• Registered Development Agreement between the owner of land and the builder, Power of Attorney to the builder from land owner for sale of flats.
• Commencement Certificate granted by Corporation / Nagar Palika.
• Letter of Allotment from private Builder / Housing Board / Society.
• NOC and Transfer Letter from development authority.
• NOC from Private Builder in Bankâ€™s Standard format.
• Tripartite Agreement
• If leased land then Registered Agreement of Lease.
There are a variety of home loans made available by the different finance companies.
a) Home Purchase Loans
b) Home Improvement Loans
c) Home Construction Loans
d) Home Extension Loans
e) Home Conversion Loans
f) Land Purchase Loans
g) Bridge Loans
h) Balance-Transfer Loans
i) Re-finance Loans
j) Stamp Duty Loans
k) Loans to NRI's
An application for home loans can be made any time after you have decided to acquire/construct a property, even if the property has not been selected or the construction has not commenced. An application form along with the necessary documents has to be submitted to the respective finance company after which they would review the application and decide on its status.
The maximum home loan amount one can borrow depends on many factors, which include the purpose of the loan, whether for purchase of property, or improvement or purchase of land for development. Also the residential status of the applicant, whether resident in India or non-resident will also have a bearing on the maximum quantum of loan that one can borrow. Typically, a Resident Indian can borrow up to 85% of the cost of the property, including cost of land, subject to a maximum of Rs 5,000,000.
A Fixed interest rate for Home loans is one where the rate charged by the HFC on the loan amount is constant over the tenure of the loan. A fixed interest rate protects the borrower from a rise in home loan rates. While on the flip side, he may not benefit if the market rates were to fall. Therefore, it is advisable to go in for a fixed rate if you feel that the rate of interests in the market have touched rock bottom and the rates can only move upwards.
A Floating interest rate for home loans is a loan where the interest rate which is payable is linked to the market rate e.g. the bank lending rate. The interest rate payable by you will also rise and fall as per bank lending rates which may fluctuate.
Home loans interest rate in India is usually calculated either on monthly reducing or yearly reducing balance. In the Monthly reducing system, the principal on which you pay interest reduces every month as you pay your EMI. While in the Annual Reducing system the principal is reduced at the end of the year, thus continuing to pay interest on a certain portion of the principal which you have actually paid back to the lender thus making EMI for the monthly reducing system effectively lesser than the second system of calculating interest.
You will have to ensure that the property is duly and properly insured for fire and other appropriate hazards, as required by the HFC during the period of the loan and will have to produce evidence each year and/or whenever required by the HFC. The HFC will be the beneficiary of the insurance policy and will be an additional cost that will add to the final cost of purchase of the property.
It is possible to repay a loan ahead of schedule. A form of a penalty termed as a pre-payment penalty is payable to certain institutions which varies from one HFC to another
Collateral securities are the additional securities taken by the HFCs which may be in the form of guarantee from one or two persons, assignment of life insurance policies, deposit of shares and units or other securities. These additional securities are taken so that if a loan is not paid back, recourse may be taken to such securities instead of depending upon the mortgage of the property which is the last resort.
The processing of a home loan application, if the documents are in order takes around 15 to 20 days and it takes another week for the company to check out the property papers and make the disbursement.