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General

When Should I Apply For A Loan?

Ideally you should follow the 5 – step process as given below:

  • Decide on buying a house.
  • Decide on the amount that you can afford to put on your own.
  • Apply for a loan to find out your maximum loan eligibility.
  • Get your loan approved.
  • Select a house that meets your budget.
I Have Not Selected A Property. Can I Apply?

Yes, you can apply for a housing loan even if you have not selected a property.

I Have A Partnership Firm? Can The Firm Take A Loan?

No, most HFIs do not provide for loans to partnership concerns. The terms and conditions applicable if an HFI provides loan would be different from the ones in the case of a normal Home Loan. You can, however, apply for a loan in your individual capacity. In such a scenario, you will be evaluated as a self employed person with your share in profits being taken into consideration for loan eligibility.

Can A Minor / Senior Citizen Join As A Co-Owner To A Property?

HFIs have a condition that all co owners need to be co applicants. All co applicants have to be eligible to sign loan agreements. Since a minor is not eligible to enter into a contract, HFIs do not allow for minors to be co owners. Senior citizens, however can join as co owners. Some HFIs also lay down age limits which the co owners have to conform to before the loan is sanctioned.

Will Cash Component Be Included In Calculation Of LTV?

It is not advisable to include any sort of payments for the house that are not accounted for in your IT returns. It is always better to disclose the full value of the house in the agreement in your own interests. This also helps you from any tax implications at a later point in time. HFIs always frown upon any undisclosed portion of the cost of the house and hence the same is not included in calculation of LTV.

How Is The Cost Of Property Calculated?

The sum of the agreement value of the property, stamp duty, registration charges, garage charges for parking cars, society transfer charges, electricity and water connection charges, collectively form the value of the property for the HFI. Additional furnishings done by the developer, for which you enter into an amenities agreement (duly registered) with him are also included in the value of the property. The cost of the property, however, does not include any cash transactions involved in the purchase of the house over and above those mentioned in the agreement.

Can My Home Loan Include Cost Of Initial Furnishing?

No, the cost of initial furnishing does not get included in the cost of the property. However, if the initial furnishing is done by the builder, for which you have signed an amenities agreement that is duly stamped and registered, then such value will be included in the cost of the property.

Am I Assured That My Property Documents Are Clear If An HFI Agrees To Give A Loan?

Yes, be assured of a legally and technically clear property if an HFI decides to give you a disbursement against the loan on your property. The HFI also ensures that the construction has been completed within the norms stipulated by the governing authority. In most cases of resale, you can be sure that your property is clear if the HFI decides to give you a loan. However, if the HFI is not convinced that your property is clear, it insists on some other security as mortgage over and above the current property being financed. In under construction cases, the property will be clear at the time of final disbursement. In case the builder violates the permissions granted to him by the governing authority towards the final stages of the construction, the HFI will hold back final disbursement till it is assured that the property is clear.

For The Same House Can I Get A Further Loan?

You can avail of a further loan as and when you want as long as you have the repayment capacity to service the loan. If you need the loan against the same property, you have to avail it from the same HFI where you have your current loan. The loan is considered as a new one and the terms and conditions of this loan would be as per the prevailing norms at the time of your fresh loan.

What Is A Leasehold Land?

A leasehold land is one where a third party like an individual person, development authority, society or a developer is the owner of the land on which the property is constructed. The owner of the property has given the land on lease to a developer, society etc. The society or the developer constructs a building that is then bought by an individual customer. Where the building consists of multiple flats or dwellings, the flat is owned by the customer by virtue of the same being mentioned in the agreement to lease or in the tripartite agreement entered into between the lessor, lessee and the customer. Alternatively, the property could be sub leased to the customer. If the building is a single unit or house the owner will directly lease the land to the customer.

Can I Get Finance On Leasehold Land?

Yes, you can get finance on leasehold land if the lessor is a development authority. Finance is normally not available if the lessor is any other party than the one mentioned above.

Can I Avail Of Two Simultaneous Loans Against Two Different Properties?

Yes, you can have as many loans against different properties. Provided you have the capacity to repay all the loan installments every month. All HFIs take into consideration the loan installments that you pay every month before arriving at your eligibility.

Incase I Get Transferred Outside The City How Can I Repay My Loan?

Make sure you inform the HFI in advance if you have a transferable job. And as far as repayment goes, after the transfer just inform your new branch about your loan, if the repayment is by way of DAS. If your repayment is by way of PDCs, you can either swap the PDCs with ones from the location where you are getting transferred to or you can retain the same PDCs and ensure that you remit the installment amount every month by the time your payment becomes due.

Do NRI's Get Any Benefit For Repayment Of NRI Loan?

The terms and conditions for a NRI loan are different than those of loans granted to Residents of India.

What Is SURF?

SURF or the Step Up Repayment Facility as it is originally known, is a scheme that is provided to young professionals who have just begun their careers. Considering that their repayment capacity will increase steadily in the near future, this scheme increases the repayment capacity of a customer. Thereby his loan eligibility also increases as it considers the increase in income of the customer over the next few years.

What Happens If My Property Value Falls?

There are always unexpected fluctuations in real estate prices. Accordingly the price of your property may rise or take a plunge. However you must not discontinue the payment of your installments. Fluctuating values of property do not in anyway undermine the need for you repay your loan obligations on time, as any default in payments by you will seriously damage your credit profile and further ruin your chances of getting any loans. Incase you would like to dispose of the property you may do so after clearing your loan with your financier.

What Is Refinance?

You have taken a loan for your house from a HFI at a particular ROI. However over the years the ROI drops. In such a case you stand to lose. Well not if you opt to swap your loan. This could be done from either the same HFI or another HFI at the current rates of interest, which is lower. This is known as refinance.

How Can I Refinance My Existing Loan?

The procedure for refinance is as follows: Arrange for funds to repay the loan with the current HFI after getting the loan approved from the new HFI. Once you have repaid the loan, collect your title documents from the old HFI and submit it to the new HFI and avail of disbursement on your loan.

What Is A Balance Transfer?

When you transfer the balance of a loan that you availed at a higher ROI to either the same HFI or another HFI at the current ROI, it is known as Balance Transfer.

How Can I Avail Of A Balance Transfer?

The procedure for refinance is as follows: Arrange for funds to repay the loan with the current HFI. Get the loan approved from the new HFI. On repayment of the loan, collect your title documents from the old HFI and submit it to the new HFI and avail of disbursement on your loan. Kindly read the details on the Balance transfer product and use the calculator to find out the benefits that you will gain from such a swap.

Should I Insure My Property?

Most HFIs do not insist on property insurance. Some HFIs even offer it to you as an incentive for a certain period of time. However, if your property is not covered under insurance, it is advisable to go in for an insurance cover on your property. The rates of property insurance are very low and today the rates are Rs. 60/- per lakh of property value for a period of one year. If you decide to go in for a longer tenure for insurance, you can avail of huge discounts being offered by the various insurance companies.

I Have Heard Of Mortgage Redemption Life Insurance Policy, Tell Me More About It. Is It Advisable To Go For Such A Cover?

Under a mortgage redemption life insurance policy your life insurance policy would be considered for the mortgage against the loan. In case of your permanent disability to repay or in case of the death of the applicant the loan gets repaid through the policy. Thus the property gets cleared without any legal implications. If, however, you repay the loan totally, you get back the sum assured at maturity. Most HFIs do not insist on going in for a mortgage redemption life insurance policy. However, some HFIs offer better rates on your loan if you opt for this policy. If you plan to go in for a life insurance policy soon and if you wish to avail of this rate differential, then you should opt for the mortgage redemption life insurance policy.

Can I Get A Loan To Finance The Construction Of My Own House?

Yes, you can get finance to construct your own house. The documents that are required in such a case are slightly different from the ones you submit for a normal Home Loan. If you have purchased this plot within a period of one year before you started construction of your house, most HFIs will include the land cost as a component, to value the total cost of the property. This will meet their LTV norms. In cases where the period from the date of purchase of land to the date of application has exceeded a year, the land cost will not be included in the total cost of property while calculating eligibility.