CHEQUE BOOK

HT Estates - - HTESTATES - Harsh Roongta

I have ₹ 25 lakh in hand and would like to buy a house for about ₹ 45 lakh. I earn ₹ 3.5 lakh an­nu­ally. Also, the build­ing in which I want to buy the flat is 20 years old. What should the EMI be if I bor­row the dif­fer­ence amount?

—Su­bir Ma­lik Banks can finance only up to 80% of the agree­ment value of the prop­erty. If you are below 40 years of age, you should be el­i­gi­ble for around four to four-and-a-half times your gross an­nual in­come as loan, pro­vided you have no other loan to ser­vice sub­ject to 80% of the prop­erty agree­ment value. With an an­nual in­come of ₹ 3.5 lakh and as­sum­ing you have a good re­pay­ment track record on loans and credit cards (if any) you will be el­i­gi­ble for a loan amount of ap­prox­i­mately ₹ 14 lakh to ₹ 16 lakh for a ten­ure of 20 years at an in­ter­est rate of 10.25% per an­num.

Hence, for a prop­erty worth ₹ 45 lakh, the bank can lend up to ₹ 36 lakh, but since you are el­i­gi­ble for only ₹ 15 lakh, the bal­ance amount of ₹ 30 lakh will have to come from your own sources. Ad­di­tion­ally, you will have to con­trib­ute to­wards stamp duty and reg­is­tra­tion charges from your own sources of funds. You can take a joint loan with your earn­ing spouse/par­ents/chil­dren to in­crease the loan el­i­gi­bil­ity.

The age and the con­di­tion of a build­ing has a bear­ing on loan el­i­gi­bil­ity. Banks are nor­mally re­luc­tant to lend for a prop­erty which is very old. In your case, if the prop­erty is 20 years old and if it is in good con­di­tion, you should not have any prob­lems in get­ting a loan from any bank. Most banks get the prop­erty val­ued in­de­pen­dently and they will pro­vide the loan based on their val­u­a­tion rather than the value men­tioned in the pur­chase agree­ment. The val­u­a­tion as de­ter­mined by the banker’s val­uer is sig­nif­i­cantly lower than the ac­tual cost and hence your ef­fec­tive down pay­ment can go up. Please note that the residue age of the build­ing based on tech­ni­cal eval­u­a­tion should be more than the ten­ure of the loan sought by you.

I am plan­ning to buy a res­i­den­tial plot and the con­struc­tion may take an­other two to three years. Can I get a home loan for the prop­erty?

—Arvind Ag­gar­wal We are as­sum­ing that you mean that the con­struc­tion will start im­me­di­ately but will be com­pleted in two to three years. If so, you can get a com­pos­ite loan, which is taken for self-con­struc­tion of a house. The com­pos­ite loan is con­sid­ered at par with a home loan for the pur­pose of el­i­gi­bil­ity, rate of in­ter­est, ten­ure of the loan etc.

The loan is given to finance cost of land and cost of con­struc­tion on the plot. The banks will re­quire doc­u­ments in re­spect of proof of in­come, iden­tity, res­i­dence for the home loans and doc­u­ments re­lat­ing to ti­tle of the prop­erty be­ing pur­chased. You will have to sub­mit an es­ti­mate of the to­tal cost of con­struc­tion, cer­ti­fied by an ar­chi­tect/civil en­gi­neer. The cost of the plot to you or the cur­rent mar­ket value, which­ever is lower, will be taken into ac­count to work out the to­tal cost of the pro­ject, pro­vided you com­mence the con­struc­tion within a rea­son­able time after pur­chase of the plot.

The bank will de­ter­mine the home loan amount based on the to­tal cost com­pris­ing con­struc­tion cost and cost of the plot. The loan will be re­leased in parts, based on the progress of the con­struc­tion, and after you have brought in your full con­tri­bu­tion. The bank may in­sist on send­ing its own tech­ni­cal per­son­nel to as­sess the progress of con­struc­tion or may rely on cer­tifi­cates/pho­to­graphs sub­mit­ted by you.

Some banks are not com­fort­able fund­ing self­con­structed prop­er­ties and hence, you will have a nar­row choice as far as num­ber of len­ders are con­cerned.

Harsh Roongta is CEO, Apna Paisa. He can be reached at ceo@ap­na­paisa.com prop­erty should read the orig­i­nal lease deed to de­ter­mine the orig­i­nal sta­tus of the prop­erty.If the lease deed does not have the trans­fer clause we will also not recog­nise it.”

Sur­pris­ingly, the rev­enue depart­ment seemed in­dif­fer­ent to the plight of the home­buy­ers stuck with trans­fer deeds. Asked why the depart­ment was col- lect­ing rev­enue for doc­u­ments which do con­fer prop­erty ownership rights on buy­ers, Dharam Pal, sec­re­tary (rev­enue) says, “We are con­cerned about rev­enues. It’s the duty of the peo­ple to go through the doc­u­ments be­fore get­ting them reg­is­tered. Peo­ple should buy prop­erty through trans­fer of lease deed only if the deed has a clause which al­lows such trans­fer. The sub-reg­is­trar can’t make such a dis­tinc­tion.”

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