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

1) Copy of Prior chains of agreement.

2) Draft agreement copy.

3) Copy of Index 2.

4) OC-Occupancy certificate/CC (completion certificate) + approved Plan copy of the project.

5) Latest copy of property maintenance bill.                                      

6) Copy of Share certificate.

 7) Copy of society registration certificate. 

8) Commercial property tax receipt.

III) Disbursement List of Documents

1) Original prior chain of agreement with stamp duty & registration duly paid & along with the copy of index 2.

2) Copy of Occupation Certificate.

3) Original share certificate (If Issued).

4) Commercial property tax receipt copy of latest month.

5) Society registration copy.

6) Docket kit duly franked and signed by all applicants.

7) Resale affidavit agreement to be notarized and signed by all applicants.

8) 7- Security cheque in favour of Bank.

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

10) Facility agreement duly franked and signed by all applicants.

11) NOC from Builder.

12) NOC from society with chairmen and secretary signature.

13) For CIDCO/MHADA Property:

            a) Copy of conveyance deed & Original NOC & transfer letter from CIDICO/ MHADA if    conveyance deed is executed.

            b) Copy of tri-party agreement & lease agreement – if conveyance deed is not executed.

14) Seller Details & Documentation –

            a) Seller’s self attested pan card copy.

            b) Seller’s self attested aadhaar card copy.

            c) 3 months bank account statement.

            d) Bank’s Seller Verification format duly signed.

15) For Seller BT – (Seller BT- property purchase from seller who is having existing loan on the same property).

            a) Seller BT KIT duly franked & signed by the borrower.      

            b) Copy of Original LOD (list of document) & foreclosure letter is mandatory.

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

17) Any other documents as per:

            a) Credit Manager’s requirement.

            b) Property Legal report.

            c) Sanction condition on sanction letter.

18) 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 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

List of Documents Required for Mortgage Loan Sanction

KYC

1) Latest passport size colour photographs of all applicants. 

2) Copy of pan card of all applicants.

3) Residence proof electric bill & aadhaar card copy.

4) Bank’s Mortgage form duly signed.

Financial Documents

1) Latest 4 months salary slips.

2) Latest 6 months bank account statement of the salary account. 

3) Latest 2 years Form 16.

4) Latest 1 year bonus copy.

5) Copy of registered rental agreement & 12 months rental credit statement – for rental income received if any.

6) Latest 2 years ITR copy reflecting agricultural income – for agricultural income received if any.

7) Job Change- joining new company –

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

            b) Copy of resignation letter.

            c) Reflection of One month salary credit in bank account statement.

8) A Cheque towards the Processing fees of the bank/NBFC.

List of Documents Required for Property’s Legal & Technical

1) Prior chain of agreement.

2) OC/CC + approved plan copy.

3) Share certificate.

4) Copy of society registration. 

5) Latest copy of property tax receipt.

List of Documents Required for Disbursement Process

1) Docket kit duly franked and signed by the customer.

2) Original copy of prior chain of agreement with stamp duty &registration duly paid along with the copy of index 2.

3) Copy of Occupation Certificate.

4) Original share certificate – if issued.

5) 7- Security cheque in favour of Bank.

6) NOC from society signed by chairmen & secretary.

7) NOC from Builder.

8) Copy of Society registration certificate.

9) Latest copy of property tax receipt

10) Any other documents as per the Legal report of the property.

11) Any other documents required as per the sanction condition.

12) Any other documents as demanded by the credit managers.

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

14) Facility agreement duly franked and signed by all applicants.

15) Copy of Mortgage Intimation.

16) Copy of tri-party agreement & lease agreement – if CIDICO/ MHADA property.

17) Copy of conveyance deed if executed – in CIDICO/ MHADA property.

18) Original NOC & transfer letter from CIDICO/ MHADA if conveyance deed is executed.

The complete checklist till disbursement for the mortgage loan balance transfer for the salaried customers is as given below:-

Documents required for Loan Sanction

KYC

1) Latest passport size colour photographs of all applicants. 

2) Copy of pan card of all applicants.

3) Residence proof- copy of aadhaar card, passport & electric bill.

4) Balance transfer form duly signed by all applicants.

Financial Documents

1) Latest 4 months salary slips.

2) Latest 6 months bank account statement (salary reflection). 

3) Latest 2 years Form 16.

4) Latest 1 year bonus copy- if any.

5) For rental income receivable- if any:

a) Copy of registered rental agreement.

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

6) Latest 2 years ITR copy– for agricultural income receivable if any.

7) Job Change- joining new company –

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

            b) Copy of resignation letter.

            c) Reflection of One month salary credit in bank account statement.

8) A Cheque towards the Processing fees of the bank/NBFC.

9) Other most important documents for transfer:

            a) LOD (list of documents) from the existing loan bank.

            b) Repayment track record for 18 months.

            c) Outstanding letter copy from the existing loan bank.

Documents required for Property’s Legal &Technical Conduct

1) Copy of Prior chain of agreements.

2) Copy of Index 2.

3) Copy of latest month property tax receipt.

4) OC/CC + approved Plan copy.

5) Copy of Share certificate.

6) Copy of society registration. 

Documents required for Disbursement Process

1) Original prior chain of agreement with stamp duty & registration duly paid & along with the copy of index 2.

2) Copy of Occupation Certificate.

3) Original share certificate (If Issued).

4) Property tax receipt copy of latest month.

5) Society registration copy.

6) Docket kit duly franked and signed by all applicants.

7) 7- Security cheque in favour of Bank.

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

8) Facility agreement duly franked and signed by all applicants.

9) NOC from Builder.

10) NOC from society with chairmen and secretary signature.

11) Original copy of LOD & Outstanding letter.

12) Copy of BT draft agreement duly franked and notarized and signed by all applicants.

13) For CIDCO/MHADA Property

            a) Copy of conveyance deed & Original NOC & transfer letter from CIDICO/ MHADA- if   conveyance deed is executed.

            b) Copy of tri-party agreement & lease agreement – if conveyance deed is not executed.

14) Any other documents as per:

            a) Credit Manager’s requirement.

            b) Property Legal report.

            c) Sanction condition specified on sanction letter.

The list of documents required for home loan balance transfer for salaried customers are as follows:-

Checklist for Loan Sanction

KYC

1) Latest passport size colour photographs of all applicants. 

2) Copy of pan card of all applicants.

3) Residence proof- copy of aadhaar card, passport & electric bill.

4) Balance transfer form duly signed by all applicants.

Financial Documents

1) Latest 4 months salary slips.

2) Latest 6 months bank account statement (salary reflection). 

3) Latest 2 years Form 16.

4) Latest 1 year bonus copy- if any.

5) For rental income receivable- if any:

a) Copy of registered rental agreement.

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

6) Latest 2 years ITR copy– for agricultural income receivable if any.

7) Job Change- joining new company –

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

            b) Copy of resignation letter.

            c) Reflection of One month salary credit in bank account statement.

8) A Cheque towards the Processing fees of the bank/NBFC.

9) Other most important documents for transfer:

            a) LOD (list of documents) from the existing loan bank.

            b) 18 months repayment track record.

            c) Outstanding letter copy from the existing loan bank.

Checklist for Legal &Technical Process of the property

1) Copy of Prior chain of agreements.

2) Copy of Index 2.

3) Copy of latest month property tax receipt.

4) OC/CC + approved Plan copy.

5) Copy of Share certificate.

6) Copy of society registration. 

Checklist for Disbursement Process

1) Original prior chain of agreement with stamp duty & registration duly paid & along with the copy of index 2.

2) Copy of Occupation Certificate.

3) Original share certificate (If Issued).

4) Property tax receipt copy of latest month.

5) Society registration copy.

6) Docket kit duly franked and signed by all applicants.

7) 7- Security cheque in favour of Bank.

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

8) Facility agreement duly franked and signed by all applicants.

9) Copy of BT draft agreement duly franked and notarized and signed by all applicants.

10) NOC from Builder.

11) NOC from society with chairmen and secretary signature.

12) Original copy of LOD & Outstanding letter.

13) For CIDCO/MHADA Property

            a) Copy of conveyance deed & Original NOC & transfer letter from CIDICO/ MHADA if    conveyance deed is executed.

            b) Copy of tri-party agreement & lease agreement – if conveyance deed is not executed.

14) Any other documents as per:

            a) Credit Manager’s requirement.

            b) Property Legal report.

            c) Sanction condition on sanction letter.

“SAVINGS” as in the form of cash or investments is pivotal for the very survival of human beings. It is these savings that have helped to survive the current situation of (COVID-19) pandemic lockdown- the home confining and economic-no income lockdown. It is therefore important that one must save for his future precisely his uncertain future before it’s too late. Savings will help to tackle financial emergencies and uncertainties thereby reducing the financial stress. 

There are multiple ways to save. Highlighted below are few such investment options to start saving with.

1. Invest In Direct Equity– The COVID-19 have brought heavy corrections in the equity stock markets. The share prices have tumbled making new 52 weeks low and creating an opportunity for the investors to invest in the equities at a cheap price. The markets especially during the pandemic have been very volatile, and therefore the correct investment move would be to invest for a long term in equities. Short term trades & intraday trades might lure with its profits but such profits are not guaranteed while investing in the long term will fetch guaranteed profits. Know now more about investing in stocks on “An Insight Into Indian Stock Markets”. 
   
2. Invest In Mutual Funds (MF)– With the hit in the stock markets (due to COVID-19) the mutual funds markets have also taken a toll. Since it is a known fact that the mutual fund money is also invested in the stock markets. The impact on the stock markets will also have a direct impact on the mutual funds and its NAVs (Net Asset Value). Mutual funds allow easy per month investments in the MF by investing small and equal amounts at regular intervals known as SIPs (Systematic Investment Plan). (For detailed information on SIPs refer to our previous blog “Everything You Must Know About SIP”). Although the current mutual fund market is providing low returns or negative returns on the investments, this corrected stock and mutual funds markets has provided an opportunity to buy more units of the stock with the same monthly investments. Investing mutual fund amounts in equity stocks is called Equity Mutual Funds. For those investors who want steady returns, a fixed-income fund is an apt choice, which is known as debt mutual funds. The debt mutual funds are less risky in comparison to equity mutual funds as the money in debt mutual funds is invested in the corporate bonds, government securities, treasury bills, commercial paper and in other money markets. 
   
   The mutual fund is managed by a fund manager. Investments in Mutual Funds are largely dependent on the ability of these fund manager‘s to generate the returns. The fund manager may choose to invest the money in the Domestic market (Investing in only Indian stocks companies) or International market (Investing stocks of overseas companies). 
   
3. Invest in Real Estate– It simply means purchasing an asset property such as residential property, commercial property, plots etc. Please remember any asset property purchased for the purpose of self-occupancy is not considered as an investment asset. Every second property purchased other than self-occupied property is in real terms considered as an investment asset. Before investing in any real estate it is important that one must study the various property related aspects such as, its location, accessibility, legality and paper approvals, rental income receivable, nearby developments, and future upcoming developments/projects that will appreciate the future value of the property. It is also equally important to ascertain your eligibility before booking or giving a token to the seller/builder of the property. In most of the cases the investor opts for a home loan or a mortgage loan, to bridge the gap between his own contribution and the cost of the property. Calculate loan eligibility with EMI calculator click “https://www.loanfasttrack.com/emi-calculator.html”.
   
4. Savings Accounts- To give a good start, savings can also be started by simply depositing the money in the savings account. The deposited money in the savings account earns interest income to the account holder. For those who wish to maintain easy & quick availability for liquidity and those who wish to make safe investments without taking any risk can choose to accumulate their funds in this savings account. The current scenario of COVID-19 has reduced the savings deposit rates of many banks to 3.5% pa for account balance up-to 1 lakh & 4% pa for savings account balance of above 1 lakh while the SBI had cut the rate on all his savings accounts to 2.75% in April 2020.
   
5. Invest In Bank Deposit– Invest money in bank deposits such as FDs- Fixed Deposits and RDs- Recurring Deposits. Ideal funds laying in the savings account can be utilized to invest in FD or RD which can earn interest income to the account holder. Interest earned can be claimed either on monthly, quarterly, half yearly or yearly basis. Many see this as the safest mode of investments. The interest income earned through the deposits is liable for tax as per the income tax slabs. However, with many banks going bankrupt in the recent past, the security of the depositor’s savings money took a toll and under the DIGC rules (deposit insurance and credit guarantees corporation) the finance minister announced an increment on the insurance amount of the depositors from 1 lakh to maximum up-to Rs 5 lakh per depositor for both his principal & interest amount.  However due to the pandemic effect the interest rates on savings & bank deposits have fallen since the RBI cut the policy rates. The current FD rates stand at 3.30%-5% while the recurring rates start with 3%. 
   
6. National Pension System (NPS)– The government of India introduced the NPS scheme in January 2004 only for its government employees which later in 2009 was opened up for all citizens of India between the age of 18 & 65 years. This scheme allows all subscribers to contribute to an NPS account till retirement and withdraw the lump-sum income after their retirement. Funds contributed in NPS are invested in a mix of equity, corporate bonds & government bonds. It is an entirely tax free instrument where the entire corpus escapes the tax at maturity and the entire pension withdrawal amount is tax-free. NPS is managed by PFRDA (Pension fund regulatory & development authority) and it offers two types of accounts to its subscribers: 
   1. Tier I- which has restrictions on the withdrawals and on the utilization of the accumulated corpus
   2. Tier II- it is an investment account wherein the subscribers with pre-existing tier I accounts can deposit and withdraw the money as and when required. 
      
7. Invest In Gold– Gold is a precious element which has the appreciating value over the years. The usage of gold ornaments and jewelleries are cherished in the Indian traditions and hence it is seen as a good investing option. There are two ways of owning a gold- gold paper and physical gold. Physical gold implies purchasing the gold jewellery, coins and bars. Gold coins & bars are the most preferred choice to invest as a coin & bar is a form of pure gold. Alternately paper gold means investing in gold exchange traded fund (ETFs) (trading in the NSE & BSE with gold as an underlying asset), sovereign gold bonds (SBs) and additionally in gold mutual funds that further invests in gold ETFs. 
   
8. Invest In RBI Saving (Taxable) Bonds– The RBI savings bonds are one of the safest investment options as it is issued by the RBI on behalf of the government of India. The tenure of bonds is for 7 Years and it is issued in the form of demat and is credited to the bond ledger account (BLA) of the investors. It comes with a sovereign guarantee and no risk to the principal amount and is therefore a preferred choice for many investors. The investors receive interest on the bond in two ways- a) on non-cumulative bonds interest is received half-yearly, b) on cumulative bonds interest is received at the time of maturity along-with the principal amount. The investor also gets no tax benefits on these bonds and the interest income earned is also subject to tax as per the investor’s income tax slab rates. These bonds are neither tradable in the secondary markets nor are they transferable. Also the bonds cannot be used as collateral for getting loans from banks & NBFCs. Well, there is no upper limit of investments in these bonds and since they are risk free, they can be a good start to start savings.

If you are looking for any support in applying loans within Mumbai, visit Loanfasttrack on https://www.loanfasttrack.com/. We will help you in online processing of your loan, with no additional costs. You can also contact us directly on  9321020476 or email us on info@loanfasttrack.com. 

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

The Banking Surrogate means ascertaining the eligibility of the customers only on the basis of his banking statements. This product is specially designed for the customers who earn variable income/ profits per month i.e. for the self-employed customers. The fixed income earners like those of salaried class are not considered under this product to qualify for higher eligibility.

Important Highlights

• The self-employed can get a loan even without ITR or any other financial documents.
• The loan can be applied only on the basis of banking statements.
• The income assessment of the self-employed is done only on the basis of banking statements.
• Multiple bank accounts can be considered for getting higher loan eligibility.
• There is no capping on the number of multiple bank accounts to be considered for the enhancement of the loan eligibility.
• The current account for the self-employed is mandatory except the self-employed professionals such as doctors, CAs, CSs & architects.

Basic parameters of the banking surrogate:

1. Application: The banking surrogate can be considered in the products of home loan, mortgage loan/loan against property, NRP loan i.e. non-residential premises loan, home loan balance transfer of home loan, mortgage loan balance transfer, NRP balance transfer, home loan top-up, mortgage loan top-up & NRP top-up. (Top-up loans are subject to the income eligibility and to the market value of the property).
   
2. Loan Amount Criteria: The customer can apply for a minimum loan amount of Rs.10lakhs and a maximum loan amount of Rs.3crs. However, the ceiling limit for self- employed professionals such as doctors (MBBS/BDS/MD/MS), chartered accountants, company secretary, and architects, on the basis of their savings accounts only is Rs.50kakhs.
   
3. Loan To Value (LTV): LTV refers to the percentage of the property’s market value that a lender can finance through loans.
   For home loan – LTV is 70%
   For mortgage loan against residence – LTV is 60%
   For NRP – LTV is 65% if self-occupied & 55% if not self-occupied.
   
4. Loan Tenure: Maximum loan tenure allowed under the banking surrogate is for 15 years. However, for the tenure of more than 10 years of in-home loan and NRP, the LTV percentage is lowered by 5%.
   
5. NRP under-construction status: If the customer buys an NRP under-construction property, for him to qualify for a loan under the banking surrogate, the completion status of the under-construction property must be 75% for CAT A and B builders & 85% for CAT C builders.
   
6. Account’s credit transactions: The banking statements of the customer must reflect a minimum of 3 business credits per month in the current account and a minimum of 3 transactions per month in the savings account.
   
7. The ADB calculation and its applicable ratio: ADB stands for average daily balance. It is the internal calculation method of the bank for determining the loan eligibility of the customer on the basis of his banking transactions.

• To calculate ADB banks consider the total balance of the customer’s banking account as on the dates 1^st, 11^th, and 21^st of all months and dividing it by 36.
  ADB = (Total Balance of 1st, 11th, and 21st of all months)/36
• The ADB figure so derived is then used to determine the eligible EMI.
  Eligible EMI = ADB/ ADB-EMI Ratio

The applicable ADB ratio depends on the ADB range. Mentioned below is the grid of ADB range and its applicable ratio along with the maximum loan amount as per the ADB range.

ADB Range (10 years)	Applicable Ratio	Maximum Loan Amount
Less than or equal to 107603	2	Upto Rs.25 Lakhs
Greater than 107603 and equal to or less than 286942	3	Greater than Rs.25 Lakhs and upto Rs.50 Lakhs
Greater than 286942	4	Greater than Rs.50 Lakhs and upto Rs.3 Cr

• The eligible EMI is then used to derive the loan eligibility of the customer by dividing the eligible EMI by the per lakh EMI.
  Loan Amount = Eligible EMI/ EMI Per Lakh
  
  
  8. Credit Summation: In banking, surrogate credit summation is yet the second calculative method in determining the loan eligibility of the customer on the basis of his banking transactions. To calculate credit summation banks consider every single credit entry in the banking account of the customer for consecutive 12 months and dividing the figure by 2 i.e.considering only 50% of the derived number.
  Total Credit Summation for 12 months * 50%

How to calculate the loan eligibility

In banking surrogate the income eligibility is calculated as LOWER OF THE THREE:

1. Eligibility as per Average Daily Balance
   ADB = (Total Balance of 1st, 11th and 21st of all months)/36
   Eligible EMI = ADB/ ADB-EMI Ratio
   Loan Amount = Eligible EMI/ EMI Per Lakh
   
2. Eligibility as per Credit Summation
   Total Credit Summation for 12 months * 50%
   
3. Eligibility as per LTV = Market Value * Applicable LTV

With this banking surrogate, all self-employed customers and the self-employed professionals now can earn higher eligibility even with the lower net profits in the ITR. Speak to our experts on 9321020476 or log on to https://www.loanfasttrack.com/ for additional details. Loanfasttrack is a direct sales associate with ICICI bank.

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 is an authorized channel for ICICI

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 an 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 the loan against property in Mumbai

Looking for a land loan? Here it is everything that you should know about – before purchasing land and before going for a land loan.

To build a dream house of your own with your specifications and requirements with modern amenities along with gardening, lawn with a swing char, duplex bungalow with 5 bedrooms, indoor pool, mini theatre, and to your countless imaginative specifications need a piece of land/plot to erect your house of dreams. Owing a land to construct your house is not very easy especially when you are dwelling in a metropolitan city like Mumbai. There actually exists limited scope for horizontal expansion for real estate due to the scarcity of land resource availability, and hence many times our dreams don’t realize in reality. But, with a note “One day you will make your dream come true”, you move on thinking to make one such investment inland in the future to fulfill your dream.  Sounds exciting, but remember the decision to buy a land comes with its own merits and demerits.

Here is what you should know before considering buying land.

1) Choice and selection of the plot /land for investment make a lot of difference with reference to its location, accessibility, road connectivity, water & electricity supply, sewer and drainage systems, neighborhood – markets, hospitals, power stations, etc. and as well as the shape and direction of the plot. If not chosen and considered correctly, an investment inland would be a dead investment as there would be no future scope for appreciation in the land prices.

2) The FSI for the /land plot – it is important that you understand the concept of FSI for land purchase. FSI means maximum area allowed for construction on the piece of land which largely depends on the location of the land. The other related aspects that determine FSI are land carrying capacity, solid waste disposal, road connectivity, adequacy of water supply. FSI varies from state to state and region.

3) Investment in land is feasible for those looking out for construction of property on that piece of land. Although appreciation in the value prices of land is profitable over years it does not source income until the land is sold or developed & constructed. Till such a holding period, the investment on land is a dead investment. On the other hand investment in house generates a regular flow of income for you when it is rent out. A regular per month rent + appreciation in the value of the house price equals the overall appreciation gained on the land investments over the years.

4) Ensure that there is no legal dispute on the land you wish to acquire. Legal disputes such as plot are not NA plot i.e. the land is agricultural land, the land is already mortgaged or is pledged multiple times, the land is being sold to more than one buyer, the land claim of legal heirs, the land has been notified for govt. projects or special purposes, land boundaries, litigations on land, etc. are very important, to ascertain that the land is free from any encumbrances and has a free marketable title.

5) Remember by default all land in India is defined as agricultural land unless it’s defined for some other purpose by the government. There are different types of NA like NA – commercial, NA – residential, NA – warehouse, NA – resort, NA – IT. An NA plot of a particular type can be used only for only that particular defined structure which means and NA – warehouse plot cannot be used for making residential schemes and sell to the common-man; it can be used only to build a warehouse for commercial purpose.

6) Taking into account the scarce availability of land, the investors search for a piece of land beyond the boundaries of the city corporation limits. The investment made in an outskirt plots needs timely surveillance and proper fencing/boundary with an ownership board pointing towards the ownership name of the plot to avoid trespassing, as an empty plot is an easy target for the trespassers for illegal occupation.

It is therefore important that you purchase land that can easily be surveillance by you or your families.

7) Ensure that the seller of the plot/land be it builder or the individual owner or at times both being the joint owners has the legal rights to sell the land.

8) Ensure that the land documents are legal and complete. If required sought the help of the lawyer to be sure of the documentation and its title clearance. At the time of purchasing the land ensure that the land transfer documentation is complete. Important documents to look for are:

i) Title Deed: check if the title deed is in the name of the land seller and that he has a full right to sell it. Insist on looking at the original and not just a photocopy.

ii) 7/12 Document: is a revenue document showing the title, ownership, occupancy, liabilities, and rights pertaining to the land. It mentions how the land moved from one owner to another in the last 30 years.

iii) 6/12 Document: is a document showing the past transactions i.e. the record of change in ownership of land.

iv) Conversion Certificate (popularly known as DC conversion certificate): is issued by Deputy Commissioner (DC) certifying that the property is converted from agricultural land to a residential property.

v) Encumbrance Certificate (EC): it is a record that shows all registered transactions pertaining to a property in a particular time period. EC is helpful in ensuring a clear and marketable title of the property. Normally the EC is for 13 years, but for buying a property it is suggested that you ask for 30 years EC.

vi) Land Use Certificate: it verifies that the land is not in the commercial, industrial or agricultural zone.

vii) Release Certificate: it is a certificate from the bank stating the loan on the land has been completely repaid and the land is no longer pledged. In the case of joint owners of the land, ask for a release certificate from each owner to be sure that no single owner has pledged his share of land.

viii) 8/A Extract: this booklet contains the details of payment of tax, land revenue tax, types of crops grown, owner’s name, etc.

ix) Land Survey Sketch: land surveying is commonly used to establish the legal boundaries for land/plots. It is required of you to hire a certified surveyor to certify the boundary of the land that can match the actual dimension with the approved sketch from the survey department.

x) Original tax receipts and other bills relating to the plot.

xi) Approval documents by the city development corporation verifying that the plot/land is approved by them.

Knowing the fact that legal cases on lands can go on for decades, make every possible inquiry for the land and its legal formalities & documentation. You may hire a local competent lawyer who is well versed with all local laws who can help you in the land transactions without facing any legal trouble.

9) A land investment attracts the wealth tax equal to 1% on the net worth exceeding 30lakhs after adjusting the debts, for the land more than 500 sq meters.

10) Land purchasing requires maximum own contribution to an extent of 30% of the value of the land deal since plot funding by financial institutions like Banks & NBFCS provides a maximum loan of 70% only.

To sum up the important points for buying land:

• NA plots with clear titles are limited and scare and often you will have to pay a good price for it.
• Do not hurry to make a deal. Be patient and don’t fall prey to the sales tactics of the salesman. Make your own study, visit the plot, check the documentation, check the nearby development, look out for the main features of road connectivity, water supply,
• Talk to the local people nearby on the points that concern you, like plot pricing, land approvals, ownership, etc. Also search for the project and other related matters with respect to its geographical position, accessibility, etc. online to match the features as described by the plot/land seller.
• Make more than one visit to the plot – especially one when your salesperson is not on the site, this might source you additional information on the plot which might be new to you.
• Never settle for the sales price offered by the land seller. There is always a room for bargaining in India.
• At times soil test is important to be carried out especially if you are buying a piece of agricultural plot, just to be sure what crops can be grown on the field.
• Before finalizing make sure for our arrangement of funds as our own contribution to the land purchase is high (30%).
• For the rest 70% funding, it is advised you approach the lender Banks/NBFCS prior hand, as there are not many lenders who provide land loans and those who provide has its own set of guidelines towards the funding norms against the land.

To know more about funding on land lets learn more about land loans.

What Is Land Loan?

A land loan is financing that allows you to purchase a piece of land or plot wherein the land has to be within the hub locations limit of municipality. A land that is outside the municipal limits but allocated by the development authority is also eligible to qualify for a land loan. A land loan is sanctioned only for the purchase of a residential piece of land or plot. It is also referred to as plot loan.

Like any other loan, the land loan is also repaid in EMIs and is availed for maximum loan tenure of 15 years. The lender charges the interest rates on the principal loan amount availed by the borrower. The rate of interest for land loans is higher in comparison to a typical home loan, reason: land loans are considered riskier transactions by the lender because it is complicated to figure out the worth of the land as there is no property collateral as it is in home loan/ loan against property and also it is non-revenue generating asset which concerns the lender about your EMI repayment

 Types Of Land Loan

There are basically two types of land loans, both being different with respect to features, benefits and terms and conditions.

1) Land Loan / Plot Loan

 A loan is taken only to purchase a vacant residential piece of land/plot for the purpose of investment or which can later be used to construct a house in the future.

2) Land Loan + Construction Loan / Plot Loan + Construction Loan

Also called a composite loan, is the loan taken to purchase a vacant residential piece of land/plot and to construct a house on the property within the stipulated time period. The stipulated time period varies from lender to lender.

It is important to note that all land loans are sanctioned with a pre-condition that construction on the land/plot should commence within the stipulated period. But inland loan it is only a pre-condition to sanction a loan, you can avail a construction loan in future to construct a house on that land, while in the composite loan the cost for construction gets included in the value of the loan. But be careful, the noncompletion of the construction on the land within the stipulated time frame as that stated on the sanction letter by the lender, the lender may charge you with a penalty for non-commencement of construction. The penalty can be imposed in either of the ways:

1) You may be asked to pre-pay and close the loan.

2) Your lender may increase your existing land loan rate of interest, maybe up to 2% over and above your existing rate.

Eligibility Requirements For Land Loan

You are required to meet the eligibility criteria of the lender. The eligibility criteria for land loans are similar to home loan eligibility. The most common factors that the lender will look into are:

1) Nationality: You should be a resident of India.

2) Age: You should be between 21 to 70 years of age.

3) Income and Work Experience: you could be salaried or self-employed but must be with a regular flow of monthly income. Your job stability and work experience reflect your continuity in the income flow.

4) Credit Score: your average credit score required would be 750 and above.

Tax Benefits On Land Loan

There is no income tax benefit available for land loans. However, the tax deduction can be availed only for the loan amount taken against the construction and only after the construction of the property. Any interest paid before completion of construction cannot be claimed as pre-EMI interest like that in the home loan.

Irrespective of being another loan product people still consider the land loan to be the same as home loan though they significantly differ with each other. The following differentiation table highlights the difference between the two.

SR. NO.		LAND LOAN	HOME LOAN
1	Purpose	A loan is taken to purchase a residential piece of land.	A loan is taken to purchase a residential house either under-construction or ready to move.
2	LTV-Loan To Value	Maximum 70% of land value. 50%-60% – If the property is situated in smaller cities or towns.	90 % – For property Value up-to 30lakhs. 80% – For property Value up-to 75lakhs. 75% – For property Value above 75lakhs.
3	Rate Of Interest	Higher than a home loan – 8.50% -11.50%	7.90% – 8.65%.
4	Loan Tenure	Up-to 15 years.	Up-to 30years.
5
5	Processing Charges	Up-to 2%-4% of the loan amount.	0.10% -0.30% of loan amount.
6	Pre-Payment Charges	Nil – for the individual borrowers. 2% plus applicable taxes – for the non-individual borrowers.	Nil – For floating Rate Of Interest. 2% – 4% – For fixed Rate Of Interest.
7	Tax Benefits	No tax benefits. The tax deduction is available only for the loan amount taken against the construction and only after completion of construction activity.	Exemptions under section 80C for principal and section 24(b) for interest paid.

Documents Required For Land Loan

• Application form duly signed by applicant and co-applicant.
• Recent passport size photograph of applicant and co-applicant.
• Pan card copy of applicant and co-applicant.
• Residence proof – electricity bill and Aadhar card copy of applicant and co-applicant.
• Income documents for salaried:
• Latest 5 months salary slips.
• Latest 6 months bank salary account statement.
• Latest 2 years form 16.
• Latest 1-year bonus copy.
• Income documents for self-employed:
• Latest 3 years ITR copy of the applicant along with the salary copy, balance sheet, profit & loss account and capital account- duly certified by CA along-with membership no. and USDIN no.
• Latest bank account statements of all accounts (current + savings).
• Latest 3 years from now. 26AS.
• The latest copy of GST returns – 3B form.
• Latest 1-year debtors and creditors statement duly certified by CA.
• Other documents:
• Business profile on company letterhead.
• Business proof- GST registration, Ghumastha or Aadhar Udyog.
• For Legal documents refer to point no.8 above inland purchasing.

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In general people may refer purchasing a new home or a land as buying a new property, but the loans taken for purchasing the two significantly differ with each other. Though in broad they may be referred as property loan and both may seem similar to many, there exist differences between the two- home loan and land loan.

SR. NO.		HOME LOAN	LAND LOAN
1	Meaning	Loan taken to purchase residential resale or builder-under-construction or ready to move property or to be self constructed property.	Loan taken to purchase a piece of plot or land for residential purpose.
2	LTV-Loan To Value i.e. amount of loan that you get against the property.	90 % – Property Value up-to 30lakhs. 80% – Property Value up-to 75lakhs. 75% – Property Value above 75lakhs.	The maximum LTV is capped at 70% of the land value. (If the property is situated in smaller cities or towns, the maximum LTV ratio is 50%-60% of the total cost of the plot.
3	Loan Tenure	Maximum up-to 30years.	Maximum up-to 20 years.
4	Rate Of Interest	Relatively low in comparison to land loan – 7.90% – 8.65%	Relatively high than home loan – 8.50% -11.50%
5	Processing Fees	0.10% -0.30% of the home loan amount.	Upto 2%-4% of the land loan amount.
6	Foreclosure Charges	Nil – Floating Rate Of Interest. 2% – 4% – Fixed Rate Of Interest.	Nil – for individual borrower. 2% plus applicable taxes – for non-individual borrower.
7	Tax Benefits	Exemptions under section 80C for principal and section 24(b) for interest paid.	No tax benefits. The tax deduction is available only for the loan amount taken against the construction and only after completion of construction activity.

Land Loan Restriction.

1) A land loan cannot be availed for buying an agricultural land or an industrial land.

i) The purchased piece of land has to be an NA land i.e. non-agricultural land.

ii) The purchased piece of land has to be a non-commercial property.

2) The land must be within the municipal or city limits and not in a village. A plot in grampanchayat is generally not considered for land loan. However there are few specific NBFCs who do grampanchayat loans.

3) The land needs to be used for residential purpose in future.

4) Lender Banks/NBFCS has a capping on maximum land loan amount. Banks like PNB has capping of 50lakhs while Indian Bank has 1Crore.

5) Lender Bank/NBFCs have preconditions towards the land loan to begin construction on the acquired plot of land within a stipulated period of time. Prominent banks like SBI and ICICI preconditions the construction on the plot o be completed within 2 years of land loan taken.

Conclusion: It is however seen that the availability of the plots or land is usually beyond the city limits mainly covered under grampanchayat. In a metropolitan city like Mumbai, plots for smaller investments by individual purchaser-as common man are rarely available. The plots so available are usually reserved and purchased by the developers/builders for constructing the residential/commercial apartments.

To know more on home loan in Mumbai, home loan rates in Mumbai and land loan visit https://www.loanfasttrack.com/.

Loanfasttrack is the best online platform to choose among the best bank for home loan to secure a low cost housing loan in Mumbai, mortgage loan in Mumbai and instant personal loan in Mumbai.  Loanfasttrack is a specialised loan provider in Mumbai markets with its existence in the online market since 2015. It offers loan services in Mumbai – instant loan in Mumbai, loan against property in Mumbai, business loan in Mumbai, Unsecured business loans, personal loan in Mumbai, home loan, home loan balance transfer, car loan, Top-up loans & Loan transfers.