Home Loan Tips

How much loan can one get?

You can get a Home Loan of up to 85% of the Total Consideration Value.

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Who can be a co-applicant for the loan?

The spouse of the applicant can be included as a co-applicant for the home loan and his/her income shall be included to enhance the loan amount. Further, in case there are any other co-owners, they also need to be co-applicants.

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What is the repayment period of the loan?

You can select the payment period you are comfortable with up to 15 years provided it does not extend beyond retirement age or on your reaching 65 years of age whichever is earlier.

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How are home loans repaid?

The home loan repayment is by Equated Monthly Installments (EMIs) comprising of interest and principal amount calculated on annual rests. Post Dated Cheques or being directly deducted from your salary can pay EMIs.

In case of part disbursement of the loan, monthly interest is payable only on the disbursed amount. This interest is called Pre-EMI interest and is payable monthly till the final disbursement is made, after which the EMIs would commence.

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What is the security provided for the loan?

The security of the property and/or such other additional /collateral security has to be provided as may be mutually agreed.

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What documents are required to get the loan sanctioned?

Representatives of the concerned firm will discuss the documents that are required to submit in detail. An indicative list is given below:

	Passport size photograph of all applicants.
	Residence and age verification, which may be established from the PAN card, election ID passport, driving license and ration card.
	Bank statements for the last six months.
	Latest salary slip/ statements showing all deductions in case of employed applicants.
	Certified copies of Balance sheets and profit and loss accounts., IT acknowledgement, advance tax challans ( for both company/ firm and personal account ) for the last three years in case of self employed applicants.
	Memorandum / Articles of association for companies, partnership deeds for firms and a brief profile of your company /firm in case of self employed applicants.

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How will they disbursed the loan?

The loan will be disbursed on:

	The identification and selection of the property.
	Submission of legal documents.
	Legal and technical clearance of the selected property.
	On satisfactory completion of the above and on the investment of the owners' contribution, the loan amount (as warranted at the stage of construction) will be disbursed.

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From where can one get home loans?

Yes, you can avail of a Home Loan from several Housing Finance Companies, some of them are:

List of Housing Finance Companies and link to there website

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Different Types of Home Loans

To have one's own home is the dream of every person. Now that getting a home loan is so easy it seems everyone can fulfill his / her long cherished dream. There are different types of home loans tailored to suit your requirements. These are

Home Purchase Loans

This is the basic home loan for the purchase of a new home.

Home Improvement Loans

These loans are given for implementing repair works and renovations in a home that has already been purchased by you.

Home Construction Loan

This loan is available for the construction of a new home.

Home Extension Loan

This is given for expanding or extending an existing home. For e.g.: addition of an extra room etc.

Home Conversion Loan

This is available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need of pre-payment of the previous loan.

Land Purchase Loans

This loan is available for purchase of land for both construction and investment purposes.

Bridge Loans

Bridge loans are designed for people who wish to sell the existing home and purchase another one. The bridge loans help finance the new home, until a buyer is found for the home.

Balance Transfer Loans

Balance transfer loans help to pay off an existing home loan and avail the option of a loan with a lower rate of interest.

Refinance Loans

This loan helps you pay off the debt you have incurred from private sources such as relatives and friends, for the purchase of your present home.

Stamp Duty Loans

This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of property.

Home loans are available on fixed rate of interest and floating rate of interest. In fixed rate loans, the interest rate remains fixed over the life of the loan, irrespective of the interest rates in the open market. The plus point of fixed rate loans is that they remain steady over the years, making at least one aspect of your monthly cash flow predictable. But the flip side is that the lenders charge a higher rate of interest for fixed-rate loans because if interest rates shoot up, they lose the opportunity to make more money on the funds they are lending

In floating rate loans, the rate of interest changes according to a set formula as interest rates fluctuate in the open market. The plus point is that lenders charge a lower rate for such loans because you are taking on some of the interest-rate risk. The downside is that interest rates may rise anytime and you can end up paying more than fixed rate loans.

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Documents required for Home Loans

Below are the lists of documents required for availing of home loans for various business and property categories. Please click on the categories mentioned above to view the list.

• Salaried Individuals
• Self-Employed/Businessmen
• If a flat is purchased from the builder
• If the property is being purchased is in Cooperative Society
• If constructing on own land

Salaried Individuals

1. Salary slip/Form 16 A.
2. A photocopy of the first and last pages of Ration card or copy of PAN/Telephone/Electricity bills.
3. A photocopy of Investments (FD Certificates, Shares, any fixed asset etc. or any other documents supporting the financial background of the borrower.
4. A photocopy of LIC policies with the latest premium payment receipts (if any).
5. Photographs (as applicable).
6. A photocopy of bank statement for the last six months.

Self-Employed/Businessmen

1. brief introduction of Business/Profession.
2. Balance Sheet, Profit and Loss account and statement of income with Income Tax returns for the last 3 years certified by a CA.
3. A photocopy of Advance Tax payments (if applicable).
4. A photocopy of Registration Certificate of estatblishment under shops and Establishments Act/Factories Act.
5. A photocopy of Registration Certificate for deduction of Profession Tax (if applicable).
6. Bank statements of Current and Saving accounts for the last 6 months.
7. A photocopy of Certificate of Practice(if applicable).
8. A photocopy of any bank loan (if applicable).
9. A photocopy of the first and last pages of the Ration card or a copy of PAN/Telephone/Electricity Bills.
10. A photocopy of LIC policy (if applicable).
11. A photocopy of investments (FD Certificates, Shares, any other fixed asset).

If a flat is purchased from the builder

1. Original copy of your agreement with the builder.
2. 7/12 extract or property register card of the land under construction.
3. Index II extract of your agreement with the builder.
4. Copy of N.A. permission for the land from the collector.
5. Search and title report (with the details of documents) for the last 30 years.
6. Development agreement between the owner of land and the builder.
7. Copy of order under the Urban land Ceiling Act.
8. Copy of building plans sanctioned by the competent authority.
9. Commencement certificate granted by Corporation / Nagar Palika.
10. Building completion certificate(if available).
11. The latest receipts of taxes paid.
12. Partnership deed or memorandum of association of the builders firm.

If the property is being purchased is in a Cooperative Society

1. Original share certificate of the Society.
2. Allotment letter from the society in your name.
3. Copy of the lease deed, if executed .
4. Certificate of the registration of the society.
5. Copy of the byelaws of the society.
6. No objection certificate from the society.
7. 7/12 extract or property register card in the society's name.
8. Copy of N.A permission for the land from the collector.
9. Search and title report(with the details of documents) for the last 30 years.
10. Copy of order under the Urban Land ceiling Act.
11. Copy of the building plans sanctioned by the competent authority.
12. Commencement certificate granted by Corporation / Nagar Palika.
13. The latest receipts of taxes paid.
14. Original Agreement to assign / Deed of assignment.

If constructing on own land

1. Original sale deed of land and extract of Index II.
2. 7/12 extract or property register card in your name.
3. Copy of N.A. permission for land from the collector.
4. Search and title report (with the details of documents) for the last 30 years.
5. Copy of order under Urban Land Ceiling Act.
6. Copy of the building plans sanctioned by the competent authority.
7. Building permission granted by Corporation / Nagar Palika.
8. The latest receipts of taxes paid.
9. Estimate of cost of construction certified by the architect.

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Documents Required by NRIs

Photocopies of:

• Employment contract (English copy if the contract is not in English, attested by the Embassy/Employer).
• Latest work permit.
• Details of previous employment.
• Identity card issued by current employer.
• Continuous discharge certificate (CDC) – (for applicants employed in the merchant navy).
• Latest salary slip/certificate.
• Overseas Bank Account Statement (four months).
• Pages with visa stamp on the passport.

Property Related Documents

• Allotment letter from the co-operative society / association of apartment owners.
• Receipts for payments made for purchase of the dwelling unit.
• 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.

Additional documents be submitted by Person of Indian Origin

Photocopy of PIO card.

If the PIO card is not available, photocopies of any of the following documents:

• The current passport, with birthplace as ‘INDIA’.
• The Indian passport, if held by the individual earlier.
• Parents/grandparents Indian passport/birth certificate/marriage certificate substantiating the individuals claim as a person of Indian origin.

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Tax Benefits from Home Loan

Tax Benefits & Implications

Since home loans are subsidized by the government of India, the rate of interest is much lower when compared to other loans available for different needs. And because home loans come with a lower rate of interest, the advantage is that the effective cost gets reduced even further.

Keeping this in mind, take a look at some of the tax benefits which make home loans more appealing and definitely not a burden.

What tax benefits do I enjoy?

Tax benefits are available on the principal and interest components of a loan as per the Income Tax Act, 1961. As the benefits could vary from year to year, it is advisable to check the current benefits available. A tax rebate of 20% (under Section 88 of the Income-Tax Act) on the principal repaid, subject to a principal ceiling of Rs. 20,000 per year, is available. To you it would mean a tax rebate of Rs.20,000 x 20% - which is Rs.4,000.

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