Home Loan Faqs
We are builders of flats and apartments which are cozy and house high quality luxury homes which you would want to own.
GPHomes Private Ltd in Chennai has residential homes which are beautiful, elegant, luxurious and yet highly
affordable. We reduce your efforts of knowing about home loans by providing you with answers for the
frequently asked questions:
You can for apply for Home Loan at any time. You may apply for it after you have decided to acquire/construct a property, and even in case, the property has not been selected or the construction has not commenced, you can still apply. What’s more, you can also avail for Home Loan facility if you want to renovate or expand your home.
Your Home Loan eligibility is determined by your repayment capacity, taking into consideration, factors such as: Your:
- Income
- Qualifications
- Age
- Spouse’s income
- No. of dependants
- Stability and continuity of occupation
- Assets/Liabilities.
- Savings history.
The most important concern of banks in determining your loan eligibility is whether or not you are contentedly able to pay off the amount you borrow.
Banks usually take some additional securities which are called collateral securities. Collateral could be in the form of guarantee from one or two persons, assignment of life insurance policies, the surrender value of which should be equal to the loan amount, deposit of shares, and units or other securities. These additional securities are taken just in case a loan is not paid back; recourse may be taken to such securities instead of depending upon the mortgage of the property which is the last resort.
It takes around two weeks for processing of one’s application if all the necessary documents are in order and takes another week for the bank to inspect the property papers and make the disbursement.
The maximum amount that you can borrow depends on factors such as:
- The purpose of the loan.
- Whether it is for purchase of property or improvement or renovation.
- Or purchase of land for development etc.
Banks usually take some additional securities which are called collateral securities. Collateral could be in the form of guarantee from one or two persons, assignment of life insurance policies, the surrender value of which should be equal to the loan amount, deposit of shares, and units or other securities. These additional securities are taken just incase a loan is not paid back; recourse may be taken to such securities instead of depending upon the mortgage of the property which is the last resort .
Yes, and you will have to insure that the property for fire and other appropriate hazards, as required by the banks during the loan tenure. The banks will be the beneficiary of the insurance policy . You will also have to produce proof/evidence, whenever required by the banks. This is an added cost that will add to the final cost of purchase of the property.
Yes, you can take loan for construction in one city while working in another. The banks usually service this loan after getting details of the plot legally verified.
The home loan interest rate varies from banks to banks and normally ranges from 9 to 12%.
Most banks follow the monthly reducing-balance method, which accounts for your principal repayments only at the end of the particular month. Some banks may also follow the daily reducing balance method.
The interest on Home Loans is usually calculated on Reducing balance. In Monthly Reducing Balance, the principal on which you pay interest reduces every month as you pay your EMI and in daily Reducing Balance, the principal is reduced at the end of the each day
Fixed Rate of Interest means that the interest rates remain FIXED for the entire duration of the loan. This basically means that you do not benefit, even if the rates of interest drop in the market.
This is the rate of interest that fluctuates according to the market lending rate.
The maximum period over which one can pay the loan varies for every bank, and is also different for every scheme. Also your residential status makes a difference. If you are a resident Indian, you could avail of a loan for the duration of 1-25 years.. As a Non-Resident Indian, you can only avail of a loan for a maximum period of 15 years.
The maximum period over which one can pay the loan varies for every bank, and is also different for every scheme. Also your residential status makes a difference. If you are a resident Indian, you could avail of a loan for duration of 1-25 years.. As a Non-Resident Indian, you can only avail of a loan for a maximum period of 15 years.
A Co-Applicant(s) is/are the Co-Owners of the property in respect of whom the financial assistance has been sought. However all co-applicants need not be co-owners. Usually co-applicants are: husband/wife, father/son, mother/daughter etc.
Banks charge fees at the time of application which is called processing fee and it is generally charged as a percentage of the loan amount
The loan can be disbursed in full or in suitable installments taking into account the requirement of funds and progress of construction, as assessed by the bank.
CIBIL is an institution which contains the credit history of commercial and consumer borrowers and shares the information to its Members in the form of credit information reports. For more information click www.cibil.com/faqs.htm
Yes, you are eligible for tax benefits on the principal and interest components of the loan under the Income Tax Act, 1961. However as the benefits could vary each year, do check out the current benefits available.
There is no general static rule that the agreement has to be registered mandatorily. It varies from state to state.
Each bank has its own list of documents that one must submit at the time of application. The common documents that the banks require at the pre-approval stage are:
- your business track record.
- Copy of audited financial statements for the last 2 years.
If you are salaried, you need:
- Salary and TDS certificate
- Latest pay slip
- Letter from employer.
And at the disbursal stage (for property already located), you need to submit the following:
- Allotment letters.
- Photocopies of title deeds.
NRI FAQS
Enjoy comfortable living at our apartments and flats which have beautifully constructed homes. We are builders who give a lot of importance to the safety and quality of the flats. We are one of Chennai’s well known flat promoters. For NRI’s, our homes are the best investment option. Please find below FAQs related to NRI home loans:
Banks provide loans for Purchase, Construction, Extending an existing home, Renovation, or for purchase of a plot of land from Development Authorities.
The following documents are to be submitted along with the application:
- Photocopy of the Employment Contract or Labour Contract and English translation duly countersigned by your employer
- Latest salary certificate (in English) specifying the following:
- Name (as it appears in the passport).
- Date of joining.
- Passport Number.
- Designation.
- Perquisites and salary
- Photocopy of Identity card / Labour card
- Photocopy of valid resident visa stamped on the passport
- Photocopy of monthly statement of local bank account for the last 4 months
- Property related documents
The security for the loan is first mortgage of the property to be financed, by way of deposit of title deeds and/or such other collateral security as may be necessary. The documents need to be submitted in India to the bank that is disbursing the loan.
In addition interim security may be required, if the property is under construction. Collateral or interim security could be in the form of assignment of life insurance policies, the surrender value of which is at least equal to the loan amount, pledge of shares and such other investments that are acceptable to the bank.
Please ensure that the title to the property is clear, marketable and free from encumbrance. To elaborate, there should not be any existing mortgage, loan or litigation, which is likely to affect the title to the property adversely.
In many states in India, the Agreement for Sale between the builder and purchaser is required by law to be registered. You are advised, in your own interest to lodge the Agreement for registration within four months of the date of the Agreement at the office of the Sub-Registrar appointed by the State Government, under the Indian Registration Act, 1908.
All owners need to be co-applicants to the loan. However, all co-applicants need not be co-owners.
Yes. It would be desirable to appoint a Power of Attorney in India and the POA should be a resident of the city where you wish to apply for a home loan. In case the co-applicant is not present in India to complete the loan formalities, the co-applicant should also draw a power of attorney favouring the person of choice in India.
Repayment capacity takes into consideration factors such as income, age, qualifications, number of dependants, spouse’s income, assets, liabilities, stability and continuity of occupation and savings history. And, of course, HDFC’s main concern is to make sure you can comfortably repay the loan amount.
Yes, you can take loan for construction in one city while working in another. The banks usually service this loan after getting details of the plot legally verified.
You repay the loan in Equated Monthly installments (EMIs) comprising principal and interest. Repayment by way of EMI commences from the month following the month in which you take full disbursement. Please refer to the EMI Calculator for further details.
Pending final disbursement, you pay interest on the portion of the loan disbursed. This interest is called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement upto the date of commencement of EMI.
You can pay the EMI, pre-EMI interest or other charges through cheques favouring HDFC Ltd., from your NRE/ FCNR/ NRO/ NRSR account in India.
An NRI who is not repaying the loan regularly, may subsequently opt to clear the outstanding loan through direct remittances from abroad through normal banking channels, from the Non-Resident (External) account in India or through Non-Resident (Ordinary)/ Non-Resident Special Rupee account /cash (withdrawn from Non-Resident (Ordinary)/ Non-Resident Special Rupee account).
Own Contribution is the cost of the dwelling unit financed less the loan amount. The own contribution should be met from direct remittances from abroad through normal banking channels or from the Non-Resident (External) Account/Non-Resident (Ordinary) or the Non-Resident Special Rupee account in India. The own contribution must be completed to enable the bank to disburse the loan amount.
The repayment capacity of the applicant(s) based on Resident status is reassessed and a revised repayment schedule worked out. The new rate of interest will be as per the applicable rate on Resident Indian loans at the time of conversion (for that specific loan product). This revised rate of interest would be applicable on the outstanding balance being converted.
An individual classifies as a PIO if
- Photocopy of the Employment Contract or Labour Contract and English translation duly countersigned by your employer
- He at any time held an Indian passport.
- He/ either of his parents/ either of his grandparents was a citizen of India.
- The person is a spouse of an Indian citizen.
A Person of Indian origin can be a citizen of any country (other than Bangladesh or Pakistan)
Yes. As per current guidelines of the Reserve Bank of India, persons of Indian origin holding foreign passports are eligible for loans from Indian Banks.
A PIO can avail loans for home purchase and home extension.
All other terms and conditions relating to rate of interest, term of loan, fees, appraisal norms, own contribution, remittances and repayment of loan remain the same as those for loans to NRIs.
A PIO card is issued to a “Person of Indian Origin “, by the “Indian mission” (Embassy of India / High Commission of India / Indian Consulate in a foreign country. It extends to the cardholder certain facilities, as prescribed by the Ministry of External Affairs, and is valid for a period of 20 years.
It is not mandatory for a person of Indian origin to have a PIO card issued in the customer’s name, to apply for the loan.
Yes. These policies will be reviewed periodically.
TAXATION FAQS
GPhomes Pvt Ltd. create flats and apartments which are an epitome of beauty and are sure to grab the attention of the buyers. We are promoters of residential homes in places of importance in and around Chennai. We help our customers throughout the journey of owning their dream homes. Here is the list of frequently asked questions with respect to taxation.
There should be no difficulty in your claiming the deduction under section 24 as also the deduction under section 80-C in respect of the interest payment and the principal repayment of the housing loan taken by you.
You may note that the principal repayment will qualify for deduction only if it is taken from a bank or certain specified institutions. You may also note that if a property is self-occupied, the deduction in respect of interest will be restricted to Rs 1, 50,000.
Section 80-C allows a deduction in respect of principal repayment but sets a limit of Rs 1 lakh in respect of certain payments and investments, which also includes the principal repayment towards housing loan.
From your query it is not clear if this property came to be acquired by your wife. If the property was acquired only out of borrowed funds where the EMI is paid by you and the balance is out of your sources, given that you have stated that your wife has no income, it will mean that though the property stands in the name of your wife, the clubbing provisions in section 64(1) would apply and the income from the property will have to be assessed only in your hands.
You may note that income will include losses. Therefore, the loss computed under the head income from house property can be claimed by you as deduction as the income or loss from the property will be assessed in your hands.
Deduction under section 80C will be available to you as far as principal repayment is concerned. If you pay rent to your wife to claim that as deduction, the rental income will get clubbed in your hands. This nullifies any gain you will get out of claiming deduction.
The claim for interest on the housing loan taken for the second property will depend on who is the owner of the property. If you are the real owner, though the property can be registered in your name and in the name of your wife, the interest paid can be claimed as a deduction only by you subject to the limits specified under section 24.
If on the other hand you are joint owners in the real sense, the claim will have to be made proportion to your ownership in the property subject to the overall limits specified under section 24.
In your case, though the stamp duty and registration charges have been paid out of borrowed funds, the amount will be allowed as a deduction. Independent of this, the principal repayment and interest paid to the bank will qualify for deduction under sections 80C and 24 respectively.
As the relationship of son and a father is one among the 8 relationship as covered by Income Tax Act, any transfer of Capital Asset to these relatives by way of Gift does not attract any Capital Gains. This also does not have any tax liability in the hands of transferee i.e in this case -your son.
But, in case your son in turn transfer/sells the property, then this would attract Capital Gains per the provisions as defined in Income Tax Act. You may refer few links here for better understanding.
You can claim deduction under Sec 80C on Stampduty and registration fees paid for the house. However you will not be eligible to claim HRA Exemption if the house is partly owned by you.
You can claim the entire tax benefit on the payable interest and principal repayments for the loan. If the employer provides only partial benefit, you can claim the rest while filing your income tax return.
The Income Tax Act does not specifically prohibit rental payments to spouse, but it is likely that the tax department will treat such a payment as a colourable/sham transaction. Also you cannot claim HRA on the rent paid for your parentsaccommodation.
Even if you are paying the full EMI from your income and your wife is not contributing towards this, she will be eligible for deduction of interest under Section 24 as she is a joint owner of the property and also a joint applicant for the loan. This is because the deduction on interest is on -due basis’, not on the basis of payment. You have not mentioned whether your wife is transferring any amount to the account from which the home loan EMIs are being deducted. Because, deduction on principal under Section 80C will not be allowed as it is on payment basis if she is not contributing to the account from which the EMI is being paid. If the house is rented out, joint owners can claim the entire amount paid as interest on the loan for deduction. For self-occupied property, the maximum amount every co-owner can claim is Rs1.5 lakh.
To claim deduction on repayment of housing loan, income from house property should be chargeable to tax in the hands of the individual and loan should be repaid by the individual as a borrower. You would not be eligible for the deduction. You would be able to claim the tax benefit on housing loan repayment if you own or co-own the property and also become borrower or co-borrower of the loan and satisfy other conditions. For loan waiver, please refer the of the agreement.
For claiming such a deduction, income from house property should be chargeable to tax in the hands of the individual as an owner and loan should be repaid by the individual as a borrower of loan.
Accordingly, as the income from such property is not chargeable to tax in the hands of the HUF and the HUF has not borrowed the loan, there will be no eligibility to claim deduction. Even if you show amount paid by HUF as a loan to you and HUF repays loan to the bank, the situation would be the same. Only when you being the borrower of loan make repayment, would you be eligible for deduction under section 80C.
As your daughter and son-in-law are non-residents in India, the person responsible to make such rental
- Latest 3 months Payslip.
- Last 6 months bank statements.
- Appointment letter from Current Employer.
- Last 2 years Form 16.
- Appointment & relieving letter from previous employer
- In case current employment is less than 3 years. Last 3 years employment history required.
- Existing Loans repayment track record if any.
- Qualification Proof.
- Resume.
- Last increment letter.
- Age, Address & ID Proof.
- One photograph each.
- Processing fee Cheque.
- Latest 3 years ITR, Profit & Loss Account, Balance Sheet. (Should be attested by the Auditor. CA
Membership number required) - Last 12 months bank statements.(Savings and Current A/C)
- Business Profile.
- Existing Loans repayment track record if any.
- Qualification Proof.
- Age, Address & ID Proof.
- One photograph each.
- Partnership Deed/ Incorporation Certificate, Memorandum & Articles of Association.
- Share holding pattern and List of Directors attested by Chartered Accountant/Company Secretary
- Processing fee Cheque.
- Latest 3 months Payslip.
- Last 6 months bank statements.(Salary A/C at Abroad & Local NRE/NRO A/C)
- Appointment letter from Current Employer.
- Deputation letter. (If gone to abroad on deputation)
- Appointment & relieving letter from previous employer
- In case current employment is less than 3 years. Last 3 years employment history required.
- Existing Loans repayment track record if any.
- Qualification Proof.
- Resume.
- Last increment letter.
- Passport & Visa Copy.
- Address Proof (Abroad & India).
- Work Permit
- One photograph each.
- Credit Report and W2(For U.S and U.K.)
- Power of Attorney (As per the Banker•s Format)
- Age, Address and ID Proof of Power of Attorney.
- Processing fee Cheque.
| BANK | up to 30 lacs | above 30 lacs |
|---|---|---|
| SBI | 8.05% | 8.50% |
| HDFC | 8.45% | 8.80% |
| Axis | 8.90% | 9.25% |
| ICICI | 8.85% | 9.15% |
