Questionnaire When Approaching Financial Institutions For Housing/Site Loan

# 1 Comments Look For Not all Banks finance all types of properties. Some Banks Ensure you have obtained the property related Will I get loan for the property I am proposing do not provide site loans, some do not finance land which documents from the seller when approaching the to buy? is not BDA approved, some don t sanction for land in Bank. specific areas. The value of the property can be one of: - The amount at which the property is to be registered What percentage of the flat/plot value will the - The value of the property as mentioned in the Bank finance? Agreement Of Sale - The value of the property as assessed by the Bank valuer This would depend on: - Your monthly EMI capacity - The term of the loan Check if you can leverage the income of our spouse or coapplicant or guarantor. You could also project your future income by having a record of past income revisions. Most institutions allow multiple terms for Loans - usually Longer term usually means lesser EMI but more ranging from 5 years to 25 years. This would depend on ROI and hence, more overall payment. Get the the earning life you can project in future. Terms get best possible mix for your situation. shorter as you move closer to retirement. The ROI usually depends on: - The term of the Loan - The quantum of Loan - Some Banks charge more ROI for site loan Discounts if they are provided for the company you work in or the time of the year or your repayment record (from past or current loan). Discounts, as above. Also, check market indicators to study the possibility of ROI changes in the near future. One more indicator is the time elapsed from the last increase in ROI. If the ROI has not changed for a while, it may be due for a revision. Check the EMI quoted with the EMI Calculator. Some Banks also offer "smart" EMI which work in a staggered manner, to accommodate your growing income. Check for this and like-minded schemes that would help you to plan your loan and EMI better. Some Banks will take into account your net monthly income while others will take in the gross. Some allow you to add the income of your guarantor and/or co-applicant. Usually, the lowest value is assessed by the Bank and this may be considered for the loan. Most Banks also take the registration fee and stamp duty charges into consideration. The Banks usually finance between 75 to 100% of this consolidated amount (the percentage differs across Banks). Ask how eligibility can be increased, if you need a higher quantum of loan. Query Response

What loan eligibility do I have?

How can I increase my loan eligibility?

What are the terms that I can avail this loan for?

What is the FIXED Rate of Interest you are charging for this loan?

What is the FLOATING Rate of Interest you are Same as above charging for this loan?

What is the EMI going to be for the loan I am borrowing?

This would depend on: - ROI offered - Whether you opt for EMI holiday or staggered EMI

How was the EMI calculated?

This would be based on the amount borrowed, term of the loan & ROI prevalant at that point in time. You should take care to see that this EMI is a mangeable percentage of your monthly income Daily reducing balance means you save on interest from the date your payment is done, without waiting for the current monthly cycle to complete. This is preferred though not all Banks may provide this though most PSU Banks do.

10

Is the balance Monthly or Daily reducing in nature?

11

Can I get EMI holiday? If yes, for how long?

12

Can you give me stage-wise disbursement breakdown? Can I get a home improvement loan? What is the process for this? What is the processing fee for the Loan? Are there any other charges?

13 14 15

EMI holiday means that you are paying interest This means that till the loan is completely disbursed or a on the disbursed amount with no reduction of fixed duration of time after first disbursal, the EMI would the principal at all. If you can afford the complete EMI, you would be better off not taking this consist only of the interest & not the principal payment holiday. This is for flats under construction. The Bank could wait for your share to come in first before it starts disbursal of the loan or it could ask for your share to be paid at every stage. Home improvement loans are usually provided after the See if you can use this to increase your loan flat is ready for occupation and for non-movable amount, if required items/furniture (Kitchen, Wardrobes etc). Some Banks have a standard rate, some have this as a percentage of the loan amount applied for. Make sure you get a COMPLETE listing of all Legal fees, documentation fees etc charges - hidden and otherwise.

16

Do I need to have the loan/self/property insured? If yes, what is the cost involved in this?

Loan insurance is only in the case of death. Permanent disability or loss of employment is not covered in this insurance. Usually, Banks insist on registering the Mortgage as this prevents multiple sale of the same property. The cost is typically around 1% (subject to change as per givernement regulations)

- Property insurance is compulsory but it is advisable to also insure the loan so repayment is ensured in the unlikely event of the customer losing his/her life. - Look for annual or term insurance premium payment options.

17

Do I have to register the mortgage document at the sub-registrars office? If yes, what are the cost implications for this? Is there any part-payment penalty? When can I part-pay my loan? What is the effect of part-payment of my loan?

18

Make sure you keep the possibility of partpayment open. Remember that the ROI is compounded so the sooner you pay off, the lesser would be your interest

19 20

21

22

23

Most Banks reduce the tenure but keep the EMI constant. Check with your Bank for exact details. Some Banks will only allow part-payments up to an Is there any cap on part-payment? amount and/or put a cap on the number of times partpayment can be done This could be conditional. Some Banks don t charge any penalty whereas some are conditional. Pre-payment may There is a move to make charging of preIs there a pre-payment penalty for early payment fees illegal. Check with your Bank & see be charged if: closure of the loan? - The payment is done within a window from the disbursal if you can negotiate on this point. time This would strictly depend on the Bank. Since there may From the time I submit the loan application to be independent agencies handling sub-tasks, time taken getting the sanction letter, how long would it would depend on the agreements the Bank has with take? these agencies. What is the validity period once the loan is Banks typically re-process an application as a fresh one if sanctioned? What are the implications for me approached for a loan after the validity period. This could if I don t avail the loan within the validity differ across Banks. period? These can be categorized into: - Personal documents (Income Proof, Address Proof, You would need to provide information on the coEmployment Proof, Asset-Liability statement etc) - Land related documents (Refer the checklist provided for applicant & guarantor also. The exact documents demanded could be different across Banks. this) - Seller related documents (Legal documentation that prove the antecedents of the Seller) The Bank will provide you a checklist when it accepts the documents from you in lieu of the loan. Use this checklist to ensure you have received all the documents back after loan closure.

24

What documents would the Bank need from me?

25

After I close the loan, how long would it take for the documents to be sent back to me?

Typically, 3-5 weeks

26 27

Do I need to open an account in the Bank? Are there any other obligations the Bank expects me to complete?

Some Banks mandate opening of Savings Account for sanctioning your loan Cover all your other issues in this space

* Do note that this is an indicative list and the actual set demanded could differ across Banks
Personal Documents Last 3 years IT returns Last 3 payslips Bank Account Statements (salary account is a must) Photographs Address Proof Employment Letter Income Revision Letter Asset & Liability Statement Registered GPA (If applicable, in case the loan is applied on behalf of some one else) * The Bank may ask for some/all of the above for the co-applicant as well as the guarantor & the GPA holder Property Documents Agreement For Sale Original Sale Deed Original Khata Extract Original Khata Certificate Last 3 years Tax Paid Receipt Betterment Charge Receipt Encumbrance Certificate from the local body (16 years) Mother Deed Trace of Property (if not BDA approved) Family Tree of the Seller Layout Plan Approved Plan (not for plot) Government Notification Order (if property is notified) NOC, in case the Property is mortgaged elsewhere * The Bank would ask to see the originals to verify the copies provided. Sellers Documents GPA (if this is a joint development effort) Joint Development Agreement Firm Registration Document (if this is a registered firm of the Seller) Partnership Agreement (if Seller has entered into one) * Depending on the type of Seller/s, the Bank may ask for more documents to establish the antecedents of the Seller/s