For down payment, how much should one keep aside ideally? How do you arrive at this percentage?
— Santosh Verma Normally lenders grant home loan of up to a maximum of 80% (90% for loan amount below ₹ 20 lakh) of the agreement value of the property as home loan. The overall eligibility will be based on your income, your regular outgoings and repayment track record and any existing loan, which you are presently servicing.
This means that your down payment will have to be at least between 10% and 20% of the cost of the property. Moreover, as per Reserve Bank of India guidelines, the bank will not take into account stamp duty and registration cost, while calculating the cost of the property. Therefore, in addition to 10% or 20%, you will have to fully fund the cost of stamp duty and registration charges.
The property is valued by the valuer appointed by the bank. Based on that, the amount to be financed for the property is decided by the bank. In case the valuation done by the valuer is lower than the agreement value, your eligibility in percentage terms shall be decided on the basis of the value as arrived at by the bank’s valuer and you will have to pay the remaining amount. Moreover, there are some components of the cost of the flat, which may or may not be financed by the banks and consequently your down payment requirement for the property will go up.
I am going to buy a flat in Thane, Maharashtra. I’m working but my wife is not. Can she be my coapplicant for a home loan?
—Shankar Raman It is desirable to include the name of the spouse as a joint owner for the purpose of succession. If your spouse is a co-owner, then she will necessarily have to become a co-borrower. If you decide against making her a co-owner, then there is no advantage in making her a co-borrower. However, a lot of lenders insist on the spouse becoming a co-borrower even if she is not a co-owner. My parents own a piece of land on which we wish to construct a house. If I take a home loan in my name as a co-applicant, will I get tax benefits even if the land is not in my name. If my parents give me the land as a gift, and if I apply for a home loan, will I be eligible for tax benefits?
— Sagar Sharma To get a loan, your parents will have to be co-borrowers with you as they are the owners of the property. You cannot claim any tax deduction benefits on the loan if you are not a co-owner of the property. Becoming a co-owner through a gift deed or sale deed will help you get tax deduction but both options will entail payment of stamp duty. I want to buy a flat in Delhi and the seller has informed me that the flat was allotted to him by DDA on leasehold basis. Later, he got the flat converted to freehold. What documents do I need to check?
Sangeeta Sharma Check the copy of conveyance deed and find out if the prope rty tax and other utility bills have been paid up to the date of purchase. Verification can also be done at the sub-registrar’s office to find out if transfers in respect of the flat are registered with him. Get a lawyer for due-diligence.
Harsh Roongta is director, Apna Paisa. He can be reached at firstname.lastname@example.org