FAQs

Home loan is a loan disbursed by a bank or financial institution (lender) to an individual specifically for buying a residential property. Here, the lender bank holds the title of property until the loan is paid back in full along with interest.

The tenure of a home loan starts with a minimum tenure of 5 years and a maximum tenure of 30 years

Longer the tenure you have, the lesser will be your EMI but higher would be the interest outgo. In shorter tenures, you pay a greater EMI, but the loan gets repaid faster and you pay less interest.

The eligibility criteria for a home loan is that anyone — whether self-employed or salaried individuals/professionals — with a regular source of income can apply for home loans. One must be at least 21 years old when the loan period begins and should not exceed an age of 65 years when the loan ends or at the time of superannuation. This is the generic home loan eligibility criteria and specifics such as the minimum and maximum age limits, minimum income level, etc. may differ from one bank to another.

1. Banks consider the following factors while granting a home loan:
2. Income level of the applicant
3. Age of the applicant
4. Qualification (stability and occupation continuity)
5. Resident status (maximum limit for an Indian resident differs from that of a non-resident)
6. Spouse’s income (household income is considered when there is a co-applicant)
7. of dependants (it is a measure of repayment capacity)
8. Credit history and score (past repayment track record)
9. Status of existing loans

Joint borrowers in a home loan can be immediate family members such as your parents, spouse and children can be joint borrowers in case of a home loan.

The maximum number of joint borrowers for a home loan is fixed at 6. Only family members such as parents, siblings and spouse can be co-borrowers for a home loan in India.

Yes, a single woman or a single man can get a home loan.

Generally, banks pay around 80% of the cost of the property bought. The remaining 20 % of the amount is paid up front, which is popularly known as the down payment or own contribution, taxes may or may not be considered by the banks in the home loan amounts.

The time required for home loan disbursement is 3-15 days after satisfactory completion of documentation and procedures.

The general documents needed to apply for a home loan are:

1. Completed loan application form.
2. Passport size photographs.
3. Identity proof – PAN card/Passport/ DL/ Voters ID.
4. Residence proof- telephone or electricity bill/ passport/ voter ID / property tax receipt.
5. Bank statement for at least past 6 months and salary certificates/ latest acknowledged ITR.
6. Copy of plan approved for the proposed construction/extension.
7. Cost estimation/ valuation report from Bank’s (or finance company) authorised surveyor/evaluator.
8. Allotment letter of housing board/ NOC of the society/Builder etc. as well as any other land use certificate/other.

The different types of home loan are as follows:

Land purchase loans: These loans are granted to individuals for the purchase of land on which they intend to build a house.

1. Home purchase loans: These are the most common type of home loans that is granted to individuals and they are granted for the purchase of an apartment. These loans can be granted for a new purchase as well as a resale purchase of a property.
2. Home construction loan: This type of loan is granted to individuals for the construction of a house on a plot of land that is already owned by the applicant.
3. Home Expansion/Extension Loan: This loan is specifically granted to individuals who want to expand their current home to include a new construction such as an additional floor, room, bathroom, etc.
4. Home Improvement Loan: Existing homeowners who lack sufficient funds to renovate their existing home can apply for this loan to upgrade their home with a new paint job, electrical wiring, water proofing, etc.
5. Home conversion loans: Existing homeowner can add to their existing loan so that they can purchase a new house using home conversion loans. This type of loan is only applicable to existing homeowners.
6. NRI Home Loans: These home loans are specifically designed to provide non-resident Indians with financing so that they can purchase a home in India.

The following charges may be associated with a home loan process:

1. Processing Fee- When applying for a loan, a fee is paid to the bank known as processing fee. The amount paid could be either a percentage of the loan amount or a fixed amount that is paid in lieu of carrying out the loan sanction formalities.
2. Commitment Fee- It is essential to avail the loan within a stipulated time period after it is processed and sanctioned otherwise some financial institutions levy a commitment fee. By paying the commitment fee, you are assured that you can access the loan at the interest rate and for the tenure that was initially agreed on. Most banks no longer charge this fee.
3. Pre-payment Charges- Banks/ financial institutions might charge a penalty if the entire loan amount is paid off before completion of the loan tenure. The penalty amount also known as foreclosure/pre-payment charges could be a maximum of 5% of the loan amount that is paid off before the completion of loan tenure.
4. Miscellaneous charges- Documentation, stamp duty, credit bureau report issuance charges and consultant charges are generally considered as miscellaneous charges by few lenders.

Yes, The tax benefit on home loan is divided into two sections-

Tax exemption on repayment of the home loan principal: This is the deduction allowed under Tax Section 80C with a maximum annual tax deduction of Rs, 150,000 under the section.

Tax benefit on the interest rate for home loan- Under Section 24 of the Income Tax Act, you can avail the tax benefit on the amount of interest paid on a home loan to the maximum limit of Rs. 2 lakhs for a self-occupied property.

Tax benefit for Joint Borrowers: In case of joint home loans, each of the co-borrowers is eligible to receive a total of Rs. 3.5 lakhs (1.5 lakhs under section 80C + 2 lakhs under section 24) as tax exemption. Hence, if a married couple co-signs for a home loan, they can claim a total tax exemption of Rs. 7 lakhs on their home loan.

When banks sanction you a home loan, the EMI payments may not start immediately. In such a situation, the bank is liable to charge a pre-EMI interest on your loan. This interest is payable monthly from the time the loan is disbursed till the time the EMI payments start off. The pre-EMI interest amount is lower than the home loan EMI as the principal payment portion is excluded for pre-EMI interest payments

Yes, one can foreclose your home loan amount before completion of the scheduled loan tenure by making a lump sum payment towards paying off the loan. In such cases, the bank may decide to apply some penalties in the range 2-3% of the principal amount outstanding. Some banks and NMFC (non-banking financial companies) do not charge any penalty on making prepayment of a home loan.

There are different ways to pay off your home loan such as issuing post-dated cheques for the tenure of the home loan, getting the amount deducted automatically from your salary or by issuing standard instructions to the lender for ECS (Electronic Clearing System) wherein the EMI is automatically deducted from your bank every month.

A floating rate home loan is if the interest rate on the loan varies periodically over the loan tenure. Banks have their own base rate which determines the rate of interest charged on a home loan. The base rates of banks are revised from time to time based on RBI directives as well as other factors, which leads to an increase or decrease in the EMI amount payable.

Fixed rate home loans are offered at a predetermined interest rate during the loan period and these remain unchanged during the loan period irrespective of market conditions. This can be a huge benefit when market volatility starts affecting interest rates. For instance, if the RBI increases interest rates on loans, then people with fixed rate home loan will not be affected by any increase or decrease in the market interest rates and the EMI amount will remain unchanged. This type of home loan is less popular these days.

The interest rate on home loans is calculated either on monthly reducing or yearly reducing balance. In some cases, daily reducing method is also adopted.

Annual reducing: In this system, the principal, for which you pay interest, reduces at the end of the year. Thus, you continue to pay interest on a certain portion of the principal that you have actually paid back to the lender. This means that the EMI for the monthly reducing system is effectively less than the annual reducing system.

Monthly reducing: In this system, the principal, for which you pay interest, reduces every month as you pay your EMI.

Daily Reducing: In this system, the principal, for which you pay interest, reduces from the day you pay your EMI. EMI in the daily reducing system is less than the monthly reducing system.

Home insurance is a type of insurance policy that covers private residences and protects them from unpredictable damages, natural or man-made disasters, burglary and theft.

Home insurance policies cover the house structure as well as its contents or possessions. Many insurance policies also combine various personal insurance features too.

You can own multiple properties as many as you want.

Before buying a new property you need to check the following documents: RERA Certificate of the project, Agreement to Sale or Sale Deed, Title Deed, Approved Building plans, Completion Certificate (incase of ready to move property), Commencement Certificate( Incase of under construction property), Latest Tax Receipts (if property is ready to move), Occupancy Certificate.

Agreement to sale or Sale Deed, No Objection Certificate (NOC) from builder, NOC from banks, Building Plan approvals, Completion Certificate/Commencement certificate, Adhar Card and/Or PAN Card and Photographs.

Yes. The stamp duty on the gift deed varies from state to state.

Stamp Duty is the tax paid for the legal recognition of property. It is paid by the home buyers.

The buyer needs to pay the following taxes:

TDS or tax deduction at source on amount exceeding Rs 50 lakhs for the purchase of property excluding agricultural land.

Stamp duty

GST (Goods and service Tax): GST may be charged @ 1% or 5 % in new projects and 12% in under construction projects.

Yes, you need to execute a special Power of Attorney to someone else and get is registered.

Power of Attorney allows a person to authorize another person the right to make decisions regarding the person’s assets, finances and real estate properties.

There are two types of power of attorney. First, the ‘General Power of Attorney’ where a property owner confers ‘general’ rights. The rights include but are not limited to sell, lease, sub-lease etc. The second one is the ‘Special Power of Attorney’ where only a specific right is given by the owner to the chosen person.

Registration of a property includes necessary stamping and paying of registration charges for a sale deed or agreement to sell and getting it registered at the sub-registrar’s office of the concerned area. If a property is purchased from a developer directly the developer will help the buyer in getting the property registered. Nowadays, property registration process is computerized in most states.

It refers to the registering of documents relating to transfer, sale, lease or any other form of disposal of an immovable property. Registration is compulsory by law for all properties under Section 17 of Indian Registrations Act, 1908. Once a property is registered lawfully, it means that the person in whose favor the property is registered, is the lawful owner of the premises and is fully responsible for it in all respects.

Original copies of the chain of title agreements and Building Plan approvals

Original registration and stamp duty receipts

Possession Letter

Original share certificate (In case of societies)

Proof of payment of all dues like maintenance charges, electricity bills, phone, water and property taxes up to the date of handing possession

NOC from the Society or other concerned body confirming no objection to the transfer

The Real Estate Act is intended to achieve the following objectives:

• ensure accountability towards allottees and protect their interest;
• infuse transparency, ensure fair-play and reduce frauds & delays;
• introduce professionalism and pan India standardization;
• establish symmetry of information between the promoter and allottee;
• imposing certain responsibilities on both promoter and allottees;
• establish regulatory oversight mechanism to enforce contracts;
• establish fast- track dispute resolution mechanism;
• promote good governance in the sector which in turn would create investor confidence.

In accordance with notifications issued by Urban Development Department of Government of Maharashtra, MR & TP Act is applicable to all the districts of Maharashtra. Hence, all areas of Maharashtra are included in Planning Area as defined in Section 2(zh) of the Act.

The Act covers all bodies (private and public) which develop real estate projects for sale to the general public. Section 2(zk) defines the term ‘promoter’ which includes both private and public real estate promoters. Thus, both Development Authorities and the Housing Boards, when involved in sale are covered under the Act.

Yes.  Every real estate project which has land area more than 500 sqmts or has more than 8 apartments needs to be registered

As per section 2(d) an allottee includes a person who acquires the said ‘apartment / plot’ through transfer or sale, but does not include a person to whom such plot, apartment is given on rent. The Act doesn’t include rental projects, lease / leave and License deals.

The position of parking is as follows;

1. a) Open Parking Area: This has been clearly included in the definition of “Common Areas” which need to be conveyed to the Association of Allottees after Occupancy Certificate is received. Hence, sale or allotment of Open Parking Areas by the Promoter is not permissible
2. b) Covered Parking as defined in the Maharashtra Real Estate (Regulation and Development)(Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on Website) Rules, 2017 is permitted to be sold.
3. c) Garage as defined in the Act is permitted to be sold.

Section 18 of the Act provides for provisions as regards various situations in which the allottee would be compensated by the promoter due to delay in completion of the project etc.

No. An aggrieved person can only approach one of the two forums for redressal of his grievance.

Yes, the layout of the real estate project has to be approved. However, the promoter may include some buildings in his application of registration where apartments are proposed and the Building approvals are pending. Building Approval for the apartment must be obtained before the agreement for sale is signed between the promoter and buyer, regarding the said apartment.

If any promoter fails to register as per Act, he shall be liable to a penalty which   may extend up to ten per cent of the estimated cost of the real estate project. On continued violation, he shall be punishable with imprisonment for a term which may extend up to three years or with fine which may extend up to a further ten per cent of the estimated cost of the real estate project, or with both.

The MahaRERA website would display all the registered projects.

It is mandatory that the advertisement for marketing of apartments in the real estate project must carry the MahaRERA registration number.

Real estate agents have to get registered with MahaRERA either as an individual or as “other than individual”. Promoters while applying for registration of any real estate project will have to indicate the names of registered real estate agents who will be working as agents in the said project. Names of such agents will be displayed along with other project specifications on the MahaRERA website, upon registration of the project.

If any real estate agent fails to register and contravenes the provisions of section 9 or section 10 of the Act, he shall be liable to a penalty of ten thousand rupees for every day during which such default continues, which may cumulatively extend up to five per cent of the cost of plot, apartment or buildings, as the case may be, of the real estate project, for which the sale or purchase has been facilitated as determined by MahaRERA.

Yes, in accordance with the provisions of the Act, the promoter, while applying for registration to MahaRERA, has to give a declaration, supported by an affidavit, indicating the time period within which he undertakes to complete the project or phase thereof, as the case may be.

MahaRERA will take action in accordance with section 8 of the Act.

Yes. In accordance with the model form of agreement, if the Promoter fails to abide by the time schedule for completing the project and handing over the [Apartment/Plot] to the Allottee, the Promoter agrees to pay to the Allottee, who does not intend to withdraw from the project, interest as specified in the Rule, on all the amounts paid by the Allottee, for every month of delay, till the handing over of the possession.

The interest payment is in accordance with the model form of agreement and hence should be automatically paid. The buyer may have to file a complaint to MahaRERA if there is a grievance.

In accordance with the model form of agreement, the Allottee has to pay to the Promoter, a rate of interest equal to the State Bank of India highest Marginal Cost of Lending Rate plus two percent, on all the amounts which become due and payable by the Allottee to the Promoter under the terms of the Agreement from the date the said amount is payable by the allottee(s) to the Promoter.

Recovery of Interest, Penalty, Compensation, Fine payable, Forms of Complaints and Appeal, etc.) Rules, 2017 provide for filing of complaint with MahaRERA, by an aggrieved person who has any interest in the registered project. The aggrieved person can file an application online as per format provided by MahaRERA. It shall include the following details:

– Registration number of the project to which the complaint pertains

– Particulars of the complainant and respondent

– Facts of the case

– Relief Sought

– List of Enclosures and so on

Yes. An aggrieved person having any interest in the registered real estate project can file complaint.

The procedure to be followed by MahaRERA  while adjudicating a complaint is detailed in section 36 of the Act read with Rule 6(2) of Maharashtra Real Estate (Regulation and Development) (Recovery of Interest, Penalty, Compensation, Fine payable, Forms of Complaints and Appeal, etc.) Rules, 2017.

The aggrieved person can file an application online as per format provided by MahaRERA website.

An aggrieved person may file a complaint with MahaRERA for any violation or contravention of the provisions of the Act or the Rules or Regulations made there under.

As per Regulation 24 of Maharashtra Real Estate Regulatory Authority(General) Regulations 2017, for adjudication proceedings with respect to complaints filed, MahaRERA may, by order, direct that specific matters or issues be heard and decided by a single bench of either the Chairperson or any Member of the Authority.

No. However, geographical jurisdiction may be specified for Chairperson or members of MahaRERA.

Section 29 of the Act provides that complaints should be disposed off as expeditiously as possible but not later than sixty days from the date of filing the same. However, where it cannot be disposed of during the said period, the Real Estate Regulatory Authority is required to record its reasons for the same.

No. As per section 79 of the Act, civil courts are barred from entertaining disputes (suits or proceedings) in respect of matters which Real Estate Regulatory Authority or the adjudicating officer or the Appellate Tribunal is empowered under the Act to determine. However, the consumer forums (National, State or District) have not been barred from the ambit of the Act. Section 71 proviso permits the complainant to withdraw his complaint as regards matters under section 12, 14, 18 and section 19, from the consumer forum and file it with the adjudicating officer appointed under the Act.

Any person aggrieved by any direction or decision or order made by MahaRERA or by an adjudicating officer may file an appeal before the Appellate Tribunal within a period of sixty days, in accordance with Rule 9 of Maharashtra Real Estate (Regulation and Development) (Recovery of Interest, Penalty, Compensation, Fine payable, Forms of Complaints and Appeal, etc.) Rules, 2017.

Promoter has to enable formation of Legal Entity like Cooperative Society, Company, Association, Federation etc. within three months from the date on which fifty one per cent of the total number of Purchasers, in such a building or a wing, have booked their apartment.

Promoter shall execute a registered conveyance deed in favour of the allottee within three months from date of issue of occupancy certificate or fifty one per cent of the total number of Purchasers, in such a building or a wing, has paid the full consideration to the promoter, whichever is earlier.

The Act makes both the Promoters and the landlord or any such parties which are beneficiary of a sale of a project and receive payments from allottees as Co-Promoters and hence liable to adhere to the provisions of the Act and Rules and Regulations made there under.

MahaRERA shall launch online application for registration from 1st May 2017. All promoters shall make their applications online through this IT solution, filling the details in the requisite forms, uploading the required documents and paying the necessary fees.

Promoter has to register the project before he starts any form of  advertising, marketing, booking, selling, offer for selling or inviting people to purchase plots, apartment or buildings.

At the end of ninety days from the date of notification of Section 3 of the Act, the promoter of an ongoing project shall not advertise, market, book, sell or offer for sale or invite persons to purchase in any manner any plot, apartment or building, unless he registers the project.

Yes, while registering project, promoter needs to give revised date of completion which should be commensurate with the amount of development completed

Registration is of the Project/Phase and hence the provisions of the Act are applicable to all units of the Project/Phase.

MahaRERA empowers any aggrieved person to file a complaint with respect to a registered real estate project. This will include an allottee who has an agreement executed before the project is registered with MahaRERA. However, MahaRERA will have authority to adjudicate for violations and contravention of provisions of the Real Estate (Regulation and Development) Act or rules and regulations made thereunder.

The Act puts an obligation on a promoter to obtain consent of each allottee, if he

wants to change the building plans for the phase that is registered. If a subsequent phase has not been registered, the promoter can change the plans of the subsequent phases without obtaining consent of the allottees from current / ongoing phases. However, if the subsequent phases are also registered, consent of allottees, of the concerned phases, would be needed as mentioned in section 14 of the Act

MahaRERA protects the interest of all the Allottees; including those who have executed an agreement before the project is registered under its provisions Hence, if the promoter wants to change the plans post registration, then consent of all pre-registration allottees shall be required as well.

A promoter should meticulously plan the buildings of the registered phase & common areas and then declare the individual date of handing over possession of the building & common areas. Each phase along with the development works shall have to completed and handed over to the allottee within the time frame defined by the promoter, during registration, for that phase of the project.

Promoter has to obtain all such insurance as notified by the State Government. So insurance will be compulsory only after the Notification is issued by the State Government. The Act says that the State Government can prescribe various types of insurance including but not limited to

1. a) Title of the land and building as a part of the real estate project; and
2. b) Construction of the real estate project.

The promoter is liable to pay the insurance premium before transferring the same to the allottee / association of allottees. The documents related to insurance will have to be handed over to the association of allottees when the same is formed.

Yes, if this is declared at the time of registration and subject to provisions of Section 4 of the Act and Maharashtra Real Estate (Regulation and Development)(Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on Website) Rules, 2017 made there under. However, the money withdrawn should be utilized towards construction expenses of the project, on priority.

The Act makes both the Promoters and the land owner or any such parties which are beneficiary of a sale of a project and receive payments from allottees, as CoPromoters and hence liable to adhere to the provisions of the Act and Rules and Regulations made there under. The withdrawal of money would be subject to provisions of Section 4 of the Act and the Maharashtra Real Estate (Regulation and Development)(Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on Website) Rules, 2017  made there under

Yes, since these are part of the project cost

The Promoter has to ensure that an association of allottees is formed within three months of 51% of allottees have booked their apartment in the project.

Yes, but consent of allottees would be needed as mentioned in section 14 of the Act.

Yes, the said Acts have not been repealed. However, In case of inconsistent provisions, the provisions of the Central Act shall prevail.

In accordance with the Act, MahaRERA shall within a period of seven days of the deemed registration, provide registration number.

A promoter would be allowed to advertise, market, book, sell or offer to sell or invite persons to purchase plot, apartment or building in a phase of a real estate project, only if the said phase is registered. A promoter cannot advertise, commit or sell amenities or facilities that are in a subsequent phase which is still not registered

No, it has to be separately registered if the said adjoining land was not a part of the project which has been registered.

In accordance with section 14 of the Act, the promoter should take previous consent of the concerned allottee

No

Estimated cost of the whole project that has been put up for registration has to be indicated while applying for registration.

Please refer to the Forms 1, 2 and 3 of Maharashtra Real Estate Regulatory Authority (General) Regulations 2017.

The original certificates have to be retained by the promoter because the same are required to be verified and audited by the statutory auditor of the promoter’s company at the end of every financial year. Copies may also have to be submitted to the concerned bank, if demanded by them

No. A separate bank account needs to be opened in accordance with the provisions of the Act and rules made there under.

No. There should be one designated bank account for every registered project or registered phase of a project

No. Section 13(1) of the Act prohibits the promoter from taking more than 10% of the cost of apartment without entering into a written agreement for sale, duly registered.

Yes, if it is against a consideration. Real Estate Agent is clearly defined in section 2(zm) of the Act

Yes, if it pertains to a registered project under MahaRERA.

Provision of termination of agreement is covered in the Model Form of Agreement attached to Maharashtra Real Estate (Regulation and Development)(Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on Website) Rules, 2017.

No. There is no limit placed on the number of residential properties an NRI can buy.

No, NRIs don’t require consent from the RBI to buy an immovable property in India, provided the property is residential or commercial in nature.

Yes

No, an NRI cannot buy a property in India jointly with a foreign citizen. Only Indians can buy property in India.

No, NRI cannot pay for the property and register it in someone else’s name, as per the new benami property act an individual paying up for the property has be one of the applicants in the registered sale deed or agreement to sale.

No tax benefits are available for NRI’s unless you file your returns and subsequently become eligible to avail the tax benefits as mentioned under Home Loan FAQ’s.

Apart from the documents mentioned under the home loan section for Indian citizens, NRIs are required to submit a few additional documents as well. These include:

1. A copy of the passport
2. A copy of the works contract or the labor card
3. The power of attorney (POA). (POA is required because the borrower is not based in India

The housing loan needs to be paid upfront for the entire tenure of the loan by way of direct remittances from abroad through normal banking channels or from other financial accounts as may be permitted by RBI. Generally, payments are done through NRO, NRE, NRNR and FCNR accounts. These accounts change based on RBI regulations.

Home loan offered to NRIs do not exceed 5 years in major cases. However, some financial institutions offer loans for a term of 7 years as well.

The eligibility is calculated in the same way as it is done for resident Indians with emphasis on:

1. Qualifications – Graduate (minimum).
2. Current job profile and work experience.
3. Chances of continuing abroad for the loan tenure.
4. Chances of servicing the loan with an extended tenure in case the applicant needs to return to India.

An NRI can avail home loans for new property purchase and resale property purchase.