Tuesday, 14 July 2015

Housing Loan

Purpose Of Loan


a) To purchase/construct house/flat on ownership basis. Includes purchase of already constructed flat/house which has at least future life equal to 1. times of the stipulated repayment period.

b) To renovate/extend/repair existing house flat.

c) To purchase a plot of land. Only composite loan for purchase of loan along with construction of house to be considered. An undertaking should be obtained from the borrower that he/she will construct a house on the said plot within a maximum period of 18 months from availment of advance failing which Rate of Interest at Commercial Rates will be applicable.

d) To acquire household articles for furnishing house/flat

Insurance Coverage


Sum Insured shall be Home Loan amount and Insurance Premium shall be one time premium for the tenure of the loan.

Eligible components for Home Loan:

i) Cost of the Plot of Land.
ii) Cost of Construction.
iii) Stamp Duty and Registration Charges.
iv) Expenses for furnishing the House/Flat.
v) Cost of Flat in case of Purchase of Flat.
vi) Payment towards extra amenities like Parking slot.

Eligible Borrowers

i) Permanent Salaried Employment.
ii) Professionals like Doctors, Lawyers, Engineers, Chartered Accountants etc.
iii) Self employed Persons having regular income.

Age

Normally housing finance should not be extended to retired persons and persons above 65 years.

Income

For Salaried:
  1. Latest Annual Salary Certificate (Form 16).
  2. Copies of Income Tax Returns for last 3 years.
For businessman:
  1. Copies of Financial Statements (preferably audited).
  2. Income Tax Returns for last 3 years.
Note:- Even though ITR's are available for last 3 years, eligible quantum of home loan is to be arrived at on the basis of the latest ITR. Care must be take than the latest ITR is not inflated.
In case latest ITR is only available and the ITR for previous years not available adequate documentary proof to be obtained such as Annual Salary Certificate/ Form 16.
For purchase of second house the customer may intend to let out his existing or new house being purchased out of bank finance. In such cases the rental income may also be considered for calculating EMI.

CO-Borrowers

The family members of the borrower can be considered as Co-borrowers even if they are not joint owners of the property to meet the Income/EMI Criteria. They may include Husband/Wife, Parents/Parents of Husband, Son, Daughter/ Daughter in law etc.

Margin

The borrower has to contribute a suitable portion of the Project Cost from his/her own pocket. This is called the Margin. This is usually 20% for 1st Home and 25% for 2nd or subsequent Homes.

Net Take Home Pay/Income

It is the portion of the Income left with borrower after meeting the EMI requirements. It should not be less than 40% of his gross salary/income.

Credit Information Report

Generation of Credit Information(CIR) is mandatory. Most popular Credit rating agency providing this service is Credit Information Bureau of India Ltd. (CIBIL). It provides information related to the customers previous Credit history and provides a suitable risk rating for the customer.

Calculation of Quantum of Loan

72 times of gross monthly salary OR 6 times of gross annual income based on Income Tax Return.

Security

Equitable Mortgage of land/flat/house proposed to be financed.

Legal Opinion/ Search and Title Clearance Report

A Legal opinion has to be obtained regarding the title of the documents from the bank approved panel advocate to avoid any legal complications after the loan disbursement.

Valuation Report

A Valuation Report has to be obtained from the bank approved Panel Engineer to ascertain the marketable value of the property.

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8 comments:

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  2. Interesting and informative. Thanks a lot for such a detailed post, really helpful. I am looking forward to learning more.

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  4. Oh god, when I'm thinking about my own housing loan it makes me feel so depressed. At the one hand I do really need a house. My family needs it. I have children and I need to rise them up properly. But the fact that I need to spend so much money makes me sick. Better I'd be doing reviews on EssayCompany.

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  5. These calculations and risk factors can only be managed by expert advisors. Housing loan is a long procedure and shall not done without personal financial planning of funds. Will sell off some mutual funds and use fixed deposit amounts in making down payment next month.

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  6. This comment has been removed by the author.

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