What is Home Loan ?

Home Loan is a very wage word lets try and understand what really comes under Home Loan, What kind of Loans come under Home Loan ,  and for the benefit our our customer we have listed the information in detail in this article.


The reason why banks are very cautious while providing home loans are :

• Subsidized Rate of Interest.
• Income Tax rebate on Home Loans.

So what is really a Home Loan?

Home Loan is taken for purchase of a Under construction Property/Ready Possession Property. Construction of a New House or Addition of Floor or two to the existing structure. Transfer of Existing Home Loan from one bank to another. Now lets understand in detail , what the above terms mean to a consumer.

Purchase of Underconstruction Property: The highest property purchase happens through this means these days. Properties which are coming up in the outskirts of Noida and Gurgaon are mostly under construction properties. All these properties are being developed by Developers,after taking land from Noida /Greater Noida authority in case of Noida and GDA/UP Awas Vikas Nigam Ltd in case of Ghaziabad and HUDA in case of Gugaon. After allottment of the society plot from these 

authorities start building flats on these plots,the construction begins only after all the construction and environmental clearences are in place. The builder then advertises in the leading newspaper about the schemes and starts selling these properties. The builder also submits the map and all approvals to the Banks and Housing Finance companies , after due dilligence and all checks the bank/HFC's approve the project for loan. Now if a consumer books a flat in underconstruction sociteis and requires a loan then he can approach the bank/HFC for a Loan. You can buy property as an original allottee as well as on resale. The funding is available for both the options. All the banks and HFC's are not funding all the project, the customer needs to check with the developer about the Bank/HFC.A housing loan is available for these kind of property transactions. The income tax rebate is also availableon these loans.

Purchase of Ready Built Up Property: A customer is buying a ready built property. The customer will only know once he deposits all the property documents along with the chainlist of the previous transactions. In case of the Resale , the customer needs to deposit previous deeds for the title verification. For example, if a customer is planning to buy a Builder Floor in Greater Kailash New Delhi, he will have to deposit all previous chainlink starting from Lease Deed to the current sale deed. Lease deed means the property was allotted to the allottee as a Lease property and then it was converted into free hold through Conveyance Deed. The property was further sold on sale deeds. SO all previous deeds from current Sale Deed to Lease deed will form a part of property documents. All these documents will be submitted to the bank empaneled lawyer for legal opinion. A copy of Sanction Plan is alse submitted to see , how the structure has been erected on the plot. The sanction plan is an approval of map from the concerned authorities and the structure can only be built according to the plan. if  unauthorise construction has happened then the case might get rejected. Banks donot want to fund a property which can be demolished by the Authorities.

Construction Loan: A construction loan is given by the bank for Construction on the Plot,  for the adding   additional floor on the existing structure. Loan is also advanced for a Plot and Construction both. The constrcutionc loan is calculated on the basis of plot value and construction cost estimate. The customer also needs to get his map sanctioned from the authorities like MCD in Delhi. The customer has to start construction from his contribution and after completing 20% the bank then starts disbursing the Loan. Loan is disbursed according to the construction stage. 

Buyover and Top UP Loans: Buyover/Transfer of existing Home Loan also comes under the category of Housing Loan. A complete buy over and additional top up amount can be given in this scheme. Though the top-up loan is not a part of Housing Loan but as far as interest pricing is concerned the customer might get it on the Housing Loan rate only. The top up amount can be used anywhere by the customer.

Loan Against Property and Renovation Loans are not the part of Housing Loan.  Since the end use of these loans are not the purchase of a new property, and that is the reason these Loans are priced at high rate, though there are few banks those who charge similar Rate of Interest for Renovation Loan , but you can not claim interest rebate on this loan.

Do write back or comment if you have any query regarding Home Loan in Delhi NCR at dbisht@yahoo.com