palladio: FAQ's on Home Loans


The benefits of taking a home loan:

The income tax authorities look with favour upon those servicing a housing loan from specified financial institutions. And, it is up to customer to take advantage of this provision.

Section 24 of the Income Tax Act:

Interest paid on capital borrowed for the acquisition, construction, repair, renewal or reconstruction of property is entitled to a deduction. That means you are allowed to deduct an amount equivalent to the total interest payable on the housing loan from your taxable income within the same financial year. This is now a substantial amount. Presently, the limit stands maximum up to Rs.1.5 lakh every year.

So, should you borrow money to acquire, construct, repair, renew or reconstruct property on or after April 1, 1999 , you get a deduction of up to Rs 1.5 lakh. The criteria being: the property has to be acquired or constructed by March 31, 2003 and be self-occupied.

Section 88 of the Income Tax Act:

You get a 20% rebate on repayment of principal during a financial year. Once again, over the years, the principal repayment eligible for rebate has been enhanced from Rs 10,000 to the current limit of Rs 20,000. Stamp duty, registration fee or other such expenses paid for the purpose of transfer of such house property to the assessee is also considered under this amount.

Who can apply for a housing loan?

Any person, including Non Resident Indians, with a steady source of income can borrow funds for financing the cost of a flat from housing finance companies and banks

Can a Non Resident Indian avail of housing loans?

Yes. Repayment of loan should be made out of inward remittances or out of funds held in the borrower's NRE/FCNR/NRO accounts.

How much can a person borrow?

Loans are generally disbursed up to a maximum of 85% of the cost of the flat. The balance 15% cost (Margin Money) of the flat is to be funded by the flat purchaser from his own contribution.

How do we assist a flat purchaser for procuring Housing Finance?

All projects at VJEH are pre approved for grant of home loans by leading housing finance companies and banks. Our sales team liase with the all leading Housing Finance Institutions for processing the loan, documentation and disbursement of loans.

What is an EMI?

Equated Monthly Installment ("EMI") is the amount comprising a portion of the interest and the principal loan amount which is payable by a borrower to the lender every month.

How is the rate of interest calculated in India ?

Interest rates vary from time to time and from institution to institution. The current trend ranges from about 8.25% - 8.75 % pa. The interest calculated either on a daily or monthly reducing or yearly reducing balance.

What is a fixed-rate housing loan?

A fixed-rate housing loan is a loan where the rate of interest is constant through the entire term of the loan period.

What is a floating interest rate housing loan?

A floating interest rate loan is a loan where the interest rate payable is linked to the market conditions such as the bank retail prime lending rate and rises and falls with the bank rate varies. Hence a borrower bears the risk of interest rate fluctuations. Floating interest rates offered are usually lower than the fixed interest rates.

What is the time required for approval of a loan application?

About 8-10 working days from the date of submitting all the required documents.

What is the time required for disbursement of loans?

Usually loans are disbursed within 5-7 days after completion of verification by the institution, documentation ( such as handing over of the original agreement for sale\ lodging receipt to the lender) and completion of all relevant procedures and only after proof that the borrowers own contribution has been paid by him to the vendor / builder / developer.

What is the time required for disbursement of loans?

Usually loans are disbursed within 5-7 days after completion of verification by the institution, documentation ( such as handing over of the original agreement for sale\ lodging receipt to the lender) and completion of all relevant procedures and only after proof that the borrowers own contribution has been paid by him to the vendor / builder / developer.

Do institutions accept joint loan applications?

Yes

What are the documents required at the time of making an application for a housing loan ?

• Photographs
• Proof of age (Passport / License / Voters ID. )
• Proof of residence ( Ration card / Tel / Electricity bill. )
• Latest Salary slip (proof of income for salaried individuals ).
• Form 16
• Bank statements for the previous 6 months.
• For self employed, certified copies of balance sheet, profit and loss statement and tax challans / tax returns for the previous 3 years for partnership/private limited companies,the articles of association, partnership deed and details about the firm.
• For NRIs latest salary certificate specifying, name (as it appears in the passport). Date of joining, passport number, designation, perquisites and salary, photocopy of labour card/ identity card, photocopy of valid resident visa stamped on the passport, photocopy of monthly statement of local bank account, property related documents.
 
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