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