Buyers Guide
Legal Information
In today Indian market, every buyer must be aware of his buyer rights and what are the necessary requirements that a builder should fulfil before selling the property to a buyer.
A builder has to acquire a list of approvals right from buying the property land to selling the same in fully constructed manner. Few prominent legalities and approvals that the developer must hold are:
- A clear and marketable title certificate
- CC (Commencement certificate) and I.O.D. order
- Approved plans from respective corporations
- Completion/occupational certificate
Agreement for sale
This is a legal document that binds the builder to sell and buyer to buy the particular document. With this document there is an assurity that it cannot be resold to any other buyer without your permission as the sole rights of the property are then in the buyers hands.
This document even helps you gets finance to purchase the property as it accounts for one of the most important document in Home loan approvals.
Stamp Duty and registration
Stamp Duty has to be against every agreement for sale that needs to be registered. Without the same the registration process will not be complete.
Stamp Duty rates differ from Mumbai to Thane Dist.
As per Mumbai: Stamp duty till 5,00,000/- is 7650/- and any amount above 5,00,000/- will be flat 5 %
As per Thane Dist (Virar, Vasai) : The Buyer would be liable to pay stamp duty of flat 6% on the property price.
Procedure: Once the buyer intents to register agreement of sale, he would be asked to make a pay order of the stamp duty amount in the name of the respective body, depending on the jurisdiction where the property is situated. The pay order is then given for the franking of the agreement and is later duly signed by both the parties ie buyers and sellers.
Registration
Registering the documents relating to the transfer, sale, lease or any other form of disposal of a property is compulsory under section 17 of the Indian Registration Act, 1908. The main purpose to register the sale deed to record the ownership of the property.
Registration fees for any particular sale deed is approximately 1% of the market value or agreement value whichever is higher, to the maximum of 30000/-
Home Loans
The housing market in India has boomed drastically in the past decade. Given this boom, the Home loan industry has become the most popular form of loan for a middle class buyer. But before a common man decides to choose from the various home loans available in the market, he should know a few things.
The ‘Home Loan’ Concept: A home loan is basically assistance in monetary terms by a bank or any financial institution to fulfill your need of buying your home. In this transaction, the purchased home itself stands as ‘security’, until you pay back the entire loan the entire loan amount with interest.
The basic requirements Banks and other financial institutions have various rules concerning this factor. These rules may differ from institution. However, the very basic requirements are as follows:-
- Have a fixed, dependable source of income (employed/ self-employed)
- An acceptable financial record extending to at least six months of active banking
- The age limit of 21-60 years of age if employed, or 21- 65 years of age if self employed.
The budget for your home The first step before embarking on a home-loan application is to decide on your budget. A standard home loan will cover up to 85 percent of your requirement(the overall cost of your property). You will need to raise a minimum of 15 percent and also separately, take into account stamp duty, registration charges, brokerage etc.
Eligibility factor: This step is crucial in deciding the loan amount for which you are eligible criterion is calculated based on your total income and overall liabilities (other financial commitments such as car loan, etc). In case, your spouse also has an active income, he/she can be included in the proceedings as a joint applicant- this increases your eligibility for a higher loan amount. Usually, your EMI (Equated Monthly Installments) for the loan can be up to 40 percent of your monthly income.
Calculating Interest Rate: An ‘interest rate’ is additional payment that a bank/financial institution charges over the granted loan. These rates vary form institution to institution and through certain periods of time through the year, when special promotional offers and discounts are in place.
As a thoughtful consumer, consult various banks and financial institutions, research through media like newspapers, television and internet before zeroing in on a provider with the interest rate that’s just right for you. beware of such banking terminology as ‘fixed rate’, ‘floating rate’ and ‘reducing balance’,
Discuss these factors thoroughly before deciding on a option that suits you best. Also, banks charge separate charges such as processing fee, commitment fee and admin fee. These must be ascertained by you and used as a factor when deciding upon a bank or financial institution for the loan.
Documents needed:
- Photo identity proof
- Passport size photographs
- Copy of your pan card
- Address proof
- Last Six months bank statements.
- Copy of Property Title Deed
- Form 16 for the last three years (for salaried persons)
- Last six months salary slips (for salaried persons)
- Copy of IT returns of last three years (for business men / self employed people)
- Copy of audited balance sheet and P&L statements of last three years (for self employed / business men)
Decoding ‘Pre-payment’ option: Pre-payment is an option afforded by your loan provider wherein, after a specific EMI payments, you can clear the entire pending amount thereby enforcing an early closure of the loan. Through this method you can save a lot of money towards interest payments. Always keep this option as an important prerequisite when choosing a bank for your home loan.
Tax Benefits: This is actually one of the best things about taking a home loan – the tax benefits. You will be eligible to claim both the interest and principal components of your repayment during the year.
Important points to remember:
- Try keeping the repayment period as low as possible. More EMIs equals to more interest paid.
- Judge the reputation of the home loan provider. Bad service quality could also mean that the loan may cost you more and you might not get the proper customer support.
- Always remember to avail of the applicable income tax benefits.
- Ask as many questions as possible. Questions may seek advice from friends who have taken similar home loans.
- Some banks/financial institutions offer institutions offer incentives or other freebies with their loan package. Check them out.
Simple Checklist:
- What’s the interest rate?
- Basis of EMI calculation- daily, monthly or annual
- Reputation and quality of services
- Other applicable fees- what are they
- Is pre- payment option available? Is there a penalty involved?
- Does service tax form the part of the loan amount?