Home loan is the money borrowed from a bank or a housing finance institution on interest for buying / constructing / upgrading a residential real estate property.

The banks usually offer the following types of loans on interest:

• Home Purchase Loan: It is the most common type of loan taken for purchasing a new residential property or an old house from its previous owner. Home Improvement Loan: Home improvement loans are given for executing repair and renovation work at home.
• Home Construction Loan: These loans are sanctioned to construct a house on a piece of land you have already purchased. The loan approval and application process for these loans is somewhat different from the other commonly available home loans.
• Home Extension Loan: Home extension loans are offered for expanding or extending an existing house. To cite a few examples, addition of an extra room, a floor etc.
• Land Purchase Loan: This type of loan is granted for the purchase of a plot of land for both residential or investment purposes.
• Home Conversion Loans: These loans are available for people who have already purchased a house by taking a home loan but would now want to buy and move to another house. With these loans, they can fund the purchase of the new house by transferring the current loan to the new house.
• Balance Transfer Loan: These loans are availed to transfer one's home loan from one bank to another. It is usually done to repay the remaining amount of loan at lower interest rates or when a customer is unhappy with the services provided by his existing home loan provider and wants to switch to a different bank.
• NRI Home loans: These are specialized loans, structured to suit the requirements of NRI's who wish to build or buy a home in India.
• Loan against Property (LAP): These loans are given or disbursed against the mortgage of a property.

As home loans involve a large sum of money, the tenure generally varies between 3 to 30 years.

Longer the tenure you have, the lesser will be your EMI but higher would be the interest outgo. In shorter tenures, you pay a greater EMI, but the loan gets repaid faster and you pay less by way of interest.

EMI or Equated Monthly Instalment is a fixed amount paid by you to the bank on a specific date every month. The EMI�s are fixed when you borrow money from the bank as a loan. EMI�s are used to pay both interest and principal amount of a loan in a way that over a specific number of years, the loan amount is repaid to the bank alongwith interest.

Under the Pre-EMI option, the borrower is required to pay only the interest on the loan amount that will be disbursed as per the progress on the construction of the project. The actual EMI payment starts after the possession of the house.

Yes. One can avail of a pre-approved loan from a housing financial institution or a bank.

he general eligibility conditions are as follows:

• The borrower should be a resident of India or an NRI
• He / she should be above 18years of age at the beginning of the loan
• Repayment should be up to the age of 70 years.

Apart from other criteria and norms of the lending bank, the home loan amount is generally calculated on the basis of your EMI and NMI ratio, where NMI is the take-home pay after taxes and other payroll deductions. The EMI/NMI ratio varies in the range of 20% to 70% for different Net Annual Income slabs. The loan amount can be increased by including a co-applicant.

Yes, your salaries can be clubbed for the purpose of calculation of the loan amount. This can be done either when the property is jointly held with the spouse or the spouse stands as a guarantor. Thus, we ensure a great deal of flexibility in the entire exercise of financing your house.

You would be required to submit the following documents: Proof of Identity: PAN, Driving license, Voter ID, Aadhar Card Proof of Income:
Salaried Applicants: Latest 3 Months salary slip showing all deductions and Form 16 for the last three years.
Self Employed Applicants: IT returns for the past 2 years and computation of income for the last 2 years as certified by a CA Bank Statement: Past 6 months Guarantor Form (Optional)

In the fixed interest rate scenario, the interest remains constant throughout the loan period irrespective of the changes in market conditions while in the floating interest rate scenario, the interest can decrease or increase depending on market fluctuations.

The interest on home loans is usually calculated either on monthly reducing or yearly reducing or daily reducing balance by Bank. SBI charges interest on daily reducing balance.
Specifics are mentioned below:-
Annual reducing method: 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 that you have actually paid back to the lender. This means that the EMI for the monthly reducing system is effectively less than the annual reducing system.
Monthly reducing method: In this system, the principal, for which you pay interest, reduces every month as you pay your EMI.
Daily Reducing method: 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 in the monthly reducing system and a year is treated as consisting of 365 days irrespective of leap or non-leap year.

Home loans are usually accompanied by the following extra costs: Processing Charge: It is the fee payable to the lender upon applying for a loan. It is either a fixed amount not linked to the loan amount or a percentage of the loan amount. Pre-payment Penalty: When a loan is repaid before the scheduled duration, a penalty may be charged by some banks, which is known as the pre-payment penalty. SBI at present does not charge any pre-payment penalty.
Miscellaneous Costs: Bank may also ask for documentation or other consultation charges.

The following processing fees is applicable on SBI Home Loans. In addition to the processing fee, actual charges towards valuation fee, advocates fee for property search and title investigation report and stamp duty is applicable.
Processing Fee 0.35% of Loan Amount subject to a minimum of Rs 2000/- plus applicable taxes and Maximum of Rs 10,000/- plus applicable taxes

You can own as many properties as you want.

If the house is held for a period of less than three years prior to its sale, it is termed as a short-term capital asset and any gain arising from such a sale is treated as a Short-Term Capital Gain. There are no tax exemptions for short-term capital gains and one needs to pay it according to the applicable tax slab. However, if the property is sold after holding it for a period of more than three years, it is treated as a long-term capital asset and the gain arising from it is called the Long-Term Capital Gain. Such gains attract a flat or basic exemption rate of 20%.

Property is considered as a capital asset and Capital Gains Tax is levied on the gains arising from the sale of property. Such gains are calculated after duly adjusting the inflation rate, transfer and renovation charges.

Yes. Generally, the stamp duty on the gift deed ranges from 5% to 12% in all states. In few states like Haryana, Rajasthan and Delhi, a concession of 1% to 2 % has been provided to female transferors.

Property is considered as a capital asset and Capital Gains Tax is levied on the gains arising from the sale of property. Such gains are calculated after duly adjusting the inflation rate, transfer and renovation charges.

Stamp Duty is the tax paid for the legal recognition of property. It is paid by the home buyers. You can claim tax incentives of up to Rs. 1.5 lakh on stamp duty and registration charges on a new property purchase or construction of a house. However, these benefits are available with respect to one self-occupied property only.

A summary of the charges is as follows:-
TDS - 1% on immovable properties (except agricultural land) exceeding Rs. 50 lakhs.
Stamp Duty - Depending upon the various individual state and municipal laws
Service Tax - It is a central tax paid for the services offered by the developer to you. From April 1, 2015 onwards, if the apartment is worth less than Rs. 1 crore, or has a floor area of less than 2,000 sq ft, the service charge is levied @14% on car parking and preferential location charges (PLC) and @3.50% on the basic sale price. If the apartment is worth over Rs. 1 crore, or has a floor area greater than 2,000 sq ft, the service tax is levied @14% on car parking and preferential location charges (PLC) and @ 4.2% on the basic sale price of the flat.

The buyer needs to pay the following taxes:-
TDS or tax deduction at source on an amount exceeding Rs. 50 lakhs for the purchase of property, excluding agricultural land.
Stamp duty
Service Tax - Applicable if the property is being purchased from the builder who conceived and constructed the project before offering possession to the buyer. If a `ready to move in� property is purchased from the seller, service tax is not applicable.
Value Added Tax (VAT) - If applicable in the concerned state.

The property could be converted from leasehold to freehold if the local laws permit the same. To cite just one example, properties under DDA can be converted to freehold by executing a Conveyance Deed but the same is not allowed if the property is owned by the Noida Authority.

The buyer needs to pay the following taxes:-
TDS or tax deduction at source on an amount exceeding Rs. 50 lakhs for the purchase of property, excluding agricultural land.
Stamp duty
Service Tax - Applicable if the property is being purchased from the builder who conceived and constructed the project before offering possession to the buyer. If a `ready to move in� property is purchased from the seller, service tax is not applicable.
Value Added Tax (VAT) - If applicable in the concerned state.

The property could be converted from leasehold to freehold if the local laws permit the same. To cite just one example, properties under DDA can be converted to freehold by executing a Conveyance Deed but the same is not allowed if the property is owned by the Noida Authority.

The difference between a leasehold property and a freehold property lies in its ownership. In a leasehold property, the ownership remains with the concerned local authority or the government (as the case may be). The lease period varies typically between 30 to 99 years. However, this does not prevent the individual owner from selling or performing other transactions with the property, provided the lease deed has been registered. In case of a freehold property, the owner of the property is the legal owner and can sell/lease/rent the property as per his/her discretion.

A buyer could ask you for the original Sale Deed, Title Deed, relevant tax receipts and an Encumbrance Certificate.

Only the buyer is required to pay the Stamp Duty.

Yes. However, the procedure and forms may vary from state to state depending upon the location of the property. Every state in India has formulated its own set of forms under the registration rules. These forms are required to be filled up and filed at the time of the registration of Sale Deed/Transfer Deed.
In the Income Tax Act under the clauses governing rules for a sale transaction, it is mandatory for the buyer and seller to provide their PAN card number and in the event of a sale, either the seller and/or the buyer would need to fill up Form 60 as presecribed under Income Tax Act.
If the buyer or the seller is a Non-Resident Indian (NRI) not assessed for taxes in India, the person would not need to file Form 60 under the Income Tax.

Yes. You can get it done at the sub-registrar's office of the concerned district.

The sale of a residential property is said to have been formalized if the seller has received the entire consideration amount, registration of the documents has been carried out and actual possession of the property has been granted to the buyer.

No. Tax benefits are available for NRI's only if you file your returns and subsequently become eligible to avail the tax benefits as mentioned under Home Loan FAQ's.

Apart from the documents mentioned under the home loan section for Indian citizens, NRI�s are required to submit a few additional documents as well. These include:
A copy of a valid passport A copy of the work contract or the labour card
The power of attorney (POA). (POA is required because the borrower is not based in India)

The housing loan needs to be paid upfront for the entire tenure of the loan by way of direct remittances from abroad through normal banking channels or from other financial accounts as may be permitted by RBI. Generally, payments are done through NRO, NRE, NRNR and FCNR accounts. These accounts change on the basis of RBI regulations.

Home loan offered to NRI�s do not exceed 5 years in major cases. However, some financial institutions offer loans for a term of 7 years as well. The repayment for the loan is done through monthly instalments (EMI), which usually begin after the entire loan amount has been disbursed. As regards cases which involve part disbursement, you need to pay simple interest at the interest rate applicable on the loan amount disbursed.

The eligibility is calculated in the same way as is done for resident Indians with a special emphasis on:
Qualifications - Graduate (Minimum)
Current job profile and work experience
Chances of continuing abroad for the loan tenure
Chances of servicing the loan with an extended tenure in case the applicant needs to return to India

To purchase a house which is either ready to move in, under construction or bought from another owner, an NRI is eligible to apply for home loans. Additionally, NRI�s can apply for home loans under the following scenarios:-
For construction of a property on a plot of land by self
To purchase a plot allotted by a society / development authority
For the purpose of renovation or improvement of an existing property in India

In case of residential properties, the repatriation of sale proceeds is restricted to not more than two such properties, if the property was purchased from funds held in an NRE Account. Additionally, the amount repatriated out of India should not exceed the amount paid for acquisition of the immovable property in the foreign exchange received through normal banking channels or from the funds held in FCNR or NRE Account.

Yes. The RBI has granted general permission for sale of property. However, wherein 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.

Under the existing general permissions available, an NRI/PIO may purchase residential/commercial property in India out of the funds remitted to India through normal banking channels or through funds held in his NRE/FCNR (B)/NRO account. No consideration would be paid outside of India.

Upon receiving specific approval from the RBI, a person who is resident outside India may hold an immovable property in India acquired through inheritance from a person resident outside India, provided the owner had acquired such property in accordance with the rules and regulations of the foreign exchange law in force at the time of acquisition or under specific FEMA guidelines.

Yes. A person resident outside India can hold immovable property acquired by way of inheritance from a person resident in India as per the provisions of Section 6(5) of the Foreign Exchange Management Act, 1999.

Yes. Under the general RBI guidelines, NRI/PIO may acquire residential/commercial property by way of a gift from a person resident in India or an NRI or a PIO.

Yes. A Foreign national of non-Indian origin (including a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) can acquire residential properties on lease in India. If the lease does not exceed five years, he/she does not require any prior permission from the RBI.

When a person dies without leaving a will, the rules of succession (or inheritance) have to be followed to distribute the deceased person's property among his legal heirs. The rules of succession determine as to who are the rightful heirs of the deceased and what would be their share in the inheritance.
Note: The term 'property' refers to immovable property, unless stated otherwise).

In India, the rules of succession differ between religions. Therefore, succession works differently for Hindus, Christians, Muslims, Jews and Parsis. However, the rules of Hindu succession are also applicable to Buddhists, Jains, Sikhs and any other person who is not a Muslim, Christian, Parsi or Jew by religion.
(Note: The rules of succession detailed here apply specifically to Hindus, unless stated otherwise).

Property of all forms can be inherited by your legal heirs. This would include not only your own acquired property but also your share in the ancestral property of your family.

An ancestral property can be defined as a property acquired by your great grandfather which has been passed down from generation to generation (viz., your grandfather and father) up to the present generation (you) without being divided or partitioned by the family. Therefore, the property should be four generations old and should not have been divided or partitioned by the previous three generations for the property to qualify as your ancestral property.

Self acquired property is the property that you have purchased from your own income. As far as your self acquired property is concerned, you are free to dispose it off in any manner as per your discretion.

Your right to a share in your ancestral property is given to you by the mere fact of you being born. Your share in your ancestral property cannot be taken away. This is unlike other forms of inheritance, wherein inheritance opens only upon the death of the owner of the property. For example, your father may exclude you from the inheritance of his self acquired property. However, he is barred from doing this as far as your share in ancestral property is concerned.

The rights of the heirs in ancestral property are determined per stripes and not per capita. This essentially means that the share of each generation is first determined and the successive generations in turn subdivide what has been inherited by their respective predecessor.

Identifying a property that may form part of an inheritance as either self acquired or ancestral is crucial as the law treats both types of properties very differently. Identifying a property as either self acquired or ancestral will help you to plan as to how your estate would be inherited by your heirs. On the other hand, as a legal heir, this would also allow you to identify your rightful share in the family estate.

Once an ancestral property is divided, the share of each legal heir is his or her own self acquired property. Further, property inherited by either a will or a gift is not treated as an ancestral property. Moreover, self acquired property can become ancestral property if it is thrown into the pool of ancestral properties and enjoyed in common. It should also be kept in mind that properties inherited from your mother, grandmother, uncle and even your brother cannot be considered as ancestral properties.
Illustration: Property gifted by a father to his son could not become ancestral property in the hands of the son simply due to the fact that he got it from his father.

Your property would be inherited by what are known as Class-I heirs who are given priority under law such as your children. Each Class-I heir would get an equal share in the property. Therefore, if you leave behind your wife, two children and your mother, each one of them would get 1/4th share of your overall estate. If there are no Class-I heirs, then your estate would be divided among Class-II heirs. In the remote possibility that there are no Class-I or Class-II heirs, your estate would be divided between the distant blood relatives.

Son Daughter Widow Mother Son of predeceased son Daughter of predeceased son Son of predeceased daughter Daughter of predeceased daughter Widow of predeceased son Son of predeceased son of a predeceased son Daughter of predeceased son of a predeceased son Widow of predeceased son of a predeceased son Son of predeceased daughter of a predeceased daughter Daughter of predeceased daughter of a predeceased daughter Daughter of predeceased son of a predeceased daughter Daughter of predeceased daughter of a predeceased son

Father Son's daughter's son/daughter; Brother; Sister Daughter's son's son's/daughter; Daughter's daughter's son/daughter Brother's son; Sister's son; Brother's daughter; Sister's Daughter Father's father; Father's mother Father's widow; Brother's widow Father's brother; Father's sister Mother's Father; Mother's mother Mother's brother; Mother's sister