Property Valuation is the practice of developing an opinion of the value of real property, usually its Market Value. This value is determined by various factors like age, location, market conditions, maintenance, construction quality, surrounding area.
A free hold property is one which consists of a house or a building that is being purchased along wit the land upon which it is built. The ownership of a freehold property is for an indefinite period of time.
A leasehold property is one which consists of the house or a building only but not the land upon which it is built. Here the holder of the interest has the right to use or occupy, but not to sell or transfer the property. The holder of the property occupies the property for a specified period of time. After expiring the date, the property holder has to return it to the person who owns the land.
Carpet Area of the apartment/building is the area that does not include the area of the walls.
Built-Up Area of a apartment/ building is the area including the area of the walls of the Particular apartment. (Carpet Area + Area of walls of a particular apartment/ flat)
Super Built-Up Area of apartment/ building is the area that includes the Built-Up Area along with the proportionate area under common spaces such as the lobby, lifts, stairs etc. Super built up area is the term applicable only to multi-dwelling units. (Built up area + Proportionate common area)
In order to make a permanent public record, registration of an immovable property is required. Also as per Transfer of Property Act right, title or interest can be gained only if the deed is registered.
While buying an apartment, three documents are executed in the favor of purchaser. One is a sale agreement which covers the intended sale of the undivided share of land. The land is later conveyed under a sale deed. If the sale is a first sale of undivided share of land, then the title will be confined only to the undivided share of land conveyed. In order that you have to acquire the title to your portion of the building, you will need a construction agreement. The agreement for sale and the sale Deed are executed by the owner of the land or by the builder on behalf of the owner. The construction agreement is directly executed by the builder. This is a standard procedure.
The construction agreement is essentially a works contract. It is an agreement in writing for the execution of the work relating to the construction of the apartment and it also involves the transfer or sale of the goods involved in the execution of the contract.
6. What is the deciding factor for the Home Loan Amount sanctioned by the Housing Finance Institutions?
Housing Finance Institutions (HFIs) sanction loan amount based on eligibility, depending upon your repayment capacity (which considers your age, qualifications, assets, liabilities, stability of occupation, savings history) and according to your income. The maximum home loan amount to be sanctioned varies with the HFIs. Normally, the HFIs sanction a loan amount which is 80 to 85% of the cost of your home.
It takes approximately 15 days for the processing of home loan application, provided the documents are in order.It takes another 7 days for the Finance Institution to verify the legal papers of the property and make the disbursements.
Yes, the HFIs charge Processing Fees and Administrative Fees, both to be paid upfront in order to get the loan amount sanctioned. The processing fee varies between 0.5 to 1% of the loan amount. Once the loan is sanctioned, an administrative fee of 1% of the loan amount sanctioned will have to be paid.
A Fixed interest rate for Home loans is the interest rate charged on Loan amount which is constant over the tenure of the loan. A fixed interest rate protects the borrower from a rise in home loan rates. But on the contrary, he may not benefit if the market rates were to fall.
A Floating interest rate for home loans is the interest rate which varies according 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.
These are the securities taken by the HFIs which is in the form of guarantee against the loan amount. The collateral securities may include life insurance policies, Fixed Deposits, deposit of shares etc. In case of non repayment of the loan amount, these securities serve as an alternate option for the finance institutions to recover the loan instead of depending upon the mortgage of the property which is the last alternative.
In case of under-construction property, the HFIs disburse the loan amount in parts based on the progress of the construction of property. This process is known as Pre EMI which is the amount of loan paid by the institution in simple interest, in case of under construction property. Once the possession certificate is produced to the HFI, the final disbursement is done. After the final disbursement, the borrower starts paying the EMI from the following month.
Yes, one can repay the loan amount before the scheduled timeline. But in this case a penalty termed as pre payment penalty is levied which differs from one institution to another.
Yes it is required to insure the property for which home loan is taken. The property needs to be insured for fire and other apt hazards as per HFI requirement. The HFIs may ask to produce the evidence for insurance at any time during the loan tenure. The beneficiary of the insurance policy will be the HFI and the insurance policy will be treated as an additional cost which will be added to the final cost of the property.
14. Can one increase or decrease the loan amount after it has been approved or sanctioned by the HFI?
Yes, the loan amount can be increased or decreased after it has been approved or sanctioned. But it needs to be done prior to the disbursement of final loan amount is done. If you wish to increase the loan amount, it requires the proof of income that needs to be presented to the HFI, so that it fulfills the income criteria for that particular loan amount.
Indian residents are eligible for certain tax benefits on principal and interest components of a loan under the Income Tax Act, 1961. Also, an added tax benefits under Sec 80 C on repayment of principal amount up to Rs. 1,00,000 p.a. can be availed that can further reduce your tax liability by about Rs. 30,000 p.a.