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List Of Documents For Commercial Loan–For Self-Employed –Partnership Firm-Builder Case

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I) Checklist for loan sanction.

II) Documents required for legal and technical &

III) Document checklist for disbursement process.

I) List Of Documents Required For Loan Sanction Process

KYC

1) Pan card copy of all partners.

2) Company pan card copy along with stamp & director signature.

3) Copy of residence proof (passport/electricity bill & Aadhaar card copy).

4) Copy of office proof (electricity bill/telephone bill) of partnership firm.

Financial Documents

1) 3 years latest financials of the applicant including Saral Copy, computation of income, Balance Sheet, P&L account, Capital Account – CA certified with membership no.

2) 3 years latest financials of all partners including saral copy, computation of income, Balance Sheet, P&L account, Capital Account – CA certified with membership no.

3) Latest 12 months bank account statement of all partners.

4) All current account statements of the partnership firm updated for a latest of 18 months.

5) Latest 3 years Form no-26 AS.

6) Latest 1 year Copy of GST returns – 3B form.

7) Tax Audit Report (Form 3CB & 3CD) (42 Points).

8) Debtors & Creditors statement aging for 1 year-CA certified.

9) For rental income receivable- if any:

            a) Copy of registered rental agreement.

            b) Latest 1 year bank account statement reflecting the rental credit.

Other Documents

1) True certified copy of partnership deed.

2) Business/company profile on the letter head of the company.

3) Business proof – GST registration, Ghumastha or Copy of Aadhar Udoyg.

4) Copy of contract letter if received any contracts.

5) If applicant partner is:
a) Chartered Account (CA) – Copy of COP & passing certificate.

b) Doctor – Copy of Degree Certificate.

6) Details of all existing loan along with the sanction letters (for calculating loan obligation) of the applicant.

7) Details of all existing loan along with the sanction letters (for calculating loan obligation) of the partnership firm.

8) Processing fees cheque in favour of bank/NBFC.

9) Bank form duly signed by applicant and co-applicant/partner/company.

II) Legal &Technical Document checklist

If APF- If the project is approved by bank & NBFC, only technical of the property is done & legal is not mandatory. 

Documents for technical – cost sheet & approved plan copy from builder.

Documents for legal – Nill.

If NON- APF– If the project is not approved by bank & NBFC, both legal and technical of the property is mandatory.

Documents for technical – cost sheet & approved plan copy from builder.

Documents for Legal – copy of draft agreement from the builder.

On the basis of draft agreement a lawyer’s opinion is taken on non-APF project and a legal report for the property is generated by the lawyer, wherein he might demand additional copies of few documents from the builder. Such lists of copies demand are:

1) Sales Deed/Lease Deed/Development Agreement of the builder/society

2) If a development agreement is executed, power of Attorney from Land owner.

3) Chain of agreements from the previous landowner.

4) Layout Copy.

5) Approved Layout and building plans.

6) Commencement Certificate from Municipal Council/Corporation.

7) Completion Certificate.

8) ULC Certificate for Clearance of land under ‘Urban Land Ceiling Act’1976.

9) N.A permission and Latest N.A tax receipt.

10) Property Card / 7/12 Extract.

11) 6D Extract.

12) 8 A Extract, if applicable.

13) If the land is within the Survey Limits, collect the City Survey Extract instead of the 7/12, 6D, 8A.

14) Title and Search Report.

15) Copy of bye laws and registration certificate of the society in case the society is a registered cooperative society.

16) Index 2 issued by the sub registrar.

17) Copy of Draft sale agreement.

18) Partnership deed/MOA/AOA of the builder /Developer.

19) Marketing Brochure / highlights of the project.

20) Copies of Sanction plan with technical request.

21) Carpet and Saleable area Statement.

22) Public Notice and its objection if any.

23) APF application form.

24) Covering Letter indicating the LOD submitted.

25) Cancelled cheques.

26) Construction Schedule.

27) Payment Schedule.

28) RERA Certificate.

III) Disbursement List of Documents

IF APF Project

1) Original Agreement with index2.

2) NOC from Builder.

3) Demand letter from Builder.

4) OCR clearance. (Own contribution –required bank statement details & Source).

5) Docket kit sign and franking 0.2% of loan amount.

6) If project is fund by the bank- ROC and Lien letter from Builder.

7) Payment receipt from Builder.

8) Architecture report from Builder.

9) Allotment letter or Possession letter from Builder.

10) 7 security cheque in favour of Bank.

11) Administration Fess –clearance by cheque or DD-demand draft.

12) Facility agreement duly franked and signed.

13) Sanction letter copy duly signed.

14) Cheque or DD-demand draft towards Administration Fess.

15) Any other documents as per:

            a) Credit Manager’s requirement.

            b) Sanction condition on sanction letter.

16) If applicant partner owns < than 51% stake in the company:

            a) All partners & partnership firm to be co-applicant in loan.

            b) Financials of all partners & partnership firm.

If Non-APF Project

All documents mentioned above in the APF project checklist along with the following two documents:

1) Title search Report.

2) Any other documents as per property legal report.

If you are looking for housing loan guidance for your property purchase in Mumbai, visit Loanfasttrack on https://www.loanfasttrack.com/. Loanfasttrack provides you hassle free services at your doorsteps with comparative evaluations of more than 13+ top banks, with no additional cost. You can also contact us on 9321020476 or email on info@loanfasttrack.com. 

About Loanfasttrack– Loanfasttrack is a Mumbai based loan provider company since 2015 offering loan services in Mumbai on– housing loan in Mumbai, mortgage loan in Mumbai, personal loan in Mumbai, business Loan, unsecured business loans, home loan transfer, top-up loans, car loans, educational loans and loan transfers.

It also helps you:

√ To find the best bank for home loan

√ To get lowest home loan rates in Mumbai

√ To get an instant loan in Mumbai

√ To get instant personal loan in Mumbai & business loan in Mumbai

√ To make you qualify for the maximum loan against property eligibility

√ To get a low cost home loan balance transfer

√ To get assured low interest rates for loan against property in Mumbai

Home Loan Salaried List Of Documents – Builder Case

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Sanction Process

Find below the list of documents required for sanction process.

1) Applicant and Co-Applicant’s photograph.                                                       

2) Applicant and Co-Applicant’s pan card copy.

3) Applicant and Co-Applicant’s residence proof electric bill & adhar card copy.

4) Latest 4 months salary slips.

5) Latest 6 months bank account statements. 

6) Latest 2 years Form 16.

7) Latest 1 year bonus copy.

8) If receiving rental income – registered rental agreement copy & 12 months rental credit statement.

9) One cheque favouring bank name towards the processing fees from the salary account.

Legal & Technical Process

If APF- If the project has APF No that is if the project is approved by the lender bank & NBFC, only technical of the property is done & legal is not mandatory. 

Documents required for technical – cost sheet & approved plan copy from builder.

Document required for legal – Nill.

If NON- APF– If the project is not approved by the lender bank & NBFC both legal and technical of the property is mandatory.

Documents required for technical – cost sheet & approved plan copy from builder.

Document required for Legal – copy of draft agreement from the builder.

On the basis of draft agreement a lawyer’s opinion is taken on non-APF project and the lawyer makes a legal report for the property which demands certain copies of documents from the builder. Such lists of copies demanded from the builder are:

1) Sales Deed/Lease Deed/Development Agreement of the builder/society

2) If a development agreement is executed, power of Attorney from Land owner.

3) Chain of agreements from the previous landowner.

4) Layout Copy.

5) Approved Layout and building plans.

6) Commencement Certificate from Municipal Council/Corporation.

7) Completion Certificate.

8) ULC Certificate for Clearance of land under ‘Urban Land Ceiling Act’1976.

9) N.A permission and Latest N.A tax receipt.

10) Property Card / 7/12 Extract.

11) 6D Extract.

12) 8 A Extract, if applicable.

13) If the land is within the Survey Limits, collect the City Survey Extract instead of the 7/12, 6D, 8A.

14) Title and Search Report.

15) Copy of bye laws and registration certificate of the society in case the society is a registered cooperative society.

16) Index 2 issued by the sub registrar.

17) Copy of Draft sale agreement.

18) Partnership deed/MOA/AOA of the builder /Developer.

19) Marketing Brochure / highlights of the project.

20) Copies of Sanction plan with technical request.

21) Carpet and Saleable area Statement.

22) Public Notice and its objection if any.

23) APF application form.

24) Covering Letter indicating the LOD submitted.

25) Cancelled cheques.

26) Construction Schedule.

27) Payment Schedule.

28) RERA Certificate.

Disbursement Process

If APF

The lists of documents required for the disbursement of the loan in case of APF project are:-

1) Original Agreement with index2.

2) NOC from Builder.

3) Demand letter from Builder.

4) OCR clearance. (Own contribution –required bank statement details & Source).

5) Docket kit sign and franking 0.2% of loan amount.

6) If project is fund by the bank- ROC and Lien letter from Builder.

7) Payment receipt from Builder.

8) Architecture report from Builder.

9) Allotment letter or Possession letter from Builder.

10) 7 security cheque in favour of Bank.

11) Administration Fess –clearance by cheque or DD-demand draft.

12) Facility agreement duly franked and signed.

13) Sanction letter copy duly signed.

14) Administration Fess –clearance by cheque or DD-demand draft.

15) 7- Security mandate cheque in favour of Bank.

If Non-APF

1) Original Agreement with index2.

2) NOC from Builder.

3) Demand letter from Builder.

4) OCR clearance. (Own contribution –required bank statement details & Source).

5) Docket kit sign and franking 0.2% of loan amount.

6) If project is fund by the bank- ROC and Lien letter from Builder.

7) Payment receipt from Builder.

8) Architecture report from Builder.

9) Allotment letter or Possession letter from Builder.

10) 7 security cheque in favour of Bank.

11) Administration Fess –clearance by cheque or DD-demand draft.

12) Facility agreement duly franked and signed.

13) Sanction letter copy duly signed.

14) Any other documents as per property legal report.

15) Cheque or DD-demand draft towards Administration Fess.

16) Title search Report.

Commercial Loan List Of Documents – For Salaried Customers-Builder Case

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Documents required for Sanction Process

KYC

1) Applicant and co applicant pan card copy.

2) Applicant and co-applicant latest passport size colour photograph. 

3) Residence proof – copy of aadhaar and electricity bill.

4) Bank form duly signed by applicant & co-applicant.

Financial Documents

1) Latest 2 years Form 16.

2) Latest 4 months salary slips.

3) Latest 1 year bonus copy.

4) Latest 6 months updated salary account statement. 

5) For rental income receivable if any- Copy of registered rental agreement With 12 months rental credit statement of bank account.

6) For agricultural income receivable if any- Latest 2 years ITR copy reflecting agricultural income.

7) If joined new company –

            a) Copy of resignation letter.

            b) Copy of joining letter/ appointment letter/ offer letter of the new company.

            c) One month salary credited – from the new company.

8) Processing fees Cheque for the said amount of the bank/NBFC.

Documents required for Conducting Legal & Technical Process (Of The Property)

If APF- If the project is approved by bank & NBFC, only technical of the property is done & legal is not mandatory. 

Documents required for technical process– cost sheet & approved plan copy from builder.

Document required for legal – Nill.

If NON- APF– If the project is not approved by bank & NBFC, both legal and technical of the property is mandatory.

Documents required for technical – cost sheet & approved plan copy from builder.

Document required for Legal – copy of draft agreement from the builder.

A lawyer’s opinion is taken on non-APF project on the basis of draft agreement and a property’s legal report is generated by the lawyer. The legal report so generated might require additional documents from the builder. Such lists of additional documents required are:

1) Sales Deed/Lease Deed/Development Agreement of the builder/society

2) If a development agreement is executed, power of Attorney from Land owner.

3) Chain of agreements from the previous landowner.

4) Layout Copy.

5) Approved Layout and building plans.

6) Commencement Certificate from Municipal Council/Corporation.

7) Completion Certificate.

8) ULC Certificate for Clearance of land under ‘Urban Land Ceiling Act’1976.

9) N.A permission and Latest N.A tax receipt.

10) Property Card / 7/12 Extract.

11) 6D Extract.

12) 8A Extract, if applicable.

13) If the land is within the Survey Limits, collect the City Survey Extract instead of the 7/12, 6D, 8A.

14) Title and Search Report.

15) Copy of bye laws and registration certificate of the society in case the society is a registered cooperative society.

16) Index 2 issued by the sub registrar.

17) Copy of Draft sale agreement.

18) Partnership deed/MOA/AOA of the builder /Developer.

19) Marketing Brochure / highlights of the project.

20) Copies of Sanction plan with technical request.

21) Carpet and Saleable area Statement.

22) Public Notice and its objection if any.

23) APF application form.

24) Covering Letter indicating the LOD submitted.

25) Cancelled cheques.

26) Construction Schedule.

27) Payment Schedule.

28) RERA Certificate.

Disbursement List of Documents

IF APF Project

1) Original Agreement with index2.

2) NOC from Builder.

3) Demand letter from Builder.

4) OCR clearance. (Own contribution –required bank statement details & Source).

5) Docket kit sign and franking 0.2% of loan amount.

6) If project is fund by the bank- ROC and Lien letter from Builder.

7) Payment receipt from Builder.

8) Architecture report from Builder.

9) Allotment letter or Possession letter from Builder.

10) 7 security cheque in favour of Bank.

11) Administration Fess –clearance by cheque or DD-demand draft.

12) Facility agreement duly franked and signed.

13) Sanction letter copy duly signed.

14) Cheque or DD-demand draft towards Administration Fess.

15) Any other documents as per:

            a) Credit Manager’s requirement.

            b) Sanction condition on sanction letter.

If Non-APF Project

All documents mentioned above in the APF project checklist along with the following two documents:

1) Title search Report.

2) Any other documents as per property legal report.

What Loans Can I Get On My Property

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loan services mumbai

Introduction

Food, clothing, and shelter are our basic needs. At some point in time, we all invest in immovable asset i.e. property. We may invest in residence/ home, commercial property, office spaces, or even buy commercial or residential plots. Apart from adding to assets in our balance sheets, the property also helps you to raise funds in our emergencies by taking a loan on the property. 

Since all loans include property they are termed as the secured loans. There are 9 types of loans that you can get on a property. They are as below:

1) Home Loan

A loan taken to purchase a new house is called a “Home Loan”. One may choose to purchase a house directly from a builder or may buy in resale. Therefore in home loan industry home loan are of two types, i.e.

a) Home Loan Builder Case.

b) Home Loan Resale Transaction.

In both types of property is given as security to borrow funds required for purchasing the house in the form of a loan.

2) Commercial Loan.

A loan taken to purchase a commercial property is called a “Commercial Loan”. Commercial property means property used for commercial purposes such as offices, warehouses, factories, commercial land /plot, etc. One may choose to purchase a commercial property directly from a builder or may buy in resale. Therefore in home loan industry commercial loan are of two types:

a) Commercial Loan Builder Case.

b) Commercial Loan Resale Transaction.

3) Mortgage Loan

Also called Loan Against Property, is a loan taken by pledging the property as a security to take the desired amount of loan. Both Mortgage Loan and home loan take property as a security then how dies both differ- the basic difference is- in the home loan the loan amount is paid directly to the builder in builder case or to the reseller in receipt transaction while in the Mortgage Loan the loan amount is credited to the loan borrower’s account.

4) Home Improvement Loan

It is a type of unsecured loan which is taken for the repairs and maintenance reconstruction, development, and renovation of the property. 

Home Improvement Loan considers a range of facilities internal or external to the structure without an increase in the living space like painting, tiling and flooring, waterproofing, plumbing, and sanitary work, remodeling kitchen, or bathroom, etc. 

Construction of a house on an open plot where an open plot is given as security to take a loan is also a home improvement loan.

A top-up loan is taken for home improvement on home/mortgage Loan where the property is already taken as security can also be termed as a home improvement loan.

5) Reverse Mortgage.

A reverse mortgage is a loan for elderly/senior citizens above the age of 60 years, in which an elderly can avail regular/periodical payments from Banks/ NBFC against the mortgage of their house while still retaining the ownership of the house and occupying the same. Reverse Mortgage does not require any Income or Credit Score requirements, only the senior citizen must possess a property that is self-acquired and self-owned or jointly owned with a spouse. However, it is important to note that no ancestral property or commercial property is eligible for a reverse mortgage.

6) Balance Transfer Loan.

Transferring your existing high-interest rate loan to the bank with a low interest rate is called the balance transfer of the loan. Secured loans like home loans, mortgage loans, or even commercial loans can be transferred to enjoy the benefits of loan EMI in low-interest rates.

7) Secured Business Loan Against Property.

Loan taken for business purposes by self-employed individual/entrepreneur is called a business loan. A business loan is a type of a personal loan but a major difference between the both is – a personal loan is really unsecured loan while a business loan can be secured as well as unsecured. 

A property can be given as a security to avail business loan especially when one has to draw higher loan amount.

8) Home Loan & Mortgage Loan O/D.

Apart from taking a traditional home loan or a mortgage loan, an overdraft with a home loan or mortgage loan is the new product in the market since the recent past. Under such a product a loan borrower can withdraw the loan amount as per his requirement of the amount in the form of an overdraft facility.

9) Home Loan & Mortgage Loan Top-Up.

A loan taken on an already existing home/mortgage loan is called a top-up loan.

A top-up loan is taken to meet your immediate requirement of funds, for example, home renovation repairs, children’s education, child marriage, business purpose, etc.

Purchasing An Under-Construction Property? Here Are The Important Loan Facts You Must Know Before Making A Purchase

by admin

“ChottaSa Ghar Hoga——Chhao Mein….” old melody from (Naukari 1954), silver lines the dream of every human being to own a house of his own. Though today the time and generation may have changed but what remains still common is the silver lining dream of every human being to purchase a house of his own. There are enough options for people when it comes to purchasing a house. They may either go for a resale property or a ready to move builder property or can opt for an under-construction property. Depending upon the needs, requirements and specifications one may choose among their priority for the type of home. Under construction houses these days are gaining more importance since the government launched schemes of affordable housing 2013 for the people. However, affordable houses will become more affordable if you make the right decision to choose the right lender for financing your house i.e. applying for a housing loan for under construction property. 

Home loan on under-construction property

In under-construction property home loans the builder is the direct beneficiary of the home loan amount sanctioned by the lender Bank / NBFC. 

It is often argued that an under construction project has enough space for appreciation in the price once the project is completed. People therefore tend to invest in an under-construction property over the intention of profitability. Additionally what blinds the buyer is the various gimmick schemes adopted by the builder, such as “Book now pay later”, “No EMI till possession”, “Book your house @ just 8% rate of interest”, etc. In financial terms these schemes are referred as subvention schemes. Under such schemes the builder or the developer of the project is liable to pay the “interest” on the principal loan amount to the lender Bank/NBFC until the property buyer receives the possession of his property. The scheme looks highly convenient for the buyers as they do not have to pay inflated EMIs on the home loan while already paying the rentals. It saves the pre-EMI interest cost of the buyer. Though the scheme looked lucrative for the property buyers it faced a major drawback as many builders failed to pay the interest to the Banks/NBFCs and therefore the subvention scheme got banned by RBI on 3rd September 2013. However later the schemes were re-launched with a slight twist of payment being linked to construction linked plans while still retaining its basic nature. 

The construction linked plans (of the builder) means paying the builder at every stage of the construction. It is currently the most popular payment plan for purchasing the property. When a home loan is taken for purchasing an under construction property with construction linked plans, the buyer has to pay only the interest component to the lender Bank/NBFC on the partial disbursed amount which is referred “PRE-EMI Interest” in the loan industry. Although this EMI may reduce the buyer’s financial burden but remember any delay in construction only means paying more interest. Secondly, it may be a sigh of relief for property investors looking only for making property investment (as they are paying less EMI for under-construction property) but for those buyers who are buying the property for self-occupation, paying rent and simultaneously paying the Pre-EMI till possession, increases nothing but the cost of their property. 

The most popular form of subvention schemes is 5:95, 10:90 and 20:80. However builder’s subvention schemes are mostly with those lender Banks/NBFCS that funds his project. The major benefit of this scheme is the maximum funding for the buyer, which means that the buyer as the loan applicant will get the maximum 95% loan in case of 5:95 schemes, 90% loan in 10.90 schemes and 80% loan in 20.80 schemes. At times few subvention schemes along with the benefit of maximum funding also come with the clause of minimum lock-in period.

There are namely two names that always emerge in the home loan industry when it comes to home loan on under-construction property: State Bank of India (SBI) and the Life Insurance Corporation (LIC). Both come up with tailored home loan products for under-construction houses. SBI’s RBFBG (Residential Builder Finance with Buyer Guarantee) scheme guarantees the principal refund of the loan amount to the loan borrower if a developer fails to complete the project (The scheme is currently available only in the cities of Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Hyderabad, Bengaluru, Pune, Kolkata, and Chennai.) and LIC’s LICHF (LIC Housing Finance) ‘Pay When You Stay’ scheme lends only for projects which are either approved or funded by them. As per this scheme the loan borrower will not pay the principal component of the home loan to LIC up-to 48 months when he buys an under-construction house. 

Piece of advice for loan seekers on under-construction property

Before applying for a home loan every buyer must factor in the cost, the quality, the location & the accessibility of the builder’s project and most importantly the builder’s reputation. The loan approval and the home loan interest rates largely depend on these factors.

  1. Check if the project is among the approved list of the Bank/NBFC that you wish to apply for. It helps in the faster processing of the loan process. Secondly buying a property in banks approved projects signifies that the particular project has a clear marketable title. Therefore always look for the projects which have APF from maximum banks or from the top banks. 
  2. Make a fair deal. Negotiate with the builder because the price quoted by builders is never a final deal. There is always a room for negotiation. The more the inflated prices of the builder the higher will be the property cost which means you will be applying for a higher loan amount and land-up paying higher EMI’s on that increased loan amount. Many times builders keep increasing rates at regular intervals to show artificial and inflated appreciation even if “No Sale” is happening. Do not let this builder’s gimmick influence you, always remember it is the market forces i.e. the demand & supply decides the prices of the properties. Therefore ensure that you know the market trends in and around that area, the price quotations of the nearby projects, etc. to be not fooled by the inflated prices of the builders.
  3. Do not rely on the glossy brochures and the sugary words of the
    builder. At times the promised property at the time of booking may appear different on possession. Therefore ensure you park your money with the trustable builders. Banks have categorized builders into A, B & C. The best the builder’s category the higher are your chances for getting maximum funding, securing low interest rates & processing charges. 
  4. At times builders may make some changes such as layout or in property space, which might not adhere legally with the approvals received for the project. Under such circumstances banks may not disburse your loan even if your loan is approved or sanctioned.
  5. Choose your lender wisely. With the recent failures of the few NBFCs such as DHFL, Indiabulls, etc. who were most preferred b the borrowers for higher funding paid higher home loan interest rates and apparently got stuck up later with the higher interest rates mainly because: a) under-construction projects cannot be transferred until you receive the possession of the property. Possession letter is a must for the home loan balance transfers. b) Loan Balance transfers from the failed NBFCs namely DHFL and Indiabulls are not undertaken by the rest lenders providing housing loans. 
  6. Before you finalize any property, the following are the things you must check with the builder to avoid future confronts:
    (a) The builder has all the necessary approvals along with the documents.
    (b) The builder is a registered builder. Check if he is registered with the concerned authorities. 
    (c) The builder has a convenient payment plan. 
    (d) Importantly the builder has the CC i.e. commencement certificate. CC means the builder is not involved in any legal hassle and can continue with the construction work and it prevents the risks of frauds.   
    The lender Banks/NBFCs might not fund you if they find any deviations from approved plans, disputes between landowners and builders, disputes on the Land Title, and lack of approvals from govt. authorities, etc. It is therefore required that you hire a competent property lawyer before investing in any under construction property and seek his guidance for the property title search.
  7. There is no tax benefit available for under-construction property. You can claim the income tax benefits once you get the possession of the property. The interest paid during the pre-construction phase can be availed for deduction in the five equal instalments while there is no tax benefit available on the principal repaid.

If you want to know more about home loans on under-construction property, speak to our expert on 9321020476 or visit us on https://www.loanfasttrack.com/.

Loanfasttrack is a Mumbai based loan provider company into market since 2015 offering loan services in Mumbai on– housing loan in Mumbai, mortgage loan in Mumbai, personal loan in Mumbai, business Loan, unsecured business loans, home loan transfer, top-up loans, car loans and loan transfers.

Loanfasttrack also helps you to find the best bank for home loan, to get you an instant loan in Mumbai, instant personal loan in Mumbai & business loan in Mumbai, to get you the lowest home loan rates in Mumbai, makes you qualify for the maximum loan against property eligibility & assured low interest rates for loan against property in Mumbai and to get you a low cost home loan balance transfer.

STOP BEING FOOLED; here is a quick guide to know all costs associated with home loan. Read “ https://www.loanfasttrack.com/blog/blog/finance/must-know-all-costs-in-home-loan/ ”

Difference Between Home Loan And Loan Against Property

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Difference Between Home Loan And Loan Against Property

We received a call today. It was a loan inquiry. The enquirer wanted to know on the loan he can get on his property, his eligibility, time process, fees and importantly the rate of interest, in precise. Our executive before explaining re-confirmed “Is it loan against property that you want to know?” The enquirer exclaimed yes. The executive explained to him in detail about the product and assured him of our best services. “Ok. Will let you know in 2-3 days”, said the enquirer and the call ends. Later on 3rd day our executive follow-ups with the client, to learn that he has already made his choice to approach Bank A and have already submitted the documents for loan processing. On confirming the enquirer said that he found the rates were too high for him to apply with us. On the contrary, the executive explained, “Sir, rather the rates that we are providing is the lowest for mortgage loan”. 

“Mortgage Loan!! No No. I am looking for home loan”, says the enquirer and disconnects the call. The executive gets no time to explain the confusion and the conversation ends there forever. This made one thing clear for the executive, that he learned to reconfirm with every enquirer, “Is it loan against property i.e. mortgage loan or home loan that you are looking for”.

Off the late, it is observed that many often use, home loans and loans against property as interchangeably. But in actually both are not the same, though in both we get the loan on the property. They are rather two different kinds of loans, even though both being secured loans. On the other hand loan against property and mortgage being the same can be used interchangeably.

Difference between Home Loan & Loan Against Property

Sr. No.   Home Loan Loan Against Property
1 Meaning Taken to purchase a new house either in resale or from builder – ready to move or under construction. Taken against the already owned property.
    It can be taken on the under-construction property. Under-construction property cannot be mortgaged.
    Available only on residential property. Both residential and commercial property can be mortgaged.
2 End-use Purely to purchase a residential property. Purchasing a residential property + other personal reason such as business expansion, children marriage, child education, medical emergencies & treatments, etc
    Funds are released to the builder in case of a builder transaction or to the seller of the property in case of a resale transaction. Funds are credited in loan borrower’s account.
3 LTV (Loan To Value) i.e. Property Funding Up-to 90% on the property’s market value. Up-to 60 – 65% of the property’s market value.
4 Loan Tenure Available up-to 30 years. Maximum of 15 years.
5 Rate Of Interest 1-2% lower than mortgage loan. 1-2% higher than home loan.
6 Processing
Fees 		Ranges between 0.25% -1% on the loan amount. Ranges between 0.40% – 1% on the loan amount.
7 Tax Exemptions Exemption under section 80C for principal and section 24(b) for interest paid. No exemptions for principal paid. Applicable only on interest paid: a) End-use for business purpose- interest can be claimed as business expenses under section 37 (1). b) End-use for purchasing house or home renovation or repairs interest can be claimed under section 24(b). c) End-use for personal reasons, education, marriage, etc – no interest exemption.   Note: Need to maintain appropriate documents to justify the loan end-use, in order to claim the interest exemption.  

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Quick Guide To Difference Between Home Loan Builder Case & Resale Case

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Quick Guide To Difference Between Home Loan Builder Case & Resale Case

A home is a home whether it is bought in resale or from a builder. Likewise, many loan borrowers are of the opinion that a home loan is a home loan whether it is taken on a resale property or from the builder. From their perspective, there exists no difference in going for a home loan on resale or builder property except in the documentation required. Although even if the rates applicable for both are the same it does not necessarily imply that both are similar. On the contrary, there exists a fine difference in both the various aspects of funding, costs incurred, tenures, etc., the knowledge of which is unknown to many.  Therefore to help you understand the difference in both the following table will highlight its important factors of differentiation.

SR.NO. FACTORS HOME LOAN BUILDER CASE HOME LOAN RESALE CASE
       
1 Property Funding 80%-90% on the Agreement Value. 100% on the Agreement Value.
2 Costs Incurred Processing Fees, Franking (0.20% on loan amount), Admin and Technical Charges. Processing Fees, Franking (0.20% on loan amount), Admin and Technical Charges + Legal charges, Title Search Cost, Resale Affidavit Charges, Registered Mortgage.
3 Tenure Can apply for maximum tenure subject to the age of the borrower. Loan tenure is subject to the age of the borrower + age of the property.
4 Disbursement Partial disbursement especially for under-construction projects. Full disbursement of loan.
    Funds are disbursed in the builder’s account. Funds are disbursed in the reseller’s account or in the bank account in case of seller BT case. (Seller BT(balance transfer) means a seller has taken a loan against the same property).
5 Tax Deduction Principal – U/s 80C Interest – U/s 24 B Under-construction tax cannot be claimed upfront. Applicable tax deductions: Principal – None Interest – Can be claimed in equal parts in five financial years post-completion or property possession within the overall annual limit of Rs. 2 lakh. Tax can be claimed upfront. Applicable tax deductions: Principal –Up-to 1.5 lakh. Interest – Up-to 2 lakh.  
6 Lender Choice Of Banks/NBFCs Loan borrowers are pushed to opt with the Banks/NBFCs that have approved the builder project. Loan borrower has a choice to opt with the lender Bank/NBFC with a low interest rate.
7 Documentation Financial Documents + Property Papers + NOC from Builder. Financial Documents + Property Papers + NOC from Society + Property Tax Receipt + Share Certificate.
8 OC –Occupancy Certificate OC is not mandatory. Partial OC OR CC (Commencement/Completion Certificate) + Plan Copy is acceptable. OC is Mandatory for property more than 10 years old.

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Why Is It Difficult To Get A Loan On Grampanchayat Property?

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While it is easier to get a loan within the city limits falling inMahanagarpalika, funding your house in grampanchayat for home loan in Mumbai becomes equally difficult for the home loan seekers. Mumbai is the city of dreams and is the home for cores of population. Over the period Mumbai has substantially widened geographically to cover its outskirts namely till Virar, Karjat/Kasara, Navi-Mumbai/New-Panvelin western, central & harbour to be called under the umbrella named “Mumbai”. The substantial part of these outskirts is typically still a village and therefore the ruling authority is still the grampanchayat for these areas.

Even though a property in grampanchayat costs half the price to a property within the palika limits, the grampanchayat properties still doesn’t remain the first preference for many. The main reason identified was the property funding. Most private & nationalized banks and NBFCs, do not lend fund for purchasing a grampanchayat property. And since majority of them don’t fund in grampanchayat, only a remaining handful of banks/NBFCs takes the monopoly to fund, charging explicitly high interest rates and processing charges. So why is it that the banks/NBFCs do not fund in grampanchayat? Why is it that difficult to get a loan on grampanchayat property? Our analysis has derived the following few reasons for the difficulties:

1) For any funding in grampanchayat the land has to be an NA land i.e. non-agricultural land and it is observed that many times the land doesn’t have an NA approval.

2) The ownership of the property land / project land is also not clear. At times there are many family owners to the same land and owing to disputes the property is into litigation.

3) The title & the 7/12 utara of the property remains unclear and at times untraceable.

4) At times the builder also does not possess the necessary permissions for developing the property.

5) The grampanchayat property is not among the approved projects of the banks, and therefore do not have an APF number. The builder does not have the required set of documents needed for the projects approvals with the banks.

6) Unsafe construction quality. Since the property costs minimum to maintain the profits margins the developer/builders make use of material which is not up-to par or substandard for constructing the project.This hinders the loan tenure of the borrower as the technical done during the loan process reports the minimum age of the property.

7) Many grampanchayat properties do not possess the proper papers towards OC-occupancy certificate & CC – commencement certificate/ completion certificate.

Key Highlights For Grampanchayat Housing Loan In Mumbai

  • There is no best bank for home loan in grampanchayat property. The loan is provided by only a few Banks/NBFCs, generally by the local co-operative banks.
  • The grampanchayat home loan rates in Mumbai are always higher generally in a range of 9% -14% p.a.
  • The processing fees are also high which differs from bank to banks and are generally in the range of 1% – 3% of the loan amount.
  • Thegrampanchayat properties & the grampanchayat home loan finance schemes usually cater to the lower middle class and middle class population.
  • Since it caters tolower middle class and middle class population who are generally the small income earners, the lender Bank/NBFC has no stringent rules for financial documentation of the loan borrower. This means even a self-employed who have not filled the ITR or a salaried with cash income stand a chance to apply for a home loan.
  • Loan against property is also possible on a grampanchayat property.
  • Home loan transfer of the grampanchayat property is also possible.
  • A loan borrower also gets the benefits of affordable housing scheme of Pradhan MantriAawasYojana.
  • Grampanchayat properties have restrictions on its number of floors. A construction of only ground + 3 storey building is allowed in grampanchayat properties.
  • However now a days the phase of grampanchayat properties is shifting. The builders now have started building the grampanchayat homes in complexes as well with good amenities such as garden, play grounds, gym, club house, swimming pools,etc.
NRI HOME LOAN

Difference Between NRI Home Loan & Home Loan For Indian

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A home is a magic world to stay close to your loved ones, a place for peace, happiness, warmth, and happiness. Whether you are an Indian resident or a non-resident Indian who wishes to come back to your motherland, a house of your own is a must to experience a sense of peace, completeness, and togetherness. Owning the house of your dreams is an achievement in itself. The lender understands this and the sentimental values attached to a home and lends different types of home loans to Indian residents as well as non-resident Indians at attractive home loan interest rates.

A home loan is funding advanced by the lender against the security of the house pledged by the borrower. In other words, it is a secured loan taken to purchase your dream house. Where the fundamentals of the home loan remain the same, there might be a difference in its processing, and home loan eligibility criteria when it comes to differentiating between a housing loan for NRI in India with a home loan for Indian residents. For instance, several lenders might require the physical presence of the NRI at the time of home loan application, while some may demand the NRI hold a graduate degree, while others may have a clause to have a home loan co-applicant who is an Indian resident. (Read- 4 important benefits of applying for joint home loans) Let’s find out in detail how a home loan for NRI in India differs from the home loans in India for Indian residents.

ParameterIndian Resident Housing LoanNRI Housing Loans
Definition – As per section 6 of the Income Tax ActIndian Resident – Indian resident is a person residing in India for more than 182 days in a year or residing in India for a minimum of 365 days in the immediately preceding 4 years and a minimum of 60 days in the current financial year.NRI – A NRI is a person of Indian origin residing abroad, who stays in India for less than 182 days in a financial year or less than 60 days and 365 days in 4 preceding previous years.
AvailabilityThe home loans are provided to all Indian residents.Home loans are provided to all non-resident Indians, other than the citizens of the countries namely, Iran, North Korea, Cuba, Syria, Sudan, and Cremia regions of Ukraine, Pakistan, Bangladesh, Sri Lanka Afghanistan, China, Nigeria, Hong Kong, Bhutan, Nepal, or Macau.
Housing loan tenureUp to 30 years is the housing loan maximum tenure for Indian residents.Up to 20 years is the maximum tenure for home loan for NRIs.
Home loan interest rate in IndiaInterest rates of home loans for residents are slightly lower than the NRI home loan rates.Home loan interest rates for NRI in India are slightly higher. NRI home loan interest rates are 0.20% – 0.50% higher than the housing loan interest rates for Indian residents.
Guarantor/Power of attorneyNot required.Power of attorney is mandatory.
Account openingNot mandatory with all banks.NRE/NRO accounting is mandatory.
Repayment of housing loanAn Indian resident can serve his EMI through his regular savings bank account.(Read the difference between EMI & Pre-EMI)An NRI has to serve his EMI only through his NRE/NRO account.
Turnaround time10-15 working days.20-25 working days.
Minimum salary requiredRs. 20,000/- p.m.Minimum salary for NRI home loan in rupees is Rs. 1,50,000/- p.m. in
Documents scrutinyDocument scrutiny is easy and faster.Document scrutiny is detailed and time-consuming.
Housing loan eligibilityIndian resident eligibility can be calculated on various products such as salary multiplier, banking surrogate, etc. (Learn more on ICICI Bank’s banking surrogate product)NRI home loan eligibility cannot be enhanced using products such as salary multiplier, express home loan, or banking surrogate, etc.  
 For a detailed list of documents required for home loans kindly refer to the links.
* Documents required for home loan for salaried persons –
-> builder property 
-> Resale property. 

* Documents required for home loan for self-employed –   
-> Proprietorship firm 
Builder Property 
&
Resale Property 

-> Partnership firm
Builder property 
&
Resale Property 

-> Private Ltd. Company
Builder property 
&
Resale Property 		Extra documents required for NRI home loan which includes visa papers, passport copy, attestations from the embassy, etc. To get a detailed list of NRI home loan documents kindly refer to the links. Documents required for NRI home loan    

Listing some of the popular banks which provide the best NRI home loans in India.

ICICI NRI Home LoanHDFC NRI Home Loan (HDFC Ltd.)Canara Bank NRI Home Loan HDFC Bank NRI Home Loan
Axis Bank NRI Home LoanKotak NRI Home LoanBank Of Baroda NRI Home LoanSBI NRI Home Loan
PNB NRI Home LoanFederal Bank NRI Home LoanIndian Bank NRI Home LoanIOB NRI Home Loan
South Indian Bank NRI Home LoanCitibank NRI Home LoanLIC NRI Home LoanYes Bank NRI Home Loan
Bank Of India NRI Home LoanUnion Bank Of India NRI Home LoanIDBI NRI Home Loan 

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Loanfasttrack

Loanfasttrack is a Mumbai-based loan provider company since 2015 offering loan services in Mumbai on– housing loan in Mumbai, mortgage loan in Mumbai, personal loan in Mumbai, unsecured business loans, home loan transfer, top-up loans, and loan transfers. Loanfasttrack is a direct sales associate with leading banks namely, ICICI Bank, HDFC Ltd, Canara Bank, Citi Bank, Piramal Housing Finance, etc.

Contact Loanfasttrack: 

Website – www.loanfasttrack.com

Email – info@loanfasttrack.com

Tel – 9321020476

Loanfasttrack’s specialized services include providing:

Additional Read:

Home Loan Sanction v/s Home Loan Disbursement

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Home Loan Sanction v/s Home Loan Disbursement

Home loan sanction and disbursement are two important processes of home loan processing. The sanction is proof that your home loan has been approved by the lender Banks/NBFCs/HFCs, which is validated by issuing a home loan sanction letter and hence the housing loan sanction letter serves as proof that you are eligible for a home loan for the mentioned amount on the sanction letter. While disbursement, on the other hand, means receiving the approved loan amount from the lender post your property valuation and legal.

The home loan process can broadly be divided into 3 steps:

  1. Make a home loan application – Apply for a home loan online or offline.
  2. Get a home loan sanctioned from the lender i.e., the sanction process.
  3. Home loan disbursement process.

Here is everything you must know before applying for a housing loan.

Home Loan Sanction Process

On making a successful home loan application to the lender either offline or online home loan sanction process begins. Ensure you fill in the correct details on your home loan application such as your residential address, employment details, income details, contact details, etc. while applying for a house loan mainly because when you make your home loan application to a lender, the lender makes a background check to verify your personal details filled in the home loan application form. Therefore, make sure your credentials are correct before you apply for a housing loan. If the lender is not convinced about your credentials, there are chances that the lender might reject your housing loan application. If the lender is satisfied, he approves your home loan and issues a sanction letter of home loan for the approved loan amount. 

The sanction letter typically contains the following.

  • Basic details of the applicant – name, address, and contact details.
  • Home loan sanctioned amount.
  • Home loan interest rate applicable.
  • Applicable interest rate type i.e., fixed home loan interest rate or floating home loan interest rate.
  • Home loan tenure.
  • Home loan sanction letter validity.
  • Home loan EMIs and Pre-EMIs (if any).
  • Home loan processing fees and a list of other charges.
  • Pre & part payment/ foreclosure conditions & charges (if any).
  • Applicable terms of disbursement of the home loan amount, i.e., the PSD conditions of home loan.

Generally, the home loan sanction letter is valid for a maximum period of 6 months, within which you have to finalize a property. If you fail to finalize within the sanction validity you might have to go through the entire sanction process once again and once again pay the applicable processing fees separately thereon. However, you may get a chance to re-sanction your home loan simply by submitting your latest financial documents if you finalize the property within 1-2 months after the expiry of the sanction letter.

Also Read: 3 Popular Home Loan Schemes Of The Top Lenders.

Apply For In Principle Sanction Letter For Home Loan

Remember, your home loan is sanctioned only based on your personal & financial credentials. Therefore if you are planning to purchase a house, it is better to get a home loan sanction letter from the bank before you make a purchase commonly referred to as pre sanction home loans or pre-approved loan sanction letter. This helps you to know where you stand concerning your home loan eligibility and accordingly plan for the property budget. Hence, the pre-sanction loans i.e., the loans applied even before finalizing the property are subject to property clearance i.e., the property valuation and clear title of the property. (Also Read: How To Apply Online Home Loan With ICICI Bank.)

 Apply for ICICI instant home loan sanction

Housing Loan Disbursement Process

Disbursement is a home loan process after sanction. It is the last process for funding your property. The disbursement is a process of 7-8 working days. However, the home loan disbursement time varies with the lenders. It is a process where you pledge your property by submitting the original set of property papers along with a duly signed application for home loan disbursement i.e., the disbursement agreement of the lender. The original property papers will remain in the custody of the lender till the time you repay in full the borrowed principal and the interest amount back to the lender.

Apply For HDFC Home Loan Sanction Letter Online

Home Loan Disbursement Stages

Following is the step-by-step important home loan cheque disbursement process

  1. Conducting Legal & Technical of the property

Property legal & technical is an important procedure after home loan sanction. The technical is the physical inspection of the property to know its age and market value. This process ascertains that the lenders do not over-lend the cost of the property, while the legal is a process where your property papers such as sales deed, index 2, plan copy, etc. are examined by the lender’s lawyers and a legal report of the property is hand-over to the lender. The legal is conducted to ascertain the risk in funding the property. For a successful application for disbursement of home loan it is mandatory to have a clear and marketable title for the property. (Also read: What loans can I get on my property?)

2. Submitting The Original Property Papers

You have to submit the original documents of the property with the lender. The property documents will vary depending on the source from which you are buying a property i.e., whether the property is a resale transaction or a builder transaction. (Also Read: What is advantageous, buying a resale or builder property) Therefore for  home loan disbursement for under construction property that you buy from a builder/developer all you need to submit is the property agreement, cost sheet, OC/CC and the plan copy along with NOC from the builder & for home loan disbursement for resale flat you need to submit the chain of agreements, property layouts, sellers details, etc. For the complete list of documents required for home loan disbursement please refer to the links mentioned below.

(a). Home loan Resale Case for salaried, for self-employed – Proprietorship firm, Private Ltd. Company, Partnership Firm. 

(b). Home loan from builder for salaried, for self-employed – Proprietorship firm, Private Ltd. Company, Partnership Firm.

3. Fulfilling the PSD conditions mentioned on the sanction letter

PSD are the special conditions levied for approving your loan. Such conditions are mentioned on your sanction letter and are to be fulfilled for the disbursement of the loan. Example of PSD condition, mandatory account opening, maintaining fixed deposits with the lender banks, loan closure letter, mandatory salary credit for the newly joined employees, etc.

4. Pay Down Payment For The Property Purchase

Before the disbursement of the home loans, you have to ensure that you pay your part of the contribution which is the down payment for purchasing your house. The amount of down payment may vary depending upon the cost of the property. However, the standard percentage of down payment is 10%, 20% & 25%. Alternatively, you can also decide the amount of down payment you want to put. Click to know how big must be your down payment on a home purchase.

On the successful validation of the property your home loan amount will be disbursed either in full or it will be part disbursement of home loan depending on the type of the property you finalized. For resale property the full disbursement of home loan amount will be credited to the seller’s account and in the builder case to the builder account. For the under-construction properties there will be partial disbursement of home loans to the builder according to the completion status of the construction of the project. (Also Read: Quick Guide To Difference Between Home Loan Builder Case & Resale Case)

Home Loan Sanctioned But Not Disbursed

It is not mandatory that a sanctioned loan has to be disbursed. The reasons for non-disbursement of loan may vary, but following are the common reasons for a home loan sanctioned but not disbursed.

  • Delay in finalizing the property.
  • Location of the property. The area is blacklisted by the lender.
  • The property deal is postponed or cancelled.
  • You get a better home loan deal with other lenders.
  • You have a higher home loan requirement.
  • Suit filed on the property or legal issue in the property.
  • The project or the builder of the property you are purchasing is blacklisted by the lender.
  • Low valuation of the property.
  • Missing property papers.
  • Not fulfilling the PSD conditions on the sanction letter.
  • Processing fees cheque bounce.

Must Read: 10 Common Home Loan Mistakes

At times the actual disbursement amount can be less than the home loan amount sanctioned. This is mainly because the disbursement of the home loan is subject to the legal and technical assessment of the property. The technical verification assesses the market valuation of the property while the legal verification assesses the clear and marketable title of the property. These two are vital processes of housing loan disbursement stages and are the major reasons for the majority of the rejections in the home loan applications. Therefore, to avoid the rejections in home loan disbursement after registration of the property, remember to fulfill the following conditions of loan disbursements: –

  • All PSD conditions mentioned in the sanction letter are fulfilled.
  • The Loan-to-value percentage in home loans is maintained. There are RBI guidelines for home loan disbursement for LTV ratio. The LTV % varies with the market valuation of the property. The maximum loan to value i.e., max LTV in home loan is 90% of the market value of the property. Read more on LTV(Loan-To-Value).
  • Availability of all property papers in accordance with the legal report of the lawyer.
  • Own contribution for purchasing the property is paid to the seller.

Now that you know the difference between the loan sanction vs loan disbursement, let us address some common questions on home loan sanction vs disbursement.

Q. What is the home loan disbursement time after approval of a home loan?

Ans: The disbursement is a process of nearly 7-8 working days subject to the fulfilment of the disbursement conditions and timely submission of the documents required for disbursement of housing loan. The turnaround time for disbursement may vary with the lender. The turnaround time for the two best banks for home loan namely ICICI & HDFC for sanction as well as disbursement is as follows:

  • HDFC home loan sanction time – 10-15 days.
    HDFC home loan disbursement process time – 10-15 days.
  • ICICI home loan sanction letter/ ICICI pre approved home loan sanction letter – 7-8 days
    ICICI bank home loan disbursement process time – 7-8 working days.

Q. What is the home loan disbursement process for under construction property?

Ans: The disbursement for under construction property will be partial as per the demand letter from the builder. 

Must read- Important fact while purchasing an under-construction property, before you buy one.

Q. What will be the EMI for the first disbursement home loan?

Ans: The first disbursement of your home loan will be as per the demand letter from the builder. You will be paying pre-EMI on the amount of home loan disbursed. Pre-EMI means paying only the interest on the partial disbursement of your home loan amount.

Read more to find out if Pre-EMI is better than full EMI.

Q. What is the ICICI home loan sanction letter validity?

Ans: ICICI bank sanction letter for home loan is valid for 6 months. Read to find out why to apply for a home loan with ICICI Bank.

Q. What is the HDFC home loan sanction letter validity?

Ans: HDFC loan sanction letter is valid for a maximum period of 6 months.

Q. What is the procedure after loan sanction?

Ans: After the home loan sanction, you need to submit the property documents to the lender for doing the property’s legal & technical which is the most crucial process of the disbursement stages. On successful reports of the two processes, you may go ahead with signing the agreement with the lender for the loan disbursements.

Q. After home loan disbursement process, how long does it take for the money to be credited?

Ans: The time for the money credit depends on the mode for your home loan disbursement. If the home loan is disbursed through RTGS, it is credited within hours and if the amount is disbursed via cheque the loan amount credited will depend on time taken for clearance of the cheque.

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