PROJECT LOAN :
This applies primarily for Builders who opt for loan at the project level and not for the individual units. The loan can be applied either at the initial stage itself or when the super-structure are already up but have run out of the money to bring the project for full completion.
HOME LOAN :
Individual home buyers with eligibility can apply for Home Loans. However there are several paper-works that have to be completed before loan can be disbursed from bank and sometimes this includes lot of running around from one bank to another. Several challenges are also encountered such as – Desired loan not sanctioned, Interest dilemma, Rejection at first stage, NOC and Title Deed documentation problems, Differences in property valuation, etc.,
Home Finance is available for :
- Construction of house on owner land/site/plot
- Purchase of a house/row houses/flat
- Extending existing house – adding more space
- Up-grading of existing house – renovation
- Balance Transfer Loan – Take over loan from other Banks/HFC’s
- Purchase of Land – Residential Land
- Funding for Registration & Stamp paper costs
Home Finance Companies also provide loans other than Home Loans :
- Loan Against Property/Mortgage Loan – Both Residential and Commercial
- Home Furnishing Loan
- Lease Rental Discount Loan
- Office Premises Loan – For self-employed professionals
COMPOSITE LOAN :
Composite Loan is type of home loan that bundles purchase of the plot and construction of the home on that plot. Loan is disbursed in tranches/installments where the first tranche is for the purchase of the plot and rest of the tranches are released with the progress of the construction. To avail the benefits of Income Tax, the construction should be completed in 3yrs from the first installment.
CONSTRUCTION FINANCE :
‘Financial assistance provided to construct a dwelling unit is called as Construction Finance’
- Land to be owned by one/both applicants
- Release of loan only after obtaining securities
- Funding on Plan & Estimate – Normally limited to 75-85% of the cost
- Disbursements in instalments as per construction progress
- Disbursement after Margin money (Cost – Loan amount) invested – parallel funding may be possible
- Final disbursement to coincide with completion of construction – monitoring of end use of loan amount
- Till final disbursement, PEMI interest to be paid on monthly basis
- Some deviation – approved plan Vs actual construction may be allowed
- Loan against only basic structure and amenities
- Normally site values not included for funding. However if site is acquired with in last 6-12 months, the actual cost may be included
- Normally enhancement of loan during construction moth allowed
- Normally no receipt for materials purchased from contractor insisted – visit by panel engineer at each stage of disbursement
- Latest tax paid receipt and latest revenue records insisted
- Regular payment of PEMI Interest is essential – otherwise Bank/HFC may not release further installements
PURCHASE OF LAND :
‘Financial assistance to purchase a residential property/plot/site’
- Only residential sites shall be fnded
- Sites allotted by Government authorized agencies, sold by developers in their layouts and re-sale of sites woned by individuals can be funded
- Normally 75-85% of cost of site value to be registered, is funded. However some Banks/HFC’s fund on Market valuation of site
- Loan sanctioned shall be released at the time of registration of sale
- PEMI interest only for the broken period of the month of disbursement. EMI from subsequent month
- Such loans shall not be eligible for Income Tax benefits, which are applicable to Home Loan repayments
LOAN AGAINST PROPERTY/MORTGAGE LOAN :
‘Financial Assistance provided against existing property’
- One can avail loan against his/her property by offering the property as security. End use of money is not monitored.
- Loan are available against residential or commercial properties
- Such loans attract more Interest rate and more EMI
- Normally loan amount restricted to 50% for Market Valuation and repayment term to 10years
- LAP not available for site alone
- Approved plan and valuation report insisted
- Such loans shall not be eligible for Income Tax benefits, which are applicable for Home Loan repayments
REVERSE MORTGAGE :
Reverse Mortgage is a special type of loan where senior citizen who has a self-occupied house and is looking for regular income can mortgage it to a financial institution. In return, the institution pays the person a fixed periodic (monthly, quarterly, annual) installment or a lump-sum amount at a defined rate of interest.
- Indian citizen above 60 years.
- Owns self-acquired and self-occupied residential property in India
- Individual, either singly or jointly with spouse, in case of a living spouse older than 55 years, as co-applicant; number of surviving spouses on the date of sanction should not be more than one.
- The property against which the borrower proposes to raise the loan should be his/her permanent primary residence.
- The property should be self-acquired and self owned.
- Borrower(s) will be required to inform the bank when they cease to use the residence as their permanent residence.
Quantum of Loan
- Minimum Rs. 1 Lakh inclusive of interest
- Maximum up to Rs. 100 Lakhs inclusive of interest subject to max 90% of the market value of the property depending on location.
Tenure of Loan
- Minimum tenure of 15 years and maximum tenure of up to 20 years, if the borrower’s age is between 60 and 65.
- Minimum tenure of 10 years and maximum tenure of 20 years, if the borrower’s age is above 65.