v What are the different forms of investments that can be made in property?
There are a number of investment options in real estate today – such as, investment in commercial real estate, investment in residential property and investment in plots are a few prevalent examples of the various options available today.
v From where can I get home loans?
Home loans are available from all the nationalized as well as private banks in India. These days NBFC are also extending home loans to the flat buyers.
v How can I get a loan for commercial property?
Normally loans are not possible for any under construction building but if the building is 80% complete, some banks offer commercial loan up-to 50% of the agreement value.
v How much loan can one get for home or commercial property?
The percentage of loan depends on property as well as the financial health of any individual.
v Can a Home Loan be Pre-approved?
Yes banks can pre-approve a home loan based on the average balance kept by the individual.
v Can I have Co-Ownership in the Property?
Yes. Co-ownership, or joint ownership, simply put, is when two or more persons hold title to the same property.
v Who can be a co-applicant for the loan?
A co-applicant is one who applies along with the borrower for a loan. A borrower has the compulsion now to have a co-applicant to a loan along with himself. It is important to note that co-applicant cannot be a minor. Most banks permit a few specified relations who can be co-applicants - brothers, parent and son (Blood Relation) and husband and wife.
v What is the repayment period of the loan?
The repayment of a loan depends upon the tenure chosen by the individual. The EMI amount may vary as per the contract term; period can be 10-15-20-25 years. The term also depends upon the age and the financial status of the person.
v What is the Process for Application for Home Loan?
While banks try to keep paperwork and formalities to a minimum, some documents are required for securing a home loan. Banks will require documents that provide proof of your identity, address, income and so on. Once you submit your documents, getting a Bank loan is a quick and easy process.
v How is the Home Loan disbursed?
After the documents are verified, the sanction letter is prepared based on which the allotment gets confirm. Post this based on the payment plan the bank disburse the amount. It can be Construction Linked Plan (CLP), Down Payment (DP), FLEXI and Special Payment Plan (SPP).
v What is the security provided for the loan?
As a basic criterion for accepting home loans, banks advance 80%-85% of the property value in the form of a home loan, depending on the individual’s borrowing eligibility. As in the case of any other secured loan, in exchange for the amount advanced in the form of home loan, banks demand a security from the borrower in the form of mortgage of the house. The property is always mortgage with the bank and also most of the loan buyers buy an insurance cover till the amount of loan so that in case of any eventuality the loan amount can be paid through the insurance company.
v What is Loan against Property?
When the funds are raised by the individual by pledging his existing property to the bank, the process is called LAP. The property remains mortgaged with the bank till the time the entire loan is paid back by the borrower.
v What security will I have to provide?
The property is mortgaged by the bank or financial institute.
v Can I repay the loan ahead of schedule?
Yes
v Does the property have to be insured?
Not necessary it is up to the individual to get it insured or else normally as a practice to ensure the home loan amount the bank gets the life insurance done of that individual up to the amount of loan sum.
v How is my loan reassessed if there is a change in status from Non-Resident Indian to Resident Indian?
Just few other documents are additionally required to the re-assess the loan application.
v How can I get exemptions on the Capital Gains Tax?
There are a few exemptions available for long term Capital Gains, if you:
Buy or construct a new house: If you build a new house or buy one from the money you receive from selling a property, you are exempted from paying the tax on Capital Gains. However, the new purchase should be done either one year before or within two years of sale and the construction should be completed within three years from the date of transfer. The new property bought or constructed should not be sold within three years from the date of its purchase or date of completion of construction.
Capital Gain Account Scheme- Through the Capital Gain Account Scheme (CGAS), you can save the received money in designated banks. CGAS helps you in buying time to look for suitable investments as it serves to inform the Income Tax department that you plan to invest the money received; but at a later date.
Invest in Bonds- You can also invest in financial assets or bonds to save tax. Such bonds are issued by the Rural Electrification Corporation and the National Highway Authority of India and should be bought within six months of transferring the property. You can invest a maximum of Rs 50 lakhs through these bonds.
v What is the difference between long-term Capital Gains and short-term Capital Gains?
If the house is held for less than three years prior to its sale, it is termed as a short-term capital asset and any gain arising from the sale is treated as a short-term Capital Gain. There are no tax exemptions for short-term Capital Gains and one needs to pay it according to the applicable tax slab.
However, if the property is sold after holding it for more than three years, it is treated as a long-term capital asset and the gain arising from it is called the long-term Capital Gain. Such gains attract a flat exemption rate of 20%.
v What are Capital Gains on property purchase?
Property is considered a capital asset and Capital Gains Tax is levied on the gains arising from the sale of property. Such gains are calculated after adjusting the inflation rate, transfer and renovation charges.
v Do I need to pay stamp duty if the property is transferred or is a gift?
Yes. Generally, the stamp duty on the gift deed ranges from 5% to 12% in all states. In few states like Haryana, Rajasthan and Delhi, concession of 1 to 2 per cent is given to female transferors.
v What is Stamp Duty? Who is liable to pay Stamp Duty? Do I get tax benefits on Stamp Duty?
Stamp Duty is the tax paid for the legal recognition of property. It is paid by the home buyers. You can claim tax incentives of up to Rs 1.5 lakh on stamp duty and registration charges on a new property purchase or construction of a house. However, these benefits are available for only one self-occupied property.
v What are the taxes that I need to pay before buying a property?
The buyer needs to pay the following taxes:
TDS or tax deduction at source on amount exceeding Rs 50 lakhs for the purchase of property excluding agricultural land.
Stamp duty- As per concerned authority.
GST - Applicable if the property is being purchased from the builder who conceived and constructed the project before offering possession to the buyer. If a `ready to move in' property is purchased from the seller, GST is not applicable.
Value Added Tax (VAT) - If applicable in the concerned state.
v How can I convert a leasehold property to freehold?
The property could be converted from leasehold to freehold if the local laws allow it. For example, properties under DDA can be converted to freehold by executing a Conveyance Deed but the same is not allowed if the property is owned by the Noida Authority.
v What is the difference between leasehold property and freehold property?
The difference between a leasehold property and a freehold property lies in its ownership. In a leasehold property, the ownership remains with the concerned local authority or the government (as the case may be). The lease period varies typically between 30 to 99 years. But, this does not prevent the individual owner from selling or perform other transactions with the property, provided the lease deed is registered.
In case of a freehold property, the owner of the property is the legal owner and can sell/lease/rent the property as per his/her wish.
v Can I authorize someone else to register my property by granting him Power of Attorney?
Yes, you can execute Special Power Of Attorney to get your property registered by someone else.
v What is Power Of Attorney?
Power of Attorney allows a person to authorize another person the right to make decisions regarding the person's assets, finances and real estate properties.
There are two types of power of attorney. The First is the 'General Power of Attorney' where a property owner confers 'general' rights. The rights include but are not limited to sell, lease, sub-lease etc. The second one is the 'Special Power of Attorney' where only a specific right is given by the owner to the chosen person. Both of them should be REVOCABLE & duly registered with concerned authority.
v What is property registration?
It refers to the registering of documents relating to transfer, sale, lease or any other form of disposal of an immovable property. Registration is compulsory by law for all properties under Section 17 of Indian Registrations Act, 1908. Once a property is registered lawfully, it means that the person in whose favor the property is registered is the lawful owner of the premises and is fully responsible for it in all respects.
v What documents would I need at the time of possession?
Original copies of the chain of title agreements and Building Plan approvals
Original registration and stamp duty receipts
Possession Letter
Original share certificate (In case of societies)
Proof of payment of all dues like maintenance charges, electricity bills, phone, water and property taxes up to the date of handing possession
NOC from the Society or other concerned body confirming no objection to the transfer
How could I verify that the documents shown to me by the seller are genuine?
Projects approvals can be verified from the corporation or the sanctioning authority's office
Ownership documents can be confirmed from the Sub Registrar's office where they are registered
Share certificate related to societies can be verified from the concerned Society itself
v What documents do I need to check if I am buying a resale property?
Clear and marketable Title, Sale Deed, Encumbrance Certificate, latest tax receipts, Occupancy Certificate, Building Plan Approvals and Possession Certificate.
v What documents are required to get a resale property registered?
New Sale Deed, PAN Card, Photographs.
v What documents are required for registration of a new apartment/plot?
Sale Deed, No Objection Certificate (NOC) from builder, NOC from banks, Building Plan approvals, Completion Certificate, PAN Card and Photographs.
v What documents are needed for registration of an independent house?
Allotment papers of the plot, Building Plan approvals, Transfer Deed (in case of multiple owners), Sale Deed, PAN Card and Photographs.
v What documents should I check before buying a new property?
Sale Deed
Title Deed
Approved Building plans
Completion Certificate ( Newly Constructed)
Commencement Certificate( Under-construction property)
Conversion Certificate( If agricultural land is covered to non-agricultural)
Khata Certificate (especially in Bangalore)
Encumbrance Certificate
Latest Tax Receipts
Occupancy Certificate
v Is an FIR necessary while making the claims?
Yes. FIR is compulsory in cases where insurance is claimed for malicious damages, riots, terrorism, burglary, theft and larceny. In case of a fire incident, you need to submit the assessment report compiled by the fire department as well.
v How do banks valuate the property for insurance?
Property valuation is done by multiplying the built up area of the property with the cost of construction per square feet. This is the usual method followed by most banks.
v What is generally the tenure of a home insurance?
It varies from bank to bank. Generally, most policies cover a period of five years.
v What is home insurance?
Home insurance is a type of insurance policy that covers private residences and protects them from unpredictable damages, natural or man-made disasters, burglary and theft.
v If I have money, is it still necessary to avail of a bank loan for buying a home?
It is generally advantageous to go for a home loan as it helps you in availing tax benefits. However, please consult your CA or tax advisor to discuss the advantages and disadvantages in your case.
v Do I need to furnish any security to get a home loan?
In a majority of the cases, the property to be purchased itself becomes the security and is mortgaged to the lender till the entire loan is repaid. A number of lenders may ask for additional security such as life insurance policies, Fixed Deposit receipts and savings certificates.
v Can I sell the property, even when the home loan is outstanding?
Yes, you can sell the property with the consent of the banking institution.
If the buyer wants to take a loan to buy the property, the process is much easier if he approaches the same bank. In these cases, the bank does not need to release the property papers to another bank before getting the payment.
If the buyer wants to make a payment outright, he can make it to the bank directly. The property papers will be released only after the bank has recovered the entire loan amount.
v Can a single woman get a loan?
Yes, a single woman can get a loan. Many lending institutions also have special schemes for them, such as a discount of up to 0.25% on the interest rate.
v What is the time required for home loan disbursement?
On an average, loans are disbursed within 3-15 days after satisfactory and complete documentation and completion of required procedures.
v How much tax rebate is available on a home loan?
As per Section 80C of the Income Tax Act, you are allowed separate deductions on principal and interest amount of home loan amount, along with other entities like ULIP, PF, PPF, ELSS and NSC's. In case of principal, you can claim deduction up to Rs 1.5 lakhs while in case of interest, it is Rs 2 lakhs. The amount of stamp duty and registration is also eligible for tax deduction.
It is important to note that the tax break can only be claimed for the year in which the construction is completed.
v Are there any other charges that accompany home loans?
Home loans are usually accompanied by the following extra costs:
Processing Charge: It is the fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan amount or a percentage of the loan amount.
Pre-payment Penalty: When a loan is repaid before the scheduled duration, a penalty is charged by some banks, which is known as the pre-payment penalty.
Miscellaneous Costs: Some lenders may also ask for documentation or consultation charges.
v What is the difference between fixed rate and floating rate of interest?
In fixed interest rate, the interest remains constant throughout the loan period irrespective of the changes in market conditions while in the floating interest rate, the interest can decrease or increase depending on market fluctuations.
v How is the interest rate calculated?
The interest on home loans is usually calculated either on monthly reducing or yearly reducing balance. In some cases, daily reducing method is also adopted.
Annual reducing: In this system, the principal, for which you pay interest, reduces at the end of the year. Thus, you continue to pay interest on a certain portion of the principal that you have actually paid back to the lender. This means that the EMI for the monthly reducing system is effectively less than the annual reducing system.
Monthly reducing: In this system, the principal, for which you pay interest, reduces every month as you pay your EMI.
Daily Reducing: In this system, the principal, for which you pay interest, reduces from the day you pay your EMI. EMI in the daily reducing system is less than the monthly reducing system
v What are the documents needed to apply for a home loan?
You have to submit the following documents:
Proof of Identity: PAN, Driving license, Voter ID, Aadhar Card
Proof of Income:
Salaried Applicants: Latest 3 Months salary slip showing all deductions and Form 16 for the last three years.
Self Employed Applicants: IT returns for the past 2 years and computation of income for the last 2 years as certified by a CA
Bank Statement: Past 6 months
Guarantor Form (Optional)
v How does my salary influence my home loan amount?
Apart from other criteria and norms of the lending bank, the home loan amount is generally calculated as 30 to 65 percent of your gross income. You can increase your loan amount by including a co-applicant.
v What are the general eligibility conditions for availing a home loan?
The general eligibility conditions are as follows:
The borrower should be a resident of India or an NRI
Above 24 years of age at the beginning of the loan
Below 60 years (65 for self-employed) or retirement age when the loan matures
v Can a Home Loan be Pre-approved?
Yes. One can avail a pre-approved loan from a housing financial institution or a bank.
v What is Pre-EMI?
Under the Pre-EMI option, the borrower is required to pay only the interest on the loan amount that will be disbursed as per the progress on construction of the project. The actual EMI payment starts after the possession of the house.
v Does tenure affects the loan cost?
Longer the tenure you have, the lesser will be your EMI but higher would be the interest outgo. In shorter tenures, you pay a greater EMI, but the loan gets repaid faster and you pay less interest.
v What are the types of Home loans available?
The banks usually offer these nine types of loans on interest:
Home Purchase Loan: It is the most common type of loan taken for purchasing a new residential property or an old house from its previous owner.
Home Improvement Loan: Home improvement loans are given for executing repair and renovation work at home.
Home Construction Loan: These loans are sanctioned to construct a house on a piece of land you have already purchased. The loan approval and application process for these loans is somewhat different from the other commonly available home loans.
Home Extension Loan: Home extension loans are offered for expanding or extending an existing house. For example, addition of an extra room, a floor etc.
Land Purchase Loan: This type of loan is granted for purchase of a plot of land for both residential or investment purposes.
Home Conversion Loans: These loans are available for people who have already purchased a house by taking a home loan but now want to buy and move to another house. With these loans, they can fund the purchase of the new house by transferring the current loan to the new house.
Balance Transfer Loan: These loans are availed to transfer one's home loan from one bank to another. It is usually done to repay the remaining amount of loan at lower interest rates or when a customer is unhappy with the services provided by his existing home loan provider and wants to switch to a different bank.
NRI Home loans: These are specialized loans, structured to suit the requirements of NRIs who wish to build or buy a home in India.
Loan against Property (LAP): These loans are given or disbursed against the mortgage of a property.
FAQ’s for URP
v What is URP?
URP is a ‘Unique referral program’ initiated by Nirmaan associates ® (exclusively), for the people who intend to earn reward by referring a known person looking for buying or selling of a property in area managed by Nirmaan associates. By introducing this referral program, in real estate industry, we have a clear motive of associating more & more people with Nirmaan associates by offering them reward in return of their successful referral.
v How does URP work?
Referrer, after registering on our website, provides Nirmaan associates with complete details & requirement of the referred by filling a form mentioned in their ‘MY ACCOUNT’ section. After the form is being submitted, the details will be verified by our team, through telephone or email, with the referred. After verification the reference will be active, generating an URN Id and referrer will be rewarded after the deal with active reference is successfully closed/ converted by Nirmaan associates. If the verification of referred fails, the reference will be rejected & information for the same will be sent to referrer.
v What is URN?
Unique Referral Number is an automatic computer generated unique ID no. allotted to reference (client) provided by referrer.
v How do I register & refer?
Referrer needs to log on to www.urp.nirmaanassociates.com or www.urp.nirmaan-homz.com , register using Facebook or Google+ account information & to refer, fill up the form mentioned in the account with complete details of the referred.
v Whom can I refer?
You can refer any know person, looking for services of buying/selling of property. But you should have the complete information available with you, of respective person, required in the form.
v How do I get the reward?
You will receive your reward through cheque payment only after presenting a bill to Nirmaan associates with complete details of the referred deal closed/ converted. Cheque may be issued after deducting TDS as well, certificate regarding TDS will be provided to the referrer.
v Will I get support regarding bill format required in the process?
Yes, we will provide you a prescribed format of bill. Bills only in that format will be accepted by Nirmaan associates.
v Will my reward expire, if not collected?
Yes, but only if the reward is not collected within 6 months from the date of intimation for collection of reward.
v How do I check reward amount due?
You can check your reward amount due under your “MY ACCOUNT’ details.
v Is referral program applicable for rental services as well?
No, validity of referral program is limited to buying & selling of properties only, not rental services.
v Who can register & join this program?
Anyone, having a valid PAN Card, can register & join this program.
v What if the reference is already registered by some other referrer?
No, same client cannot be referred by two different referrers. Only first referrer will be eligible for the reward if the deal is done with the referred.
v How is the status of reference determined in my account?
There will be different indications under your “MY ACCOUNT”, with different meanings:
a) PENDING – your reference is submitted and will be active after verification.
b) ACTIVE – your reference is verified and is active
c) REJECTED/ NOT INTERESTED – your reference verification fails
d) CLOSED ELSEWHERE – your referred client closed the deal already, but not with Nirmaan associates.
e) IN PROGRESS – your reference client closed the deal with Nirmaan associates and deal is progress.
f) READY – deal is completed with your successful referral and your reward is ready to be collected.
v Validity of Active referred client?
Validity of your Active referred client is subjected to time taken by Nirmaan associates in closing the deal with your referred client or change of plans by the referred client.
v What are the benefits & Rewards?
The referrer will get a reward of 0.30% of the sale value of the property, if and only if the client referred by referrer closes deal with Nirmaan associates. Nirmaan associates serves in both primary (fresh) & secondary (resale) market. The rewards will vary as per the deal:
a) In case of fresh booking – the reward will be calculated only on the basic sale price of the property, excluding other charges, service tax etc.
b) In case of resale property- the reward will be calculated on the total sale value of the property, excluding stamp duty charges or any other payment related to maintenance of the property.
v When will I receive the reward?
You will receive the Referral Reward within sixty (60) days after the end/ time of closure of the deal in which you made the successful referral. Referral Rewards will be paid in Cheque only after the bill is received with complete details of referred client and its URN Id.
v Will my information be disclosed to my reference?
There will be an option before submitting the reference form, whether you want to disclose your information the referred or not.
v Do I need to submit any Id proof or related documents to register or generate URP ID?
You only need to have a valid PAN Card no., to be mentioned at the time of registration, which will be verified. And a copy of your PAN Card is also required at the time of payment release/ bill acceptance by Nirmaan associates. If in verification process, Nirmaan associates find the PAN card no invalid/ not matching the referrer details, the registration will be rejected or cancelled immediately.
v My question is not here?
Mail us your query at sales@nirmaanassociates.com and someone from our team will contact you & try to resolve your query.