HOME LOAN GUIDE

1. How much loan can I avail?
A maximum loan of 80% - 85% of the agreement value can be availed. However, depending on your income eligibility and approved by the bank, your loan amount may differ. All loans are at the sole discretion of the banks.

2. What is the term of the loan that bank offers?
Home Loans are offered for a term ranging between 10 years to 25 years by bank and financial institutions.

3. What are the Basic Documents required for Home Loans?
Documents required for home loan by a salaried person in India are:

• Original Salary Slip for past 3 months or Salary Certificate
• Form 16 A (TDS Form) photocopy from the applicant’s employer
• Photocopy of the applicant’s updated bank statement for last 6 months
• Photocopy of the applicant’s company I.D. card, Aadhar Card, Pan Card or voter I.D. card or the applicant’s passport/ ration card.
• Passport size colour photographs of the applicant & co-applicant

Documents required for self-employed persons in India are:

• Photocopy of the applicant’s statement of accounts for the last 6 months
• Applicant’s passport/ration card photocopy
• A profile of the applicant’s business mentioning the nature of the business, employee strength, geographical territory, etc.
• A copy of the partnership deed, 3 years P & L A/c, Balance Sheet, computation of income certified by a CA and individual computation of income and tax returns for last 3 years in the case of a business partnership
• 3 years P & L A/c, Balance Sheet, computation of income certified by a CA and an income tax return file statement for 3 years is required, in case of a proprietor or professional
• A remuneration certificate, board resolution for fixing remuneration, the company's annual report and individual IT returns for last 3 years is required, if the company applying for a loan is Private Ltd.

4. What is the procedure for disbursement of home loan?
The bank undertake verification and due diligence of all the required documents submitted by the Applicant, the loan amount will be disbursed by the bank. The disbursement of the loan will be in the favour of the Developer.

Documents required for disbursement:

• Agreement to Sale 
• Loan agreement
• Disbursement requests
• Post-dated cheques
• Personal guarantors documents.

Some Important Home Loan Facts:

1. One of the basic home loan facts is that it is a prerequisite for most banks that the borrower take out an insurance policy to protect the home loan. This ensures that they will get their money back if the borrower dies or is for some other reason incapable of servicing his or her loan. This is because, such an agreement between borrower and lender is over extended periods of time. Unless the borrower finds the financial means to prepay it in part of in totality, a home loan is generally repaid over several years.
2. For any loan, rate of interest and principal are two basic components involved while calculating EMI payment. A major part of the amount goes in paying up the interest, in the first few years of your loan repayment tenure. After you have paid much of the interest, the trend reverses after a few years and the principal repayment increases. Banks have to increase tenure up to a certain point, as today home loan interest rates are high everywhere. The EMI you pay fails to cover the loan amount, if the interest rate continues to go up. These are some important home loan facts which you should be aware of before buying a home.

Tax Benefits:

1. Will I get tax benefits on loans?
Yes, under various sections of Income Tax department, you are eligible for tax benefits

2. Do I get deduction on Interest payment?
The repayment of the interest portion of the EMI is allowed as a deduction under section 24 under the head "income from house property" up to Rs. 1,50,000/- for self-occupied property. 

3. Do I get deduction on principal?
Under section 80C up to a maximum amount of Rs. 1,50,000/- the repayment of principal amount of the loan can be claimed as a deduction. Under Section 80C towards payment made for stamp duty, registration fee and other expenses for the purpose of transferring the property in the name of the assessed also, one can claim deduction. All these deductions however should not exceed the overall limit of Rs. 1 lakh. However, deduction under Section 80C is not available in respect of payment made towards the cost of any addition, alteration, renovation or repair carried out after the issue of the completion certificate.

4. What is TDS on Property?
A purchaser of an immovable property (other than agricultural land) worth Rs 50 lakh or more is required to pay withholding tax at the rate of 1% of the sales consideration effective 1st June 2013. Buyer of the property is required to deduct the TDS and deposit the same in Government treasury. Purchaser of the property is not required to procure Tax Deduction Account Number (TAN) according to rules in respect of tax deducted at source. The Buyer is required to quote his or her PAN and sellers PAN.