Frequently Asked Questions

Documentation for Purchasing Property

Q 1. What are the documents generally required by builder while booking the property?
Soln. Following are the documents generally required by the builder for booking the property:

  1. Duly filled in Booking Form
  2. PAN card (photocopy)
  3. Photo ID address proof such as Voters ID, Aadhar card, Passport, Driving license (photocopy)

Q 2. When will the Builder-Buyer agreement be signed?
Soln. It is signed between the builder and the buyer when the requisite amount is paid in by the buyer as set in the terms of the Booking Form.

 

Home Loan

A home loan is a loan taken for buying or constructing a home or to make improvements to a residential property. You can get a loan from banks and registered housing finance companies.

Your home loan is secured against the property that you buy. This means that in case you are unable to repay the loan, the lending bank will have the right to take possession of your home.

Q1. What are the types of Home loans available?

Ans.: The following different kinds of home loans are available:

  • Home Purchase Loan
    A common type of loan taken for purchasing a home.
  • Home Improvement Loan
    A loan given for implementing repair works and renovations at home.
  • Home Construction Loan
    A loan available for the construction of a new home.
  • Home Extension Loan
    Home extension loans are given for expanding or extending an existing home. For example, addition of an extra room, etc.
  • Land Purchase Loan
    This type of loan is sanctioned for purchase of a land, for both home construction or investment purposes.
  • Balance Transfer Loan
    This loans help you pay off an existing home loan with a higher interest rate, and avail of a loan with a lower rate of interest.
  • Refinance Loan
    This loan helps you pay off the debt you may have incurred from private sources such as relatives and friends in order to purchase your present home.
  • Loans for NRIs
    This loan is tailored to suit the requirements of NRIs who wish to build or buy a home in India.

Q2. What is an EMI?

Ans.: EMI (Equated Monthly Installment) is the amount payable to the lending institution every month, till the loan is paid back in full. It consists of a portion of the interest as well as the principal.

Q3. What are the eligibility conditions for a home loan?

Ans.: To qualify for a home loan, most of the lending institutions in India require you to be:

  • An Indian resident or NRI
  • Above 24 years of age at the commencement of the loan
  • Below 60 or retirement age when the loan matures
  • Either self employed or salaried

Q4. What are the interest rates offered for home loans? What are: Daily Reducing, Monthly Reducing and Yearly Reducing?

Ans.: Interest rates are different from institution to institution and generally range from about 8.75% to around 12 %. The interest on home loans in India is usually calculated either on monthly reducing or yearly reducing balance. In some cases, daily reducing basis is also adopted.

  • Annual reducing:
    In this system, the principal, for which you pay interest, reduces at the end of the year. Thus you continue to pay interest on a certain portion of the principal which you have actually paid back to the lender. This means the EMI for the monthly reducing system is effectively less than the annual reducing system.
  • Monthly reducing:
    In this system, the principal, for which you pay interest, reduces every month as you pay your EMI.
  • Daily Reducing:
    In this system, the principal, for which you pay interest, reduces from the day you pay your EMI. EMI in the daily reducing system is less than the monthly reducing system.

Q5. What is a fixed rate of interest?

Ans.: Some institutions have a fixed rate of interest, which means the rate of interest remains unchanged for the entire duration of the loan. This means you do not benefit, even if rates of interest drop in the market.

Q6. What is a floating rate?

Ans.: This is the rate of interest that fluctuates according to the market lending rate. This means you stand the risk of paying more than you budgeted for in case the lending rate goes up

Q7. What are the other costs that usually accompany a home loan?

Ans.: Home loans are usually accompanied by the following extra costs:

  • Processing Charge:
    A fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan or may also be a percentage of the loan amount. The loan amount required cannot be less than the processing fee.
  • Pre-payment Penalties:
    When a loan is paid back before the end of the agreed duration, a penalty is charged by some banks/companies, which is usually 2% of the amount being paid.
  • Miscellaneous Costs:
    Some lenders may levy documentation or consultant charges.

Q8. How do HFCs decide on the loan amount?

Ans.: Usually, most companies give up to a maximum of 85% of the cost of the house. The 15%, sometimes called 'seed money', will have to be provided by the loan applicant. The amount, for which the applicant is eligible, is determined by the age, income, no. of dependents, monthly outgoing and repayment capacity. This varies from case to case.

Q9. Are securities required for home loans?

Ans.: In most cases, the property to be purchased itself becomes the security and is mortgaged to the lending institution till the entire loan is repaid. Some institutions may ask for additional security such as life insurance policies, FD receipts and share or savings certificates.

Q10. What is the time required for loan disbursement?

Ans.: On an average, loans are disbursed within 3-15 days after satisfactory and complete documentation and completion of all relevant procedures, including proof that 15% of the cost has been paid upfront to the seller of the property.

Q11. What are the tax benefits of home loans?

Ans.: Both principal as well as interest of home loans attract tax benefits. With effect from 1st April 2005 (i.e. assessment year 2005-07) under section 80C of the Income Tax Act 1965:

Principal amount of repayment of loan along with other savings such as PF, PPF, Life Insurance premium etc up to a maximum of Rs 1, 00,000/- will be eligible for deduction from gross income.

Interest paid up to a maximum of Rs 1, 50,000/- will be eligible for deduction from gross income on loan after completion of construction will be deductible from income from property.

 

 

 

Home Loan Documents

Generally, the documents required to process a loan application are almost similar across all banks, however they may differ depending upon specific requirements and other factors.

The following documents are required by financial institutions to process a loan application:

  • Proof of age
  • Proof of address
  • Proof of income of the applicant & co-applicant
  • Bank statements of the last 6 months
  • Passport size photographs of the applicant & co-applicant

Salaried individuals

  • Salary slip / Form 16 A
  • A photocopy of the first and last pages of Ration card or copy of PAN/Telephone/Electricity bills
  • A photocopy of Investments (FD Certificates, Shares, any fixed assets, etc., or any other documents supporting the financial background of the borrower)
  • A photocopy of LIC policies with the latest premium payment receipts (if any)
  • Photographs (as applicable)
  • A photocopy of bank statements of the last six months

Self-Employed/Businessmen

  • A brief introduction of Business/Profession.
  • Balance Sheet, Profit and Loss account and statement of income with Income Tax returns for the last 3 years certified by a CA.
  • A photocopy of Advance Tax payments (if applicable).
  • A photocopy of Registration Certificate of establishment under shops and Establishments Act/Factories Act.
  • A photocopy of Registration Certificate for deduction of Profession Tax (if applicable).
  • Bank statements of Current and Saving accounts for the last 6 months.
  • A photocopy of Certificate of Practice(if applicable).
  • A photocopy of any bank loan (if applicable).
  • A photocopy of the first and last pages of the Ration card or a copy of PAN/Telephone/Electricity Bills.
  • A photocopy of LIC policy (if applicable).
  • A photocopy of LIC policy (if applicable).

If a flat is purchased from the builder

  • Original copy of your agreement with the builder.
  • 7/12 extract or property register card of the land under construction.
  • Index II extract of your agreement with the builder.
  • Copy of N.A. permission for the land from the collector.
  • Search and title report (with the details of documents) for the last 30 years.
  • Development agreement between the owner of land and the builder.
  • Copy of order under the Urban Land Ceiling Act.
  • Copy of building plans sanctioned by the competent authority.
  • Commencement certificate granted by Corporation / Nagar Palika.
  • Building completion certificate(if available).
  • The latest receipts of taxes paid.
  • Partnership deed or memorandum of association of the builders firm.

 

 

Property Buying Steps

Our endeavor is to simplify the most important decision of your life - buying a home. We combine the power of the internet to provide comprehensive information along with the services of a property advisor who offers genuine and unbiased advice and helps conclude the transaction successfully.

I Step: After being introduced to property by Flatle verified Sub-seller, Check out our website

Visit flatle.com to see and compare the best-suited property from a vast database of properties from best builders. We provide comprehensive information on location, builder, unique selling points of the project, layout plan, floor plans, pricing, specifications and amenities on all properties.

II Step: Select the property that meets your criteria

Property selection is based on the following:

  • Evaluating various choices available on the basis of your requirement
  • Meeting our Flatle-verified subsellers who will help you shortlist the properties that suit your needs.. We will advise you on the location, price and future prospects of the property, home loans, etc. All properties are verified and available in 100% cheque
  • We arrange a site visit to all the shortlisted properties with our Flatle-verified subsellers.

 

III Step: Closing the deal

Once you have decided on the property of your choice, we help you:

  • Close the deal by handling all the paperwork
  • Guiding you through the application forms, allotment and arranging home loan from a reputed bank, if required
  • Ensure a convenient and hassle free transaction
  • Our services to you continue till the registry of the flat. This includes payment reminders, collection of cheques and handling all documentation with the builder and the bank.

 

 

Vaastu

Vaastu is a set of principles that helps home owners lead a happy and peaceful life in their abode. The doctrine of Vaastu is related to architecture and the designs are based on directional arrangements. Vaastu guidelines can be applied during the construction of homes, offices, temples and other buildings and help bring about positive energy and general well-being for the home owner. As such, it is important to keep in mind few tips while searching for or building your ideal house.

General Tips:

  • The entrance to the house should be towards the east as it is considered an auspicious direction. The entrance should also be well-kept and nicely decorated
  • The north direction signifies prosperity, as such this part of the house should not be blocked in any way
  • Make sure to never grow a Cactus plant in the house
  • Hinges on doors should work smoothly and should not make noise
  • If the house has a slope, it should be from south to north or from west to east only
  • Avoid putting up paintings or pictures that depict violence or sorrow

Bedrooms:

  • The master bedroom in the house should always be in the south-west direction and not in the north
  • One should always sleep with their head towards the south
  • Make sure the bed is not placed directly below a beam
  • Bedrooms should be absolutely clutter free, especially the area around where you place your head while sleeping

Children’s Room:

  • Children’s rooms should be constructed in the northwest corner of the house
  • Avoid sticking furniture to the wall as it blocks the flow of positive energy
  • The colour scheme in a kid’s room should be mild yet cheerful
  • The study table should be placed in a way so that the child faces the east, north or north eastern corner of the room. The computer should be kept in the southwest corner

Living Room:

  • The living room should always be in the north direction
  • Air-conditioners should be placed in the west and avoided being put in the southeast direction
  • The chairs of dining tables must be even-numbered
  • The south and west corners of the room are ideal for keeping furniture

Kitchen:

  • The kitchen should be located in the southeast corner of the house. Northwest corner is also an ideal location for a kitchen
  • All cooking should be done while facing east or north
  • South, west, southeast and northwest are the ideal locations to place the refrigerator
  • Kitchen appliances such as mixers, juicers, microwaves and toasters should be kept in the southeast corner
  • Make sure the kitchen is equipped for good and adequate cross-ventilation

Bathroom:

  • Bathrooms should be constructed in the north-west direction
  • Make sure the bathroom has sufficient ventilation and natural lighting
  • Sanitary and bath fittings must be of good quality and should work smoothly over the years. If broken, they should be fixed immediately
  • Always keep the bath and toilet areas neat and clean

 

 

 

 

 

 

Property purchase guide for NRI

 

General

Q1. Who is an NRI?

Ans.: Under the Foreign Exchange Regulation Act of 1973, Non-Resident Indians are:

Indian citizens who stay abroad for employment or carrying on business or vocation outside India or for any other purpose in circumstances indicating an indefinite period of stay abroad;

OR

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;

OR

Government servants deputed abroad on assignments with foreign Governments or regional/international agencies like the World Bank, International Monetary Fund (IMF), World Health Organisation (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP)

OR

Officials of the State Government and Public Sector Undertakings deputed abroad on temporary assignments or posted to their branches or offices abroad.

Q2. Who is a foreign citizen of Indian origin?

Ans.: A foreign citizen is deemed to be of Indian origin if:

  • he held an Indian Passport at any time or
  • he or his father or paternal grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955. However this does not apply to citizens of Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka or Nepal.

 

Buying a Property

 

Q3. What should a consumer keep in mind while purchasing a housing flat?

Ans.: Some of the factors to consider while purchasing a flat are:

  • Locality i.e. transport, schools, hospitals, market, business district, entertainment centers, hotels, restaurants, pollution levels, etc.
  • Quoted area of the flat, i.e., carpet, built up area and super built up area 
  • Car parking space 
  • Quality of construction 
  • Reputation of the builder or seller 
  • Sufficient water and electric supply, other utilities 
  • Cost components: price, stamp duty, registration charges, transfer fees, monthly outgoings and society charges, costs of utilities 
  • Potential for resale or renting out of the property 
  • Any other distinguishing features or advantages of the property

 

Q4. What is the checklist for buying a residential property?

Ans.: Keep in mind the following things while buying a residential property:

  • Market Trends about prevalent rates of property in the vicinity and last known transactions
  • Ask for photocopies of the all deeds of title related to the property to be purchased. Examine the deeds to establish the ownership of the property by seller, preferably through an advocate. Ascertain the survey number, village and registration district of the property as these details are required for registration of the sale. Previous encumbrances and loans, if any on the property must be cleared before completion of purchase of the property. The title of the Vendor to the property must be clear and marketable.
  • Check for approved layout plan and approved building plan with number of floors
  • Clearance from municipality, electricity, water, pollution and lift authorities
  • Check the building bye-laws in that area to verify any issue with setback, side setback, height, etc.
  • Confirm transfer fees, stamp duty and registration charges to be paid on purchase of the property as well as outgoings to be paid for the property, i.e., property tax, water and electricity charges, society charges and maintenance charges

 

Q5. Do NRIs require consent of the Reserve Bank to buy immovable property in India?

Ans.: No, NRI's do not require permission to buy any immovable property in India other than agricultural/plantation property or a farmhouse.

 

Q6. In what way should the purchase consideration for the immovable property be paid under the general permission?

Ans.: The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from any non-resident accounts maintained with banks in India.

 

Q7. Is there any limit on the number of housing properties that may be purchased by an NRI?

Ans.: There are no limits on the number of residential properties that may be bought by an NRI. However, repatriation (the process of converting a foreign currency into the currency of one’s own country) is allowed only in respect of two such properties.

 

 

Selling a Property

Q9. Can a home/land be sold without the permission of Reserve Bank?

Ans.: Yes, the Reserve Bank has granted general permission for sale of property. However, where another foreign citizen of Indian origin purchases the property, funds towards the purchase consideration should either be remitted to India or paid out of balances in non-resident accounts maintained with banks in India.

 

Q10. Can sale proceeds of such property if and when sold be remitted out of India?

Ans.: In the event of sale of immovable property other than agricultural land/farm house/plantation property in India by a NRI or PIO, the authorized dealer may allow repatriation of the sale proceeds outside India, provided all the following conditions are satisfied:

The immovable property was acquired by the seller in accordance with the provisions of the Exchange Control Rules/Regulations/Law in force at the time of acquisition, or the provisions of the Regulations framed under the Foreign Exchange Management Act, 1999; 

NRIs/PIOs can effect remittance of sale proceeds of immovable property in India irrespective of the period for which the property was held. The sale proceeds allowed to be repatriated should, however, not exceed the foreign exchange brought in to acquire the said property. 

In case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties, if the property was purchased from funds held in NRE Account.

The amount sought to be repatriated abroad should not exceed the amount paid for acquisition of the immovable property in the foreign exchange received through normal banking channels or out of funds held in FCNR or NRE Account. In case of investment out of NRE Account the amount to be calculated as foreign currency is equivalent value as on the date of payment for acquisition of the said property.

 

Loan

Q11. Does RBI have any guidelines for loans to NRIs/PIOs?

Ans.: There are guidelines issued by the Reserve Bank of India for grant of housing loans to NRIs. The guidelines are:

  • The loan amount shall not exceed 85% of the cost of the housing unit. 
  • Own contribution, which is the cost of housing unit financed less the loan amount, can be met from direct remittances from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India.
  • Reimbursement of the loan, comprising of the principal and interest including all the charges are to be remitted from abroad only through normal banking channels, your Non-Resident (External) [NR (E)] Account and /or Non-Resident (Ordinary) [NR (O)] account and /or Non-Resident Special Rupee account [NRSR] in India.

 

Q12. Can authorized dealers grant loans to NRIs for purchase of a flat/house for residential intention?

Ans.: Authorized dealers have been granted permission to grant loans to NRIs for acquisition of house/flat for self-occupation on their return to India subject to certain conditions. Repayment of the loan should be made within a period not exceeding 15 years out of inward remittance through banking channels or out of funds held in the investors' NRE/FCNR/NRO accounts.

Q13. Can authorized dealers grant housing loan to NRIs where he is a principal borrower with his resident close relative as a co-applicant / guarantor or where the land is owned jointly by such NRI borrower with his resident close relative?

Ans.: Yes. Such housing loans availed in rupees can also be repaid by the close relatives in India of the borrower.

Q14. What are the documents required along with the application?

Ans.: The following documents are normally required to be submitted along with the application:

  • Photocopy of the labor contract and English translation duly countersigned by your employer 
  • Latest salary certificate (in English) specifying the following: name (as it appears in the passport), date of joining, passport number, designation, perquisites and salary. 
  • Photocopy of labor card/identity card 
  • Photocopy of valid resident visa stamped on the passport 
  • Photocopy of monthly statement of local bank account for the last 4 months 
  • Property related documents

Q15. Can an NRI take loan against the security of immovable property in India? Are there any restrictions on the use of loan amount?

Ans.: An NRI can borrow against the security of immovable property from an authorized dealer subject to following conditions:

  • the loan should be used for meeting the personal requirements or for borrower's own business purposes; and
  • Loan should not be used for forbidden activities, namely;
    • business of chit fund, or
    • agriculture or plantation activities or in real estate business, or construction of farm houses, or 
    • trading in Transferable Development Rights (TDRs)
  • The loan amount cannot be remitted outside India,
  • Repayment of loan shall be made from out of remittances from overseas or by debit to NRE/FCNR/NRO account or out of the sale profits of shares or securities or immovable property against which such loan was granted.

Q16. What kinds of incentive can NRIs, PIOs and foreigners look forward to in the Indian real estate industry that favours investment?

Ans.: The relaxation of FDI in the construction development sector announced in March 2006 allows NRIs, PIOs and all foreigners equal opportunity with their Indian counterparts in the Indian real estate sector. The new guidelines state that before selling, the site has to be developed, constructed upon or fulfill the criteria of a minimum of one year of development.

  • NRIs, PIOs and foreigners can now invest in land, buy it, construct upon it or develop it, sell constructed buildings/developed plots
  • FDI through automatic route can also flow in not just for the housing sector, but also for townships, housing, commercial area, and infrastructure development
  • Restrictions on minimum area of land, minimum number of units has been removed
  • Minimum constructed area required is 50, designated area is 25 acres

Q17. Is there any deadline to actually complete your construction development work?

Ans.: The norms are quite liberal. It allows you five years to finish at least 50% of your project from the date of getting all the clearances. Under normal circumstances the project can be completed within three years. It helps protect the customer and keeps fly-by-night people at bay.

Q18. How does the automatic route work?

Ans.: The automatic route has simplified much of the cumbersome investment process. Approval from the Reserve Bank is not required anymore and there is also no need to go to the Foreign Investment Promotion Board. The easing of paper work and relaxation of formalities has given a boost to overseas investor confidence for investing in India.

Q19. What aspects should overseas investors look at in the Indian real estate market to facilitate the suitability of their projects?

Ans.: Any NRI before investing in the Indian real estate should also focus on the particular segment that he plans to invest in like residential, retail or office space. Consulting legal firms and real estate firms providing professional NRI services can be very useful.

Q20. What steps should an NRI follow for getting all the clearances in a hassle-free manner? Whom should one consult in the process?

Ans.: A lot depends on the segment you want to invest in. It helps to gauge the future state and to know what utilities are available. An office market investment, for instance, requires you to:

  • Get in touch with consultants for advice on the city of choice
  • Outline your objectives, the size of your investments
  • Have an approximate of the returns you are expecting. The yield that has evolved from distinct parameters ranges between of 8 - 8.5% to 12% for office space and 4% - 6% in residential
  • Whether the land is for investment or for development is also a deciding factor, as is the local demand-supply situation. While investing in India, the availability and quality of infrastructure or utilities like power, connectivity, security and long-term future plans need to be scrutinized. 

Q21. Is a single window clearance possible?

Ans.: Single window in a real estate project in India may be difficult because of the involvement of several authorities. If it is a multistoried building, you need to get clearance from town planning authorities, clearance on design, elevators, firefighting agencies, etc. Efforts are on to make the process simpler and transparent, though.

 

Q22. How is the sanctioning authority and monitoring authority different in India?

Ans.: In some states, the Municipal authority is the ultimate monitoring authority. In smaller states and in non-urban areas, the town and country planning corporation acts as the monitoring authority. In urban areas where most of the construction takes place, the municipal authority wields power in giving the final permission and sanctioning drawings and plans. Clearances on electricity, water supply and other utilities also come from here.

 

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