What is the maximum amount of housing loan available?

You can avail of a maximum of 85 per cent of the cost of the property, including the cost of land, subject to a maximum amount of Rs one crore

What is the amount I can borrow and what are the criteria?

Generally, you can borrow up to 2.5 times your gross annual income. But, your equated monthly installments (EMIs) usually should not exceed 35% of your gross monthly income. The actual amount of loan will vary across the individual companies. Housing Finance Companies (HFCs) primarily look at your capacity to repay the loan installments on time. They assess the repayment capacity of you and co-applicants (spouse or parent), if any, based on annual income, assets and liabilities, savings history, financial and occupational stability, age and the number of dependants.

What is the period in which I will have to repay the loan?

The loan will generally have to be repaid in a period of between 5 to 15 years, but definitely before you retire. A few HFCs also offer a 20-year repayment period, usually at a higher interest rate.

How do I apply for a loan?

Step 1 : Approach a HFC 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.

Do I get tax benefits on the loan?

Yes. You are eligible for certain exemptions on both the principal and interest components of the loan as per the Income Tax Act, 1961. The principal repayment of the loan up to Rs. 10,000 is eligible for a rebate @20% u/s 88 of the IT Act. The income-tax exemption limit for interest paid on housing loans has been increased from Rs. 30,000 to Rs. 75,000 per annum on self-occupied houses. Therefore, an interest payment of up to Rs. 6,250 per month can be deducted from taxable income in arriving at the total income-tax payment of an individual.

How to Deal With Your BROKER ?

If you need a house and the broker is the only answer, here are some things you should keep in mind :
1. Check if the broker belongs to an association.
2. Services Expected from Broker - brokers should show you the flat, arrange a meeting with the owner and take care of getting clearance from the housing society before the agreement is signed.
3. Payment to Broker? To be sorted out as soon as possible, preferably after the formal introduction is over. The EAAI says Mumbai brokers can charge 2 percent of the transaction amount in a sale, and two months rent in a leave and licence deal.
4. Talk to your colleague, friend or neighbour with whom the Broker has dealt with.
5. Always deal with a broker in his office and be sure that you are dealing with the main broker, ask him to call the owner of the property in your presence, and set up a meeting.
6. Last but not least, listen to your feelings and go with the broker you are most comfortable with.

What is carpet area, built-up area and super built up area?

Once you know the approximate size of property you wish to purchase & and the rate prevailing in your chosen area, you can then arrive at a budget amount. Carpet Area: Carpet area may be defined as the net usable area. Until two decades back flats were sold on this basis. Carpet area is the area from the inner sides of wall to wall. However this concepts is rarely used today and as a result, flats today are generally sold on the basis of Built up area and super built up area.
Built up Area (BUA): BUA, over and above the carpet area, would include the space covered by the thickness of the inner and outer walls of the flat. The BUA thus would generally be around 15% more than the carpet area of the flat. Thus for a carpet area of 1000 sq. ft. the BUA could work out to be 1150 sq.ft. approximately.
Super Built up Area: Super BUA, apart from the BUA, is said to include the proportionate common areas on the floor like the passage, staircase, etc. This would usually be around 25% to 35% of the carpet area. However, there is a tendency of loading even the common areas of the building / project like the garden, open area, clubhouse and other recreational facilities.

What are the clearances required to acquire a property ?

The basic clearances required to acquire a property are: a. A no objection certificate (NOC) from the society where the property is located however if a property is purchased from a builder no such NOC is required. b. The income tax department 37 (I) clearance is required if the property is above the value prescribed by the appropriate authority constituted under Income Tax Act, which value is Rs 75 lacs in Mumbai city.

What are transfer charges ?

A society or a builder has to make transfer of ownership of property and lecies the transfer charges. The charges are normally borne equally between buyer and seller. The quantum of transfer charges varies from society to society. The maximum transfer charges that a society can charges is Rs 25,000/-

What is stamp duty ?

The stamp duty is a state levy that is payable on the document normally by the purchaser to the state government. The stamp duty is payable on the purchase price of property as indicated in the purchase agreement. The stamp duty payable is Rs 38750 on forst Rs 10 lakhs and 8% on the balance considerative market value of property if property is purchased in Co-operative Housing Society otherwise stamp duty is at 10%. The stamp duty is payable at the state government's office and is applicable to all properties
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