Introduction

Get a copy of the title report by the solicitor of the property. Make sure that there are no conditions written in fine print and that there are no specific reservations by the state government.

Look for specific clearance reports. For instance, if the construction is near a seafront, you will need to check for a Coastal Regulation Zone (CRZ) clearance. If the project is being constructed over or in the close vicinity of a heritage building, you must check for any heritage reservations for the premises. The idea is to ensure that you do not get stuck with a property that is or may get caught in any sort of disputes. Lack of clearance of titles also means that you will not be able to avail home loans.

Permissions and Approvals Before a construction can begin, the builder must seek several permissions and approvals from relevant bodies. Without these clearances, the construction may come under litigation. Here is a list of documents and approvals that the builder must possess for all building work to commence in Mumbai:

  • ULC order(in specific cases)
  • IOD and CC of the project
  • MCGM approved plans

Home Loan

You must be at least 21 years of age for the loan to be sanctioned. The loan must terminate before or when you turn 65 years of age. You must be employed or self-employed with a regular source of income. Office premise loan You must be at least 21 years of age for the loan to be sanctioned. The loan must terminate before or when you turn 65 years of age. You must be self-employed with a regular source of income. The loan can be for the purchase / construction / extension of a non-residential property. A loan for renovation or improvement will be given only at the time of acquisition of property. Professionally qualified and self-employed individuals can apply. A minimum of 3 year’s work experience is a must.

A number of factors such as your income, age, number of dependants, qualifications, assets and liabilities, income stability/ continuity of your employment / business etc. are taken into account when assessing your repayment capacity.

However, there are ways by which you can enhance your eligibility: If your spouse is earning, add him/her as a co-applicant. The additional income shall be included to enhance your loan amount. Incidentally, if there are any co-owners they must necessarily be co-applicants. Did you know that your fiancée’s income could also be considered for sanctioning the loan on your combined income? The disbursement of the loan, however, is done only after you submit proof of your marriage. Providing additional security like bonds, fixed deposits and LIC policies may also help to enhance eligibility. While there is no need for a guarantor, having one might enhance your credibility with us. If so, our loan officer would provide you with the necessary details. However, the final amount to be sanctioned will depend on your repayment capacity. In the total cost, registration charges, transfer charges and stamp duty costs are included.

Documents required for applying for a home loan (for self-employed professionals and businessmen)

  • Updated bank passbook or a Xerox of the statement of accounts for the last 6 months
  • Age proof: PAN card, Voters ID, Passport and License Xerox of ration card Business profile with details on the nature of business, list of clients, suppliers, staff strength, geographical spread, etc.
  • Xerox of education qualifications certificate and proof of business existence
  • Xerox of last 3 years Income Tax returns Last 3 years profit /loss and balance sheet Processing fees cheque
  • Documents required for applying for a home loan (for employed professionals)
  • Latest salary certificate / slip in original
  • Age proof: PAN card, voters ID, passport, license
  • Xerox of Form no.16 A (TDS Form) from employer. Certificate in original from employer for any other allowances, which are not reflected in salary slip
  • Updated bank pass book / Xerox of statement of accounts for last 6 months
  • Xerox of your company’s ID or ration card
  • Passport size photographs of applicant and co-applicant
  • Processing fees cheque
  • You may be asked to submit further legal documents if required by the bank or its approved lawyers. Retain photocopies of all the documents being submitted by you.

Your loan will be disbursed after you identify and select the property that you are purchasing and submit the requisite legal documents. Each and every single document asked for will be verified and checked for your safety. This may take some time but we want to ensure a clear title by completing all the legal and technical verifications so that you have full rights to your home. The 230 A Clearance of the seller and / or 37I clearance from the appropriate income tax authorities (if applicable) is also needed. On satisfactory completion of the above, registration of the conveyance deed and investment of your own contribution, the loan amount (as warranted by the stage of construction) will be disbursed by Bank. The disbursement will be in favour of the builder/seller.

List of documents for disbursement

  • Loan Agreements
  • Disbursement Requests
  • Post-dated cheques
  • Personal guarantors documents, as the case may be

Agreement For Sale

Once you have found the property you want to buy, you must ensure that the vendor cannot sell the property to another purchaser. To cover this potential problem you and the vendor must sign a contract that binds the vendor to sell and you to buy. It also allows time for you to finance the purchase and collect the documents needed for the final deed.

Considering the importance of this contract, it is advisable to ask a professional to draft this agreement. His/her professional experience will serve as the best guarantee against any loophole.

Stamp Duty & Registration

As per the Bombay Stamp Act, 1958, the purchaser must pay a 5% stamp duty on the purchase of any flat. Without the payment of this stamp duty, your solicitor will not be able to officially register your new house in your name, even when the house is transferred within the family.

Procedure for Stamp Duty

When the flat purchaser desires to enter into an agreement, the stamp duty amount is calculated for him/her as per the agreement value or market value, whichever is higher. Once the stamp duty amount is given to the flat purchasers, they need to get the pay-order, which will be addressed in favour of “SUPERINTENDENT OF STAMPS, Mumbai”. The pay-order is given for franking of the agreement. Later, the said agreement is duly filled and signed by the respective parties.

Registration The stamp duty paid document has to be registered under the Indian Registration Act with the sub-registrar of Assurances, of the jurisdiction where the property is situated. The basic purpose of registration is to record the ownership of the flat. Until the title deeds in your name are registered or recorded, you are not officially the legal owner of the house.

Compulsory Registration of Documents – Section 17 of the Registration Act, 1908

Registration Procedure

For registration, the original document printed on one side along with two photocopies of the original; have to be submitted to the registering officer. The registration procedure also requires the presence of two witnesses and the payment of the appropriate registration fees.

On Completion of Procedure

A receipt bearing a distinct serial number is issued. The following requirements for completing the registration are usually stated on the receipt:

Market value of the property

Income-tax clearance; i.e., N.O.C. under Section 269 UL (3) issued by the appropriate authority constituted under chapter XX-C of the Income Tax Act, 1961, if the same is applicable

Registration Fee

The registration fee currently fixed for registering documents relating to property transactions is approximately 1% of the market value or agreement value, whichever is higher, subject to Maximum of Rs.30,000/-. The registration fee for the following immovable property transactions is levied on the market value of property on which stamp duty is charged:

  1. Conveyance
  2. Exchange
  3. Gift
  4. Partition
  5. Transfer of lease by way of assignment
  6. Sale
  7. Power of attorney given for consideration
  8. Authorization to the attorney to sell the property

NRI Buyers

Making Payments

Non-resident Indians holding Indian passport do not require any permission from RBI for acquiring immovable property for bonafide residential purposes. Non-resident Indians holding Indian passport may pay the purchase consideration either by remittance of funds from abroad through normal banking channels or out of NRO/ NRE/ FCNR account.

Home Loans The Non-Resident Indians (NRIs) are recognized under the Foreign Exchange Regulatory Act, 1973. Every bank and housing finance companies follow the RBI guidelines to define NRI – “An Indian citizen who holds a valid documents like Indian passport and who stays abroad for employment or for carrying on business or vocation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a NRI.”

Broadly categorized, Non-Resident Indians qualifying for NRI housing loans are: Indian citizens who stay abroad for employment or for carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad; Government servants who are posted abroad on duty with the Indian missions and similar other agencies set up abroad by the Government of India where the officials draw their salaries out of Government resources; Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World Bank, International Monetary Fund (IMF), World Health Organization (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP);

Officials of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad. Documents required for Resident Indians as well as for NRIs for getting Home Loans are different in some respect. Home loans for NRIs are available for construction of new house / flats, purchase of old house / flat addition / alteration to an existing house and repairs / renovation etc. NRIs can avail of loans by mortgaging an existing residential property. However, for availing home loans, NRIs have to fulfil certain conditions according to provisions of the Income Tax Act. They should have stayed in India for a period of 182 days or more within an assessment year or they should have stayed in India for at least a total of one year or more. The FDI Policy that permits FDI up to 100% from foreign/NRI investor under the automatic route has boosted NRI confidence. Banks have attractive NRI housing schemes to accommodate the housing needs of NRIs. From the stables of HFCs, NRI housing finance plans with suitable repayment options are available. Last but not the least, NRIs should take due care while selecting their home loan provider companies or HFCs. Considering the geographical distances involved, it is significant that loan seekers associate with a proactive and responsive HFC.

Eligibility for NRI

The eligibility criteria of NRIs differ from Resident Indians based on a few parameters. The parameters include:
Age: The loan applicant has to be 21 years of age. Qualification: The NRI loan seeker has to be a graduate. Income: The loan applicant has to have a minimum monthly income of $ 2,000 (although, this criterion may differ across HFCs).The eligibility is also determined by the stability and continuity of your employment or business. Payment options: The NRI also has to route his EMI (Equated Monthly Installments) cheques through his NRE/NRO account. He cannot make payments from another source say, his savings account in India. Number of dependants: The eligibility of the applicant is also determined by the number of dependents, assets and liabilities. An NRI applicant is eligible to get a home loan ranging from a minimum of Rs 5 lakhs to a maximum of Rs 1 crore , based on the repayment capacity and the cost of the property, which although is variable by the priorities of the home loan provider. Also Home Loan Tenure for NRIs is different from Resident Indians. An applicant will be eligible for a maximum of 85% of the cost of the property or the cost of construction as applicable and 75% of the cost of land in case of purchase of land, based on the repayment capacity of the borrower. However, a NRI can enhance his loan eligibility by applying for home loans with a co-applicant who has a separate source of income. Also, the rate of interest for home loans to NRIs is higher than those offered to Resident Indians. The difference is to the extent of 0.25%-0.50%. Some HFCs also have an internally earmarked ‘negative criterion’ for NRI home loans. As such, the NRIs who hail from locations that are marked as being ‘negative’ in the books of HFCs, find it difficult to get a home loan.

RBI directive loans

The Reserve Bank of India (RBI) has clarified that Non-Resident Indians (NRIs) and Persons of Indian Origin (PIO), purchasing immovable property in India should pay for the acquisition by funds received in India through normal banking channels by way of inward remittance from outside the country. The NRIs and Resident Indians can also acquire immovable property in India other than agricultural property, plantation or a farmhouse. It has issued certain directive for sanctioning home loans to Non-Resident Indians. The guidelines provided are: The home loan amount should not exceed 85% of the cost of the dwelling unit, as the remaining amount that is 15% needs to be provided an own contribution towards the cost of unit financed.

The cost of dwelling unit which is own contribution financed less the loan amount, can be met from direct remittances from abroad through normal banking channels, the Non-Resident (External) [NR(E)] Account and /or Non-Resident (Ordinary) [NR (O)] account in India. However, repayment of the loan, comprising of the principal and interest including all the charges are to be remitted to the HFC from abroad through normal banking channels, the Non-Resident (External) [NR(E)] Account and /or Non-Resident (Ordinary) [NR (O)] account in India. The repayment option for NRIs as they can pay through the funds held in any non-resident account maintained in accordance with the provisions of the Foreign Exchange Management Act, 1999, and the regulations made by the RBI from time to time. As most of the home loan provider companies consider the economical stability of the applicant, home loans for NRIs are quite feasible, because they are well in economic resource.

Documents required for Loan

The documentation required to be submitted by the NRIs are different from the Resident Indians as they are required to submit additional documents, like copy of the passport and a copy of the works contract, etc. And of course NRIs have to follow certain eligibility criteria in order to het Home Loans in India. Another vital document required while processing an NRI home loan is the power of attorney (POA). The POA is important because, since the borrower is not based in India; the HFC would need a ‘representative’ ‘in lieu of’ the NRI to deal with and if needed. Although not obligatory, the POA is usually drawn on the NRI’s parents/wife/children.

The documents needed for obtaining NRI home loans are:

  • Passport and Visa
  • A copy of the appointment letter and contract from the company employing the applicant.
  • The labor card/identity card (translated in English and countersigned by the consulate) if the person is employed in the Middle East Salary certificate (in English) specifying name, date of joining, designation and salary details.
  • Bank Statements for the last six months
  • List of Classified documents for Salaried and Self Employed NRI Applicants
Salaried NRI ApplicantsSelf-Employed NRI Applicants
Copy of valid passport showing VISA stampsPassport copy with valid visa stamp
Copy of valid visa / work permit / equivalent document supporting the NRI status of the proposed account holderBrief profile of the applicant and business/ Trade icense or equivalent document
Overseas Bank A/C for the last 3 months showing salary credits6 months overseas bank account statement and NRE/ NRO account
Latest contract copy evidencing Salary / Salary Certificate / Wage SlipsComputation of income, P&L account and B/Sheet for last 3 years certified by the C.A. / CPA or any other relevant authority as the case may be (or equivalent company accounts)

Property Documents:

  1. Original title deeds tracing the title of the property for a minimum period of the last 13 years.
  2. Encumbrance Certificate for the last 13 years.
  3. Agreement of sale /construction, if any
  4. Receipts for payments made for purchase of the dwelling unit.
  5. Approved plan / license.
  6. ULC clearance /conversion order etc.
  7. Receipts for having invested the margin money through normal banking channels from the Non-Resident (External) account in India and / or the Non-Resident (Ordinary) account in India.
  8. Latest tax paid receipt.
  9. Allotment letter from the co-operative society / association of apartment owners.
  10. Agreement for sale / sale deed /detailed cost estimate from Architect / Engineer for property to be purchased / constructed /extended / improved.
  11. Copy of approved drawings of proposed construction/purchase/extension.

Additional documents to be submitted by Person of Indian Origin

Photocopy of PIO card. If the PIO card is not available, photocopies of any of the following documents:

  • The current passport, with birthplace as ‘INDIA’
  • The Indian passport, if held by the individual earlier.
  • Parents/grandparents Indian passport/birth certificate/marriage certificate substantiating the individuals claim as a person of Indian origin.