Frequently Asked Questions

What are the types of home loans available?

There are a variety of home loans available viz:

Home Purchase Loan: is a loan advanced to a person to assist in buying a house or flat.

Mortgage Loan: A mortgage loan, also referred to as a mortgage, is used by purchasers of real property to raise capital to buy real estate; or by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged. The loan is "secured" on the borrower's property.
What is an EMI?

EMI (Equated Monthly Installment) is the amount payable to the lending institution every month, till the loan is paid back in full. It comprises of a portion of the interest as well as the principal.

What are the factors affecting an EMI?

The EMI of a loan depends on three factors:

Loan amount - This stands for the total amount that has been borrowed by the individual.
Interest rate - This stands for the rate at which the interest is charged on the amount borrowed.
Tenure of loan - This stands for the agreed loan repayment time-frame between the borrower and the lender.

What are the eligibility conditions for a home loan?
To qualify for a home loan, most of the lending institutions in India require you to be:

•  An Indian resident or NRI
•  Above 21 years of age at the commencement of the loan
•  Below 65 when the loan matures
•  Either salaried or self employed

What are the interest rates offered for home loans?
Interest rates are different from institution to institution and generally vary institution to institution and range from about 9.25% to around 12%. The interest on home loans in India is usually calculated either on monthly reducing or yearly reducing balance. In some cases, daily reducing basis is also adopted. Homes loans are offered under daily reducing, monthly reducing and yearly reducing basis.

Annual reducing:
In this system, the principal, for which you pay interest, reduces at the end of the year. Thus you continue to pay interest on a certain portion of the principal which you have actually paid back to the lender. This means the EMI for the monthly reducing system is effectively less than the annual reducing system.

Monthly reducing:
In this system, the principal, for which you pay interest, reduces every month as you pay your EMI.

Daily Reducing:
In this system, the principal, for which you pay interest, reduces from the day you pay your EMI. EMI in the daily reducing system is less than the monthly reducing system.

What are the other costs that usually accompany a home loan?

Home loans are usually accompanied by the following extra costs:

Processing Charge:
It’s a fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan or may also be a percentage of the loan amount. The loan amount required by you cannot be less than the processing fee.

Pre-payment Penalties:
When a loan is paid back before the end of the agreed duration, a penalty is charged by some banks/companies, which is usually between 1% and 2% of the amount being pre-paid.

Commitment Fees:
Some institutions levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.

Miscellaneous Costs:
It is quite possible that some institutions may levy a documentation or consultant charges.

Searching / Short listing a property

Buying a property/house can be tedious or pleasurable depending on how you go about it.

Normally property buyers fall into two major categories:

Being sure why you are buying also influences various choices you make. This includes choosing:
The location / The stage of construction / The developer / The price bracket

There are no right and wrong decisions - whatever your reason is for buying a house, it is the right one. But there can be right and wrong ways of going about it. Here are a few tips to make property buying a pleasurable activity, to make sure you find the right price in the right location.

What documents do I need to check before buying a home/property?

Once you have decided to buy the home/property of your choice it is necessary to check up on the following documents closely before proceeding further:
•  Title Certificate
•  Commencement Certificate (CC) to start construction.
•  Sanctions from various authorities dealing with Building Plans, Fire Safety, Environmental Clearance, Land Registration Status etc.
•  Occupancy Certificate (in case of ready to move in property)
•  Payment Schedule (for under construction)
•  Completion Certificate.

What documents do I need to check before buying a resale property?

•  Check for a duly stamped registration of the property.
•  Ensure no dues are accorded to the builder.
•  Check for seller’s name in municipal records & confirm seller’s membership in the society (if formed)
•  Ensure there are no pending bills, charges or taxes.
•  Make sure that the property is mortgage free.
•  Sanctioned Building Plan (to ensure no unauthorized construction)
•  Previous title documents (that chain of title is complete)
•  Occupancy Certificate

How do I verify the authenticity of the various documents submitted by the seller?

1.  Approved plans can be verified from the corporation or other plan sanctioning authority’s office.
2.  Ownership documents of land or development rights held by the builder can be confirmed from the Sub Registrar’s office where they are registered.
3.  Society share certificate can be verified from the Society itself.

What is a sale deed?

A sale deed is a document which transfers immovable property be it land or a house, flat, office or other structure to another person.

What is a conveyance deed?

Conveyance deed is a final document provided by the builder transferring the land ownership right to the society.

What is a building completion certificate?

A building completion certificate is the final document granted by the plan sanctioning authority and usually follows the occupancy certificate. This document certifies that all acts necessary in connection with the construction of a building are complete.

What is an occupancy certificate?

An occupancy certificate is granted by the plan sanctioning authority once the building is complete and ready for Inhabitation. This document is given after verification that the construction has been carried out in accordance with the approved plans. The builder is not entitled to give possession and the unit buyer is not allowed to occupy the unit till the OC has been obtained. Further, the property comes into existence on and from the date of granting of OC. Property taxes are also levied as a unit from the OC date.

What are the taxes that need to be paid at the time of property purchase?

You need to pay the following taxes at the time of registering the property:
•  TDS or tax deduction at source on amount exceeding Rs. 50 lakhs for the purchase of immovable property excluding agricultural land. The TDS must be submitted in the name of the seller.
•  Stamp duty on registration
•  Service Tax is applicable if the property is being purchased from the builder who conceived and constructed the project before offering possession to the buyer. If a ready-to-use property is purchased from the seller then service tax is not applicable.
•  Value Added Tax (if applicable in the state and not be paid in case of ready to move in properties)

What is Stamp Duty and who is liable to pay the Stamp Duty?

Stamp Duty is a tax, similar to sales tax and income tax collected by the government, and must be paid in full and on time. The liability of paying stamp duty is that of the buyer.

What are Maintenance charges?

Maintenance charges are the charges either annually or monthly applicable to be paid by the owner once he/she has taken possession of the Property. These charges are paid for the general maintenance and preservation of the building/society.

From what date are the maintenance charges due?

Maintenance charges usually get applicable from the date (or month in general) the possession is taken of the Property.