of all the documents being submitted by you.
What tax benefits are available in regards to the housing loans?
Tax benefits are available to consumers of house loans for the interest component as well as the principal component of the housing loans. The current budget has left the upper limit of the interest payment deduction at Rs 150,000 per annum. Section 88 also allows tax benefits on principal repayments.
What is the reducing balance method of interest payment?
In reducing balance you reduce the amount of principal payment already paid by you from the initial loan amount. You pay interest only on principal unpaid till that point of time and not the entire loan amount.
What is floating interest rate?
In a floating interest rate, you interest payment will vary according to the market lending rate. If interest rates rise your interest payments will rise and vice-versa. You bear the risk of interest fluctuations in the market. Floating rates are slightly cheaper than fixed interest rates.
What is fixed interest rate?
In a fixed interest rate, your interest rate is fixed over the entire tenure of loan.
Section 24 of the Income Tax Act
This section deals with the Tax Benefits available on Interest Paid on capital borrowed for purchase, construction, repairs, or reconstruction of property.
It allows you to deduct an amount equivalent to the total interest payable on your housing loan from your taxable income within the same financial year. This limit is now set to 1.5 lacks per annum. So, should you borrow money to purchase or construct, repair, renew or reconstruct property on or after April 1, 1999, you get a deduction of up to Rs 1.5 lakh on interest paid. The criteria being: the property has to be acquired or constructed within 3 years from the end of financial year in which the capital was borrowed and be self – occupied.
Section 80C of the Income Tax Act.
A deduction u/s 80C (2) (xviii) is available on repayment of principal during a financial year 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 assessed is also considered under this amount. This deduction is from Gross Total Income.
Who is an NRI?
Any person of Indian origin (Indian Citizen) living abroad for purpose of education, employment, carrying on business etc. for an long duration abroad is a non-resident Indian. Non-residents foreign citizens of Indian Origin are also treated on par with non-resident Indian Citizens (NRI’s) for purpose of certain facilities.
Do non-resident Indian Citizens require permission of Reserve Bank to acquire.
No. Non Resident Indians are allowed to make real estate investments in India without any cap on quantity or the number of investments.
What payment modes can an NRI use for paying for the property?
There is no restriction or condition on payment on buying a property. The normal banking channels are applicable.
FCNR (Foreign Currency Non-Resident accounts) in India
Remittance from abroad through normal banking channels. NRO accounts in India. (Deposits in dollars opened by residents or non-residents). NRE (Non Resident External Rupee accounts)
What are the regulations for purchase of property?
FEMA stipulates that before making a purchase, special form called the IPI 7 needs to be filed with the central office of the RBI along with the title deed or any other certified copy of the document proving that the NRI has executed an agreement to purchase the property within the country within 90 days of the purchase of property along with bank certificate stating consideration paid for the purchase.
Do foreign citizens of Indian Origin require permission of Reserve Bank of India to..
Reserve Bank has granted general permission to foreign citizens of Indian Origin, whether resident in India or Abroad, to purchase immovable property in India for their bona fide residential purpose. They are, therefore, not required to obtain separate permission of Reserve Bank
Can returns from realty or sale proceeds be repatriated?
FEMA says no matter what the proceeds of the sale may be, the amount for repatriation should not exceed the amount paid for acquisition of the immovable property in foreign exchange received.
Can NRI's obtain loans for acquisition of a house/flat for residential purpose from..
The Reserve Bank has granted general permission to certain financial institutions, like HDFC, LIC Housing Finance Ltd., to grant housing loans to non-resident Indian nationals for acquisition of houses/flats subject to certain conditions.
Stamp Duty is a tax collected by the Government on every document by which any right, title, interest or liability is created, transferred, extended, extinguished or recorded. Since the values of transactions in the real estate market tend to be quite high, the amount of stamp duty is also a large amount.
The only exception to Stamp Duty is when the property is transferred through “Will” of a deceased person. All other transfer documents like an agreement to sell, development agreement, Conveyance Deed, Gift Deed, Mortgage Deed, Exchange Deed, Deed of Partition, Power of Attorneys, lease deeds, etc. have to be property stamped before registration.
Market Value of Flat = Carpet Area x 20% x Ready Reckoner Value of that Area
Stamp Duty = 5% on Market Value or Agreement Value (whichever is higher)
Payment to be made on:
- STAMP DUTY:
- Pay Order from any bank with confirmation letter from the Bank
- Pay Order In Favor of “STOCK HOLDING CORPORATION OF INDIA LTD A/C E STAMPING MAHARASHTRA”
- Pay Order from Nationalized Bank Only
- Pay Order In Favour “SUB – REGISTRAR, KARJAT”
- Pay Order in Favour “Joint Sub-Registrar, (AREA) MSD”
- * Area – Andheri I, Andheri 2, Andheri 3 etc
- Stamp Duty is paid on market value or agreement value, whichever is higher
- The rates of Stamp Duty for shop/office/industrial gala/basement is 5% Off the prevailing market value of the property or the agreement value, whichever is higher.
- The property not covered in Article 25 (d) of schedule 1 of the Bombay Stamp Act 1958, will attract Stamp Duty at the rate of 5% of the market value, even for residential property (Article 25 (b) (vi) (a))
- Stamp Duty charged, for every Rupees 500 or part thereof
- Registration fee is charged for every Rs 1,000 or part thereof Source: Stamp Duty Ready Reckoner 2004
Registration Fee for Sale Agreement is 1% of the market value or agreement value (which ever is higher) subject to Maximum of Rs 30,000 (from 1- 4 – 2003)
Effective 1.7.2010 Service Tax is levied on all under construction flats at the rate of 3.09% as per agreement value
Effective from 1.3.2013 Service Tax on flats admeasuring 2000 sq. ft. and above and/or agreement amount above Rs 1 crore, will be 3.70%
Effective 1.4.2010 VAT Tax is levied on all under construction flats at the rate of 1.00% as per market value or agreement value (whichever is higher)
PROPERTY NEWS (YEAR WISE)
Please note that we will update the news section every week/month how much data can it accommodate
(Sources: Print Media, Govt. GR’s, Accommodation Times, Credai-MCHI etc)
Disclaimer: – Lalani Group should not be held responsible for any information posted in this section. The News articles or information posted in these sections are merely for information purpose and have been received from various print media’s or real estate associations or government resolutions. People are advised to use their own discretion while using this information
Open letter to CM on deemed conveyance
Publication: Free Press Section: Mumbai Date: 20th February 2013 Page No:07 Expert on cooperative housing societies, PG Shenoy, has written an open letter to Chief Minister Prithviraj Chavan outlining the glitches that will have to be taken care of if his special drive for deemed conveyance is to succeed. Read More…
Extend infrastructure sector tax breaks to real estate
Publication: DNA Section: Money /Corporate Date: 20th February 2013 Page No:13 India’s otherwise vibrant and thriving real estate sector currently pretty much mirrors the state of the economy. Sales have dropped, margins are under pressure and both high-interest rates and fund availability are stumbling blocks. Read More…
Realign tax breaks with current reality
Publication: DNA Section: Money /Corporate Date: 20th February 2013 Page No:13 After the policy paralysis of the calendar year 2011, 2012 witnessed a pick up in approvals, leading to increased launches and volumes in the real estate industry. However, execution continued to witness bottlenecks on the availability of inputs due to environmental Read More…
Wanted: Infrastructure status for affordable housing
Publication: Business Lines Section: Budget line Date: 20th February 2013 Page No:07 Having failed to impress the Union Government to acknowledge it as an industry, the real estate sector is now hoping to get an “infrastructure status for affordable housing” in this Union Budget. Read More…
Govt for reviving ambitious Dharavi makeover project
Publication: Hindustan Times Section: Main Page Date: 20th February 2013 Page No:01 The stalled Dharavi redevelopment project is inching back on track, with the state looking to appoint a project consultant for the revamp of four sectors of one of Asia’s largest slums. The fifth sector is being developed by Mhada. The tenders to select the bid management consultancy Read More…Continued… Page No: 05 read more…
Co-op societies can not exploit aspiring members: HC
Publication :Indian Express Section: Mumbai Newsline Date: 20th February 2013 Page No:01 Dismissing a Juhu housing society’s petition demanding a transfer fee of Rs 2 Crore from purchaser of a plot in the society, the Bombay High Court recently observed that a co-operative housing society can not exploit people wanting to be members Read More…