(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)
Generally, it is very
difficult to construct a house without availing housing loan. There are
numerous Housing Finance Institutions (HFIs) viz. Banks and Housing Finance
companies, which provide housing loans ranging from few thousands to millions
of Rupees.Inspite, of existence of various Agencies that provide for housing
loans, availing such loans may not be an easy task since, there are lot of
instances where such loan borrower are rejected out rightly due to various
reasons.
When an application for the house loan
is rejected, it is quite natural for the Applicant to get disappointed and at
the same time wonders what went wrong for the rebuff. There may be a big
communication problem at that juncture and the Applicant may never get to know about the exact reason for the rejection of the application or he may get an
evasive response.The Bank Official, who deals with the Borrower will play a
major role and enlighten the Borrower about the procedure rather than keeping
the Applicant in the dark.
Types
of Housing Finance/Loans:
There are different types of Housing Finance/Loans available for the different
categories which are listed below:
Purchase of land Loan is given for
purchase of site. Most of the Bankers do not entertain sanction of such loans
since calculative risk is more in such loans.
Constructed houses or Flats Loan is
sanctioned for the purpose of purchase of a house which is already constructed
and available as readymade. The same can be availed for the purchase of flats
too.
Construction Loan As the name itself
suggests, loan can be availed for construction of a building on the entire
property.
Composite Loan This means that loan can
be availed both for buying a site and constructing a house.
Take over Loan This means taking loan
from one Bank to another Bank, in order to clear the dues of the other Bank.
For each of the above said loans,
margin money will differ and also certain restrictions will be imposed by the
Banks before the loan is sanctioned. For instance, when a person avails the
composite loan, he should construct the house within the stipulated period,
which may vary from 12 to 24 months as per the terms agreed. There have been
many cases where the Applicant and a Builder enter into an Agreement for availing housing loan, which is required for the Builder to commence the
project and subsequently vanishes with the unutilized loan amount once the huge
chunk of principal amount is received by the Builder, leaving the Applicant in
the lurch and making him to face the consequences. It is advisable for the
Applicant to take necessary precaution before applying for the loan and utilizing
it properly. However, this kind of problem can be avoided if the Applicant
approaches reputed and established Builders.
Regular
Income of the Applicant :The
first and foremost criteria of the Banks before sanctioning or even before
entering the loan application is about the steady monthly income of the
Applicant. If the Applicant is a salaried man, either serving in a Government Organization
or private company, the first hurdle is cleared. Then the Banks will enquire
about other aspects such as IT returns being filed by the Applicant for the
past two or three years, Bank Statements for the last 6-12 months and other
relevant documents to ascertain financial status and Banking transactions.Further, Bank financial statements will reveal outstanding loans and repayment
details, bounced cheque details, regular credit of income, any subsisting
encumbrance and if such statements are satisfactory to the Bank, then it is the
first round of victory for the Applicant.
Margin
Money: Usually, Banks
provide the loan to an extent of 85% of the total estimated amount of the plot
or property or flats.The remaining 15% has to be arranged by the Applicant and
the loan will be sanctioned by the Bank only after giving satisfactory evidence
regarding his capability of mobilizing that 15% of the balance amount.
Credit
Rating: Loan will be
sanctioned on the basis of the present salary and only 50% of the salary amount
will be considered for the loan repayment purpose by the Bankers. For instance,
if the Applicant is getting Rs. 10,000 PM take home salary, loan will be
sanctioned taking into consideration his salary status, 50% of the salary will
be taken for repayment of the proposed loan and the remaining Rs.5,000/- will
be considered as the amount for his expenses. Even if a person is getting
Rs.25,000 PM as gross but Rs.10,000 as take home salary, he may get the loan
amount considering his take home salary and not his gross.
Apart from this,
other factors like the Applicant's antecedents are also thoroughly checked
before sanctioning of the loan, wherein the Bank will look into the total
number of dependents of the Applicant to ascertain his repayment capacity. If
the dependents are more, the loan amount sanctioned will be obviously less.
Each Bank has its own prescribed criteria pertaining to monthly income of the
Applicants based on which the loan is sanctioned. There is also a necessity of
a Guarantor's signature in some cases. Applicants, who do not have a fixed
income, are not entertained by a majority of Banks.
Age
Factor: Generally availing
loan jointly by all the Co-Owners will increase the borrowing capacity.
Further, the age of all the Co-Owners should neither be less than the lower
limit nor exceed the upper limit. However, age limit will vary from one Bank to
another. It may also affect the tenure of the house loan as well as EMI's. Some
of the Banks may stick to 70 years as the upper age limit for the Co-Applicant.
If the Applicant is 35 years and the Co-Applicant is 60 years, then the loan
will be sanctioned for a maximum period of 10 years (70-60=10 years). In other
cases, the Applicant's retirement age is also taken into account. If the
Applicant is 54 years old and would be retiring by 60, then the maximum loan
tenure would 6 years only.
Property
age: It is a known fact
that the age of the property is vital in case of a resale. In many cases, loans
are sanctioned on resale properties if such properties are aged less then 50
years. If the Applicant intents to buy properties situated in the areas which
are black listed by the Banks for various reasons, then such application will
be rejected, irrespective of Applicant's financial status. The said property
should be within the geographical limits as defined by Banks for the
sanctioning of the loan. Some of the Multi-National Banks have their own set of rules and normally do not entertain the loan applications of TV and other
Artists, Police, Journalists, Politicians, Advocates and others.
Legal
Aspects: All said and done,
paramount importance should be given to the legal aspects. The title of the
property should be clear in all aspects right from the origin, flow and the
present status. If the title is not clear, the application will not be
entertained and it may be rejected. The Banks will not sanction the loan even
if the opinion is clear but the supporting original documents are missing since
it may conclude that the property is either mortgaged elsewhere or having some
other problems. The actual market value and the percentage of deviation of the
property will also be taken into consideration before the sanction of the loan.
Thus, there are not many hassles to get
a loan from the Banks of your choice provided all the pre-requisites are
fulfilled by the Applicant. Some years ago, a person would have ventured to
construct a house after 45-50 years duly saving the required amount to
construct a house. But now due to the accessibility and availability of easy
loans from Banks, youngsters between the age group of 25-35 are either
constructing new houses or buying an apartment which is indeed a good sign.Though the switch-over to a liberalized lending regime has brought in competition and efficiencies in the Housing Finance Market, factors like the
ability to cater to the larger segments of the population, including those in
rural areas is still a challenge. These segments are outside/below the income
tax bracket and the fiscal benefits are no concessions for them. The Bankers
expect higher equity from the Applicant's side for sanctioning the loan.
More,
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