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How to get to know how much I need?

Who will lend me money for buying a home?

How much will I get?Can I afford Repayment outflows?

How to fund the gap between the cost of loan and my loan

What documents will I need for getting a loan?

I have retired from service. Can I get a home loan?

Other than money, what else do lenders offer me?

What is this black money that everyone talks about in home deals?

I am a NRI.How can I take a home loan in India?

Well, finally, tell me step by step what I should do towards collecting a cheque from the home loan firm?

You need a lot of money to buy a home, usually a few lakhs of rupees. You can raise all of it yourself. Or you can shell out some amount yourself and seek a loan from one of India's over 380 housing loan firms to bridge the gap between your contribution and the cost of the house. You can't, of course, raise all the money you need from a housing finance firm. No HFC gives you 100% financing for homes.

When you want to get a fix on how much it will ultimately cost you to buy a home, consider not just the cost of the home but also several incidental expenses like

• registration charges. This varies from state to state.

• stamp duty. Even within a city, this varies from one area to another. In Mumbai for example, for a flat worth Rs. 15 lakh, you may have to shell out as much as Rs. 75,000 in stamp duty.

• if it is a flat then a transfer fee to the housing society for transferring the title to your name. Usually, it how depends on how big or small the flat is.

• parking fee. Many housing societies charge you a flat fee for allowing you to park your car or two wheeler within the premises.

You can collect information on registration fee from the Registrar's Office or the Land Records Office or even the District Collectorate. Stamp Duty departments come out with Stamp Duty Ready Reckoners every year. Just buy one and look it up. Transfer fee and parking fee are decided by the housing society in which you are buying a flat. You will have to speak to the management of the society to get a fix on them.

One final word. If you plan to take a home loan from a firm, we have not talked about the charges like processing fee which the firm may charge you apart from the interest on loan. Look at the details at CHARGES.

Some home loan firms lend you money to pay for registration and stamp duty. Others don't.

If you are falling short of cash to pay for the house, you may ask your parents, friends or even your boss for a loan. But it may not be sufficient. Given the large sums involved in buying a home, you may have to seek a loan from a housing finance firm set up mainly to lend to you and other home seekers. There are housing finance companies in public sector (LIC Housing Finance, CanFin Homes) as well as private sector (HDFC). Many banks such as Citibank, HSBC, Saraswat Bank and Corporation Bank also give housing loans. In all, there are more than 380 housing finance companies in India.

Choose a lender after some research into how much you will get, how much it will cost you, quality of service and any other factor that may be important to you.

Finsights has partnered with some home loan firms.
You can get to know about them here.OUR PARTNERS. If you like their terms, you can order for a loan from some of them right here. Soon you will be able to order a loan from any of them here.

Ok, now that you have checked out how much the home will cost you, you want to know how much you can get from a home loan firm so that you can then ask parents or friends to pitch in and fill the gap. No firm lends you all the money you need to buy a house.

How much you get will depend mainly on two factors.

One, the cost of the house. Normally, you will be lent about 75% of the cost of the house or flat. Some firms lend up to even 90%. A higher proportion is possible if your credit worthiness is higher.

Two, how much you earn. The loan will be decided as a percentage of your gross income, after factoring in the number of dependents you have, your age, qualifications, length of service, other repayment obligations, etc.If you have a co-applicant, his or her income will be included for deciding the income margin.

You can borrow from as little as Rs. 25,000 to a crore. As for whether you can afford the monthly repayment installments (EMI), go by this ball park rule: with just one dependent, you can afford to repay as EMI up to 40% of your net monthly income. Drop the idea, if your dream home demands more.

Visit the following links to know more of it.

HANDY TOOLS                  Maximum loans
                                          Tenure
                                          Interest Rates
                                          Charges
                                          Borrower's Age
                                          Security

Now we have come to a really hard question to crack. You have gone through calculators and perhaps even compared details of home loans of different lenders, and now know how much you can borrow for your dream house. But what about the margin money? You need to raise it before you seek a loan.Of course, one option is to borrow from friends and relatives. But if you can't, think of these:

get to know how much you need as margin. Tighten your belt and go for a substantial saving every month. Open a recurring deposit with a bank. It helps. Get a fix for how many months you need to save and then just race to reach the required sum. This obviously means that you should be able to plan much ahead while buying a home. Savings Calculator.

The HFC from which you plan to take a loan may be running a savings deposits scheme itself. But there are no special benefits if you save with the firm which lends you. Except of course, you begin a relationship which may help in faster sanction and disbursement of the loan later.

Of course, you may take a loan from PPF, NSC, against LIC policies, fixed deposits or shares, or even by pledging gold. But remember, these loans will mean higher repayments on debt obligations every month. Hence the lender will factor it and mark down your eligible loan amount. Go for these only when you are sure that your income level will get you much more than what you are actually seeking. (e.g., your income will get you Rs. 15 lakh, but you need only Rs. 10 lakh). Then even if you take a loan from PPF, NSC, etc, it won't hurt you.

Lenders don't go beyond just ensuring that you have raised the margin money (you may have to show your bank passbook or some proof for this). They really don't care how you did that as long as it does not affect your repaying ability.

Check out which lender demands how much margin at this site Margins.

Home loans usually run into large sums. It is possibly the biggest loan you will take in your life. Hence lenders are usually extra-cautious before handing over the cheque to you. This reflects in the rather irritating paperwork and procedures to doubly make sure that you do deserve the loan and will repay. Here is a checklist to reduce your hassles and accelerate the process.

First, some basic documents to confirm your identity and residential status.

• Ration card - you know that, in this country, you need this everywhere.

• Original / true copy of the rent receipt.

• Xerox copy of the electricity bill.

• At least three or four photographs.

• Xerox copy of the bank pass book.

• Details of other loans availed for purchase of consumer durables, vehicle, etc.

• LIC policies, with latest premium receipts.

• Details of 1-2 eligible guarantors with some proof of their financial status.

• Details of family members and co-applicants.

You will need these, if you are buying a specific property.

• True copy of the building plan certified by a qualified Architect/Engineer.

• An allotment letter from the housing board, Development Authority, Housing Co-operative Society along with an NOC to create mortgage in favour of the firm giving you a home loan.

• Item-wise estimate of the construction cost from a qualified architect.

• A clear and marketable title of the house or flat.

• In a second sale, a proof that the age of the flat does not exceed 10 years.

These financial details will be needed to check your eligibility

• If you are a salaried employee.

• You should be in permanent employment having a regular source of income.

• You should have a minimum of 7 years of service left for retirement. The upper retirement limit is 65 years.

• Qualification certificates, if required by some housing finance companies / banks.                           

• Employment verification duly certified by the employer.

• Last 3 months' salary slip duly attested by the employer.

• Form No 16 for the last financial year.

• If eligible for HRA or interest subsidy/any other benefit from employers for the housing loan, details of the same.

If you are self employed or a businessman.

• Profile of the business/profession.

• Annual accounts for the last 3 years.

• Xerox copies of advance tax payments duly attested by a C.A.

• Xerox copy of registration certificate.

• Xerox copy of registration certificate for deduction for profession tax.

• Acknowledged copy of Letter of Authority to the bank for obtaining confidential credit report.            

• Original rent receipt/lease deed.

• Membership certificate of practice.

• Xerox copy of bank's loan sanction letter duly attested.

Just remember that this is not a standardised list. Some firms may ask you for a few more documents and details while some may not need documents mentioned here. But these are the core details. If you have these you can save time because you may need just one or two more papers to sign the deal.

Documents

If you are a retired employee, with a permanent source of income after retirement by way of pension, interest, dividend and other income, you can still avail of a home loan from certain home loans companies. You may need the following:

• Income details for the past.

• Personal guarantee of 1 individual as acceptable to the housing finance company.                                  

• Stamped undertaking of legal heirs to repay the loan amount.

• Usual loan documents as falling in either the criteria of salaried / self employed.                               

• If you are switching the loan from the company to a home loan firm, a certificate from your former employer confirming that they are holding valid & enforceable documents of the house property.

• Undertaking letter of the employer that he will pass on all the documents in his custody to the housing finance company after the home loan firm agrees to take over the loan from your employer.

Several home loan companies offer more than just a loan. For example, loan firm HUDCO doubles up as a company that builds townships. Others have special cells to perform non-lending functions. These help you identify a good home for you, help check technical aspects of a house selected by you and more. Check these out in a quick glance here.

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What is this black money that everyone talks about in home deals?

You have always held forth against black money in discussions with friends and family members. But it is when you go to buy a house, you realise how inescapable black money is in property deals. Tax structures in the 70s and 80s were partially responsible for the rise in the black component in property deals. In 1970s the individual tax rates were as high as 70%. To be eligible for a loan of Rs 1 lakh, an individual had to earn more than three times the value of the property! The high taxation rates lead to tax evasion. Further, artificial scarcities created in raw materials like cement and steel and of course, land, lead to rise in cash component in property deals.

Since then black money had come to stay. The proportion of black money varies from place to place. Usually, it ranges between 30-50%. In places like Delhi it could be 75%.

Terrified? Relax. With highest tax rates as low as 30% for the individual, and cement, steel and other construction material available freely and at reduced prices, you really have a chance of buying it all it white.

Just look at these gains:

1. The sale deed would reflect the true value of the property. You can take a higher home loan up to 85% of the actual value of the property besides getting a tax benefit on the repayment of the loan.

2. Undervaluation of property is an offence under the stamp act, which stipulates that property be valued at market value. The Income Tax department could also attach the property in case it finds the property grossly undervalued. If your deal is all in white, you don't have to worry about these.

3. Sale of some assets such as shares to purchase a residential house is exempt from capital gains tax to the extent of the investment of the sale proceeds from the sale of the specified assets into the property. In the property is undervalued, the tax benefit will be reduced to the extent of the agreement value.

4. If you want to raise a loan by mortgaging a property, the true value can help in getting a bigger loan.

You can look around for all-white deals in several new buildings. There are popular construction companies in all cities that don't ask you for black component. Typically these also happen to be firms that build good houses. Prefer these.

Here are some basic facts for you:

• You should be holding an Indian passport.

• You can take a loan for a period between 5 and 10 years up to the retirement age or 65 years, whichever is earlier.

• You can take a loan from Rs 20,000 to Rs 50 lakh.

• Only 75% to 85% of the cost of the property will be funded.

• The loan amount will also depend on your repayment capacity calculated on the basis of age, qualifications, number of dependents, stability & continuity of income.

• You have to remit 15% to 25% of the margin in advance through NRE/FCNR accounts.

• Repayment will have to be made in EMIs comprising of principal and interest on monthly/annual reducing balance drawn by inward remittances from NRE/FCNR accounts.

• Deposit of title deeds subject to Indian laws.

• 1-2 solvent resident guarantors and/or

• Assignment of LIC policies in full or upto 50% of the loan amount.

Service charges differ from one housing finance company to another. Here's a comparative chart for 4 housing finance companies:

The documents that you will have to produce may vary from one company to another. Here' a general list. Expect marginal deviations.

1. Salary certificate from the employer.

2. Copy of the identity card issued by the current employer.

3. Copy of the Visa stamped on the Passport.

4. Copy of the employment contract. (Remember, if the contract is in some other language, you better give an English translation, attested by the Embassy/Employer should be given).

5. Copy of the property documents for which finance is sought.

6. Documentary proof of margin money invested out of the remittances from abroad.

7. Latest income certificate attested by the Indian embassy/Consulate.

8. Undertaking from the NRIs as per formats of the housing finance company.

9. Power of Attorney on Rs 50 Stamp paper in favor of spouse/relative to expedite the loan processing.

10. 25% of the Agreement value is to be paid to the builder /vendor/allotment authority from the NRE/FCNR/NRO A/c or by way of direct remittances from abroad. You have produce a certificate to that regard. Remember, this is a RBI condition and cannot be waived.

11. If you are working in Merchant Navy and having an NRI Status, the documents would be required to be attested by the Gazetted Officer/Notary.

So you have already crunched numbers to check how much loan you need and from whom, well, that is only the beginning. From this decision to collecting the cheque from the home loan provider (and eventually the keys from the builder) is a long process. Follow these steps. Avoid unnecessary delay.

1. Collect all the necessary papers regarding your income eligibility and keep them in a separate folder.

2. Ditto with papers regarding your property, including the certificates that you need from the builder and from the local authorities.

3. Keep papers that confirm your identity in order, in a separate folder. Like your ration card, xerox copy of the bank passbook, etc. And yes, take along a few photographs and your cheque book too.

4. Call up the home loan firm and fix an appointment with the official.

5. Carry Income, Property and Identity folders with you to the official. Remember, these officials probably deal with a number of home loan seekers in a day. The more you know exactly what you need, lesser the time the official will have to spend in explaining basics to you. This will create a favourable impression about you. Do your home work before talking to the official. Take help from this site.

6. The speed of processing your application usually depends on how complete your paperwork is. If the lending firm does not need anything more than what you've submitted, expect clearance in a matter of few days, in case it is a private sector firm. If it's a public sector bank or firm, it make take a little longer.

7. Sometimes private sector firms either waive some part of documentation or sanction loans even if documentation is incomplete, just asking you to submit the papers before you actually collect the cheque. But you should never approach a HFC expecting it to take a lenient view on incomplete paperwork.

8. Once the loan is sanctioned, you will be asked to pay application processing fee and / or a commitment fee.

9. The HFC may hand over the cheque to you but it will always be made out favouring the seller.

10. If you decide to give post-dated cheques to the HFC, remember to go to your bank first and collect a few cheque books for this purpose.