If You have chosen a prestigious gated community project in Hyderabad. You need to arrange for the following documents:
If you are employed – * Latest salary slip/salary certificate showing all deductions for at least the past 6 months. Form 16 from your employer for the past 3 years.
If you have been in your present employment, Business or Profession for Less than a year, mention details of occupation for previous 5 years, giving position held, reasons for change and period of the same.
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Buying a Home is not just a transaction. It is a transformation in everyone’s life. One should do a little home work before buying a Dream Home. The following Factors may help you in decision making.
How much Home Loan can I get? Is the bank lending me required amount? What are the criteria for arriving at the loan amount? Is there any way out to receive required amount? Will i be proud owner of world class flat in Hyderabad? Your worries will be addressed here.
Loan eligibility is based on two important parameters.
You will get the lower of the two. For this percentage formula, some banks consider your gross salary and some are considering net salary. However, most banks consider gross salary only.
Your capacity to repay the loan on equal monthly instalments is based on your Income and expenditure habits… Normally, banks will decide the loan amount, so that the EMI is limited to 50-60 percent of your total Income. Take for example, your net monthly income is Rs. 25,000 and your regular monthly expenditure is Rs. 15,000, banks assume that you can easily pay Rs. 10,000 towards EMI for your home loan.
Now, some banks, i.e. State Bank of India is offering Home Loans at 8 percent rate for the first year. If you have chosen 20 years term, at 8 percent EMI for one lakh will be Rs. 837. So bank will not hesitate to sanction a loan of Rs. 11.94 lakh.
If the interest rate is 9 per cent, EMI for one lakh will be Rs. 900. Then, your maximum eligibility will be Rs. 11.11 lakh only.
Obviously, the higher the rate of interest, the lesser will be the loan amount. Other way, the higher your income, the larger will be the loan eligibility. As mentioned earlier, it will not be more than 80-85 percent of the property value.
It is impossible to ascertain the level of expenditure for every individual. That is the reason why banks will have a pre determined percentage of income as being available for EMI payments. This is based on household expenditure data prepared by Central Government authorities. For example, banks may determine that, if your income is Rs. 25,000 per month 40 percent of that (Rs. 12,500) is available for EMI payment. Based on this, they calculate the eligibility amount. This percent will increase directly in proportion to your income. The rationale behind this approach is that, the people with higher income should be able to spend higher percentage of their income for repayment of home loan. Hence, the Home loan finance banks have slabs as given below:
As per the above slab, if your monthly income is 28,000 your eligibility:
Amount available for EMI = 45 percent of 28,000 = 12,600. Loan eligibility at 8 percent interest rate = 12,600/837=15.05 lakh. If your income is Rs. 50,000 Your loan eligibility will be calculated as below. Amount eligible for EMI is 50 percent of Rs. 50,000 = 25,000. Loan eligibility at 8 percent interest rate is 25,000/837 = 29.86 lakh. Loan Term also will have an impact on the eligibility. All the above examples are for a term of 240 months. If you chose 18 months & if your income is Rs. 50,000 amount available for EMIs is Rs. 25,000. EMI for one lakh at 8 percent rate is Rs. 956. Loan eligibility will be 25,000/956 = 26.10 lakh.
Every rupee you receive from the employer may not be considered to calculate your income. If you are a salaried employee, normally, Basic, Dearness Allowance (DA), House Rent Allowance (HRA) will be considered to calculate your income. Certain items may not consider as a part of your income.
By now you may have an idea about the amount of loan you are eligible for. This may not be sufficient to purchase prime real estate property in Hyderabad. Is there any way to get required loan amount?
Clubbing. Is the answer. Loan eligibility is calculated by clubbing your income with that of your close relatives.
All the banks allow clubbing of the spouses income. In fact certain banks make it mandatory to take the spouse as the co applicant.
Banks allow parents and children to be Joint Applicants or Co borrowers. No bank is allowing father and daughter to be co applicants. Only smaller number of banks allows brothers to be co applicants. The reason is obvious. After getting married daughter will move to another home and here income will not be available for repayment. Disputes may arise between co applicant brothers, income stops getting pooled for repayment.
When you are applying with co borrower, his age is also considered for deciding loan term. Banks ensure you complete the loan repayment before you get retired. If you are aged 35 and you are going alone for Home Loan, you can easily get a term of 20 years.
But if you apply with your father who is 45 years old, if he retires at 60 years, you will not be eligible for 20 year loan. Instead, you are allowed for a maximum of 15 year term.
Buying a Home is not just a transaction. It is a transformation in everyone’s life. One should do a little home work before buying a Dream Home. The following FAQ’s may help you in decision making.
One needs to be clear about the requirements like size of the unit, specifications, location and the budget.
Before signing the document, discuss in detail with the developer about the costs, complete payment structure and schedule.
When it comes to finance you have the following options:
Own Sources of Funding: If the house is being acquired out of the sale proceeds of an earlier house, the exemption from the long term capital gain tax on the sale of the earlier house can be claimed under u/s. 54. To claim this benefit, the new property should be acquired one year prior to selling or two years after the date on which the transfer of the earlier house takes place. If the new house could not be acquired within a period of 1 year from the sale of the earlier house, the sales proceeds should be deposited in a bank or institution, which runs capital gain accounts scheme approved for the purpose. Other issues to be considered are – for e.g. if any one acquiring a house already holds another house, then every year, one out of the two properties would be deemed to be rented out(u/s. 24) of Income Tax act the rental value shall be treated as an income. Hence, appropriate tax planning should be considered. Further in the case of individual or HUF(Hindu Undivided Family), exemption is provided from Long – term capital gain tax u/s. 54F on sale of any long term capital asset, if sale proceeds are invested in acquiring a house within prescribed period.
Bank Loan: Under u/s. 24(b), Interest paid on home loan can be claimed as a deduction to the maximum extent of Rs. 1,50,000/- per year. Such limit is for each individual and not for one property. So, a home loan can be availed in two joint names for one house to claim a deduction of Rs. 1,50,000/- each for both the persons repaying the loan. Repayment of the principal amount of home loan is also eligible for the rebate u/s. 88 subject to a maximum sum of Rs. 20,000/- per year.