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Housing Loan

Basic Details of Home Loan

The most popular method of financing a home purchase is with a mortgage. This is a loan that is secured over the home. There are a number of different mortgage suppliers and you will have to shop around in order to get the best deal. Given that your home is probably the single biggest purchase you will make in your lifetime, you must make sure to take the care and attention that the transaction merits. Mortgage rates can vary greatly from lender to lender and the amount your rate is set at can make a huge difference to the amount your repayments will amount to. Even a small difference in rates could save you thousands of dollars or allow you to have your home paid off years sooner. So do your homework.

Fixed or Variable

When looking for the best loan, there are certain terms you will need to be familiar with. For example, mortgages generally come as either a fixed rate mortgage or a variable rate mortgage. The fixed rate loan will keep the same interest rate and monthly repayment for the whole lifetime or term of the loan. This will generally be for a period of 10, 15, 20 or 30 years. If the rate is fixed for a period, such as the first 2 or perhaps 5 years, and then reverts to a variable rate it is known as an adjustable rate mortgage or ARM.

When the ARM rate becomes adjustable, it will move up or down periodically according to a specified market index. These can include the Prime Rate, the LIBOR or the Treasury Index among others.
With the adjustable rate, some of the risk of changing interest rates that would otherwise fall on the bank is transferred to the borrower. They are therefore cheaper averaging somewhere between 0.5% to 0.2% lower than a 30-year fixed rate mortgage. If the rate is particularly volatile or difficult to predict than a fixed rate mortgage may not even be possible.
In the majority of cases, the savings of an ARM outweigh the risks of a rising interest rate. Especially where the mortgage is for ten years or less.

Fees

Lenders may charge various fees when giving a home loan or mortgage. These include entry fees; exit fees, administration fees and lenders mortgage insurance. There are also settlement fees (closing costs) the settlement company will charge. In addition, if a third party handles the loan, it may charge other fees as well.
Banks usually charge a valuation fee, which pays for a surveyor to visit the property and ensure it is worth enough to cover the mortgage amount. This is not a full survey so it may not identify all the defects that a house buyer needs to know about. Also, it does not usually form a contract between the surveyor and the buyer, so the buyer has no right to sue if the survey fails to detect a major problem. For an extra fee, the surveyor can usually carry out a building survey or a (cheaper) "homebuyers survey" at the same time.

Documents required for Home Loans:-

Please note these requirements are for Indian Citizens.

If constructing on own land

  • Salaried Individuals
  • Self-Employed/Businessmen
  • If a flat is purchased from the builder
  • If the property is being purchased is in Cooperative Society

 

  Below are the lists of documents required for availing of home loans for various business and property categories.

Salaried Individuals

  1. Salary slip/Form 16 A.
  2. A photocopy of the first and last pages of Ration card or copy of PAN/Telephone/Electricity bills.
  3. A photocopy of Investments (FD Certificates, Shares, any fixed asset etc. or any other documents
    supporting the financial background of the borrower.
  4. A photocopy of LIC policies with the latest premium payment receipts (if any).
  5. Photographs (as applicable).
  6. A photocopy of bank statement for the last six months.

Self-Employed/Businessmen

  1. A brief introduction of Business/Profession.
  2. Balance Sheet, Profit and Loss account and statement of income with Income Tax returns for the last 3 years certified by a CA.
  3. A photocopy of Advance Tax payments (if applicable).
  4. A photocopy of Registration Certificate of estatblishment under shops and Establishments Act/Factories Act.
  5. A photocopy of Registration Certificate for deduction of Profession Tax (if applicable).
  6. Bank statements of Current and Saving accounts for the last 6 months.
  7. A photocopy of Certificate of Practice(if applicable).
  8. A photocopy of any bank loan (if applicable).
  9. A photocopy of the first and last pages of the Ration card or a copy of PAN/Telephone/Electricity Bills.
  10. A photocopy of LIC policy (if applicable).
  11. A photocopy of investments (FD Certificates, Shares, any other fixed asset).

If a flat is purchased from the builder

  1. Original copy of your agreement with the builder.
  2. 7/12 extract or property register card of the land under construction.
  3. Index II extract of your agreement with the builder.
  4. Copy of N.A. permission for the land from the collector.
  5. Search and title report (with the details of documents) for the last 30 years.
  6. Development agreement between the owner of land and the builder.
  7. Copy of order under the Urban land Ceiling Act.
  8. Copy of building plans sanctioned by the competent authority.
  9. Commencement certificate granted by Corporation / Nagar Palika.
  10. Building completion certificate(if available).
  11. The latest receipts of taxes paid.
  12. Partnership deed or memorandum of association of the builders firm.

If the property is being purchased is in a Cooperative Society

  1. Original share certificate of the Society.
  2. Allotment letter from the society in your name.
  3. Copy of the lease deed, if executed .
  4. Certificate of the registration of the society.
  5. Copy of the byelaws of the society.
  6. No objection certificate from the society.
  7. 7/12 extract or property register card in the society name.
  8. Copy of N.A permission for the land from the collector.
  9. Search and title report(with the details of documents) for the last 30 years.
  10. Copy of order under the Urban Land ceiling Act.
  11. Copy of the building plans sanctioned by the competent authority.
  12. Commencement certificate granted by Corporation / Nagar Palika.
  13. The latest receipts of taxes paid.
  14. Original Agreement to assign / Deed of assignment.

If constructing on own land

  1. Original sale deed of land and extract of Index II.
  2. 7/12 extract or property register card in your name.
  3. Copy of N.A. permission for land from the collector.
  4. Search and title report (with the details of documents) for the last 30 years.
  5. Copy of order under Urban Land Ceiling Act.
  6. Copy of the building plans sanctioned by the competent authority.
  7. Building permission granted by Corporation / Nagar Palika.
  8. The latest receipts of taxes paid.
  9. Estimate of cost of construction certified by the architect.
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