While buying a new home, many questions may pop up in your mind. This is an attempt
to answer common queries about buying and owing property in India. Use this guide
to acquaint yourself with rules, laws and other important information.
Q1. What is the difference between Built-up Area, Super Built-Up Area, and Carpet
Area?
Ans. Carpet Area : As the name suggests, Carpet Area is the area where a carpet can
be spread; which means the area calculated comprises the inner wall to wall distance
inside the house. This would also include steps, if any, inside the house. Generally,
the column offsets are taken into consideration while calculating carpet area, with
door jambs also forming part of it.
Built up Area : Built up area is Carpet Area + Area of walls and ducts. This is usually
10% to 12 % more than the carpet area.At present, all plans are approved as perbuilt-up
area. In case of calculating the area for registration, if only the carpet area
is provided in the agreement for sale, the registrar adds 20% to itin order to arrive
at the built-up area, onlyfor the limited purpose of stamp duty calculation.
Super Built-up Area : This is built up area + area occupied by common amenities like
elevators, corridors, awnings, club house, stairs. Super built-up area is usually
around 50 % to 70% more than the Carpet area. This is also called as Saleable Area.
This varies from location to location and projects, depending on the amenities /
facilities / common area spaces, etc.
Q2. What are the common Plan and Approval Terminologies and their meanings?
Ans. A) IOD (Intimation of Disapproval)
IOD is the first Plan which is approved and contains terms and conditions to be
fulfilled before commencement of work for any project. An IOD can be issued in a
phased manner for a project or even for a single building. IOD with plans would
help in understandingthe number of floors or buildings that have been approved.
B) CC (Commencement Certificate)
CC is a permission that allows the developer to start work as per the approved plan,
in line with the IOD.The CC would have various endorsementsit would be validated
from time to time.The First Endorsement is generally issued up till the Plinth to
start work and in case of podiums, till the top.Upon the completion of work, inspection
is done and endorsement on CC is given to proceed further.
C) OC (Occupation Certificate)
OC is issued when the building work is complete in all respects and the structure
is now habitable. It is only after receipt of OC that water connection is made to
the building.
D) BCC (Building Completion Certificate)
BCC is issued after the water connection is given to the building and BCC denotes
that all the obligations of the developer and all the conditions in the IOD and
CC have been fulfilled and that the project is complete in all respects.
Q3. Who can buy property in India?
Ans.
A) Is there a restriction on Indian citizens to buy property in India?
No, there is no restriction on Indian citizens to buy property in India, except
certain conditions and certain states that are notified under the constitution of
India, wherein only persons having domicile of the state in question are allowed
to buy properties there.
B) Is there a permission required for NRIs to buy properties in India?
No, there are no specific permissions required for NRIs to buy properties in India.
However,repatriation on the sale of such properties is governed by rules and regulations.
Q4. Who is a NRI?
Ans. A NRI is a person residing outside India, who is either a citizen of India
or a person of Indian origin. A NRI is an Indian Citizen who has migrated to another
Country. For all official purposes, the Government of India considers a NRI to be
an Indian National who stays away from India for more than 182 days in a year.
Q5. Who is a PIO?
Ans. A person of Indian origin means an individual (not being a citizen of Pakistan
or Bangladesh or Sri Lanka Or Afghanistan or China or Iran or Nepal or Bhutan) who:
1) held an Indian passport at any time, or
2) Who or whose father or paternal grandfather was a citizen of India by virtue
of the constitution of India or the Citizenship Act, 1955.
AGREEMENTS & REGISTRATION
Q6. What are the documents that should be verified before buying a residential /
commercial unit?
Q7. What documents are required to be executed if the intended purchaser wishes
to proceed for purchase of premises?
Ans. The Developer shall execute an Agreement for Sale as per the provisions of
The Maharashtra Ownership Flats (Regulation of the Promotion, Construction, Sale,
Management and Transfer) Act, 1963 (the MOFA)
Q8. What is the procedure for execution of the Agreement for Sale?
Ans. The procedure involved is three-fold:
The above can be explained in detail, as follows:
1. Stamp Duty
Unless there is an agreement to the contrary, the stamp duty shall be borne and
paidby the Purchaser as per Section 30 of the Maharashtra Stamp Act, 2013.As per
prevailing laws, the stamp duty to be paid on the Agreement for Sale shall be an
amount equivalent to 5% on the market value of the unit as per prevalent ready reckoner
rates.Market value means the price at which a unit could be bought in the open market
on the date of execution of such instrument. This price is determined on the basis
of the ready reckoner issued each year.The Mode of payment of stamp duty is E-Payment
through GRAS (Govt. Receipt Accounting System)
2. Execution
After the payment of stamp duty on the Agreement for Sale, the same shall be duly
executed by all the parties, i.e. the Developer/Promoter and the Purchaser/s. All
the pages of the document should be signed by all the parties. The Agreement should
be witnessed by at least two witnesses giving their full names, signatures, and
addresses.
3. Registration
The duly stamped and executed Agreement for Sale should be presented at the office
of the concerned Sub-Registrar of Assurances for registration within 4 (four) months
from the date of execution of Agreement for Sale.In case of delay in presenting
within the stipulated four months from the date of execution of Agreement for Sale
citing unavoidable circumstances by the Parties, the Registrar may condone the delay
after collecting penalty under section 25 of the Indian Registration Act, 1908;
provided the delay in presentation of the executed Agreement for Sale does not exceed
4 (four) months from the date of expiration of the aforesaid stipulated 4 (four)
months (i.e. does not exceed 8 (eight) months from the date of execution of the
Agreement for Sale). Registration of the Agreement for Sale is compulsory as per
Section 17 of Indian Registration Act, 1908. The registration fees shall be an amount
being 1% of the market value of the unit, subject to maximum of Rs.30,000/-.
Q9. Why is it considered necessary to register a property? What is the purpose of
registration?
Ans. 1. By registering the transaction of an immovable property, it becomes a permanent
public record. This is a notice to the general public. Those getting transfer of
property should verify whether such property has been previously encumbered. According
to the Transfer of Property Act, 1882 right title or interest can be acquired only
if the deed is registered.
2. By registering the transaction of an immovable property, it becomes permanent
public record. Title or interest can be acquired only if the deed is registered.
HOME LOANS
Q10. From where can I get home loans?
Ans. There are several Banks / Housing Finance Institutes who provide Home Loans.
Q11. Why one should opt for a Home Loan?
Ans. All Banks / HFIs have a stringent process to verify all the documents in terms
of Title of the land, Approval for the project, etc.As they are offering loans,
they would investigate with due diligence before loan disbursement. Hence, for an
individual, it is advisable to have a home loan so that all the documents are verified
by the banker before disbursement of loan.
Q12. What is APF (Approved Project File)?
Ans. In order to process home loan faster for customers, banks generally approve
the project beforehand and allot aAPF number. Once a Project has an APF number,
processing a home loan for the project with that bank would be very easy and less
time consuming. APF number also signifies that bank has already done the due diligence
and is ready to fund home loans.
Q13. How much loan can one get?
Ans. You can get a Home Loan of up to 80% of the Total Consideration Value or your
eligibility, whichever is lower.
Q14. Can a Home Loan be pre-approved?
Ans. Yes, you can avail for a pre-approval from any financial institution.However,
all pre approvals have a validity period, which may be checked with the concerned
financial institutions.
Q15. Can I have Co-Ownership in the property?
Ans.Yes you can have your wife, son/daughter, father/mother as a Co-Borrower. However,
it is advisable to check with the Financial Institution regarding their permissible
ownership grid.
Q16. Who can be a co-applicant for the loan?
Ans. The spouse of the applicant can be included as a co-applicant for the home
loan and his/her income shall be included to enhance the loan amount. Further, in
case there are other co-owners, they also need to be co-applicants.
Q17. Is Co-Applicant/Local P.O.A mandatory for applying for Home Loans, even if
I don’t have a Co-borrower in the property?
Ans. Certain financial institutions have made it mandatory for a Co-Applicant to
join in the Loan (irrespective of his/her being/not being a Co-Owner in the property,
with a Local Power of Attorney Holder in India. This may further be clarified with
theconcerned financial institution.
Q18 What is the repayment period of the loan?
Ans. You can select the payment period you are comfortable with - up to 20 years
or Retirement, whichever is earlier. In some cases,home loans are approved for a
period of 25 years.
Q19. What is the Process for Application?
Ans. Application needs to be made in the prescribed Application Form of the financial
institution, along with Relevant documents and Processing Fees to the concerned
Financial Institution.On Approval/ Sanction of the Application the Financial Institution
forwards a Approval/Sanction Letter To the Applicant & Co-Applicant.On Receipt of
the approval Letter, the property can be selected/ if selected the disbursement
process can be initiated.
Q20. What are the documents required to get the loan sanctioned?
Ans. An indicative list is given below. Representatives of the concerned financial
Institution will give you further details.
LOAN AMOUNT
A number of factors such as your income, age, number of dependants, qualifications,
assets and liabilities, income stability/ continuity of your employment / business
etc. are taken into account when assessing your repayment capacity.However, there
are ways by which you can enhance your eligibility: If your spouse is earning, add
him/her as a co-applicant. The additional income shall be included to enhance your
loan amount. Incidentally, if there are any co-owners they must necessarily be co-applicants.
Did you know that your fiancée's income could also be considered for sanctioning
the loan on your combined income? The disbursement of the loan, however, is done
only after you submit proof of your marriage. Providing additional security like
bonds, fixed deposits and LIC policies may also help to enhance eligibility. While
there is no need for a guarantor, having one might enhance your credibility with
us. If so, our loan officer would provide you with the necessary details. However,
the final amount to be sanctioned will depend on your repayment capacity. In the
total cost, registration charges, transfer charges and stamp duty costs are included.
SANCTIONING
Documents required for applying for a home loan (for salaried clients)
Documents required for applying for a home loan (for self-employed professionals
and businessmen)
GENERAL DOCUMENTS
DISBURSEMENT
Your loan will be disbursed after you identify and select the property that you
are purchasing and submit the requisite legal documents. Each and every single document
asked for will be verified and checked for your safety. This may take some time
but we want to ensure a clear title by completing all the legal and technical verifications
so that you have full rights to your home. The 230 A Clearance of the seller and
/ or 37I clearance from the appropriate income tax authorities (if applicable) is
also needed. On satisfactory completion of the above, registration of the conveyance
deed and investment of your own contribution, the loan amount (as warranted by the
stage of construction) will be disbursed by Bank. The disbursement will be in favour
of the builder/seller.
LIST OF DOCUMENTS FOR DISBURSEMENT
After the disbursement of Loan, the Mortgage needs to be intimated to the sub registrar
within 30 days of disbursement.This is mandatory, failing which there are penalties
to be paid by the borrower.
Q21. How is the loan disbursed?
Ans. The loan will be disbursed on:
Q22. How are home loans repaid?
Ans. The home loan repayment is by Equated Monthly Installments (EMIs) comprising
of interest and principal amount calculated on monthly rests through Post Dated
Cheques or ECS mode. In case of part disbursement of the loan, monthly interest
is payable only on the disbursed amount. This interest is called Pre-EMI interest
and is payable monthly till the final disbursement is made, after which the EMIs
would commence.
Q23. What is the security provided for the loan?
Ans. The Property being financed is mortgaged with the Financial Institution as
the Primary security. However other Co-Lateral security can be asked for based on
the Applicants Financial Profile/ Others, which are solely determined by the financial
Institutions.
FINANCE SCHEMES
Sub Vention Scheme
Sub-Vention scheme under which the developer is ready to subvent with the bank on
Interest for a particular period. Say for example interest subvention for 2 years
or interest subvention upto possession for fit outs which shall be clearly mentioned
and in most cases there would be a tri partite MOU between Developer, Bank and Customer
clearly mentioning the time lines for the scheme. The MOU also clarifies that customer
shall pay the EMI / Pre EMI after the subvention period is over.
Parallel Funding
In parallel funding, when a customer has shortage of Own Contribution in such event
he opts for parallel funding under which he contributes the required payment form
his side and Bank also disburses home loan. This gives customer a comfort of arranging
the required own contribution and as work progress.
Easy Payment Plan
Banks generally offers easy payment plan to suit the requirement of the borrower.
There are various schemes which has option of lower initial own contribution and
balance own contribution is paid before the last disbursement of home loan.
Q24. What are the forms available to manage the affairs of building and Maintenance?
Ans. A) Private Limited Company : Where in a Company is registered under the companies
Act 1956 to own a land and building and look forward to manage the affairs.
B) Condominiums : Condominiums are generally preferred in case of commercial premises.In
condominiums, the Land and common areas are available to person in ratio of holding.
Also, the title is transferred together with undivided rights to the common areas
C) Association of Persons : Association of persons does not hold any right, title
and interest in the land and building, the AOP is formed with the sole objective
of maintaining the society.
D) Co – Operative Housing Society : This is the most common form of association formed
in Maharashtra with its affairs being governed by the society. The Land is conveyed
to the society,hence it becomes the owner of the land and building;its members have
undivided rights in the society.
There are four types of societies that can be formed:
Disclaimer: The purpose of these FAQs is to provide the visitors with a general
understanding of the various issues relating to House Property. The above FAQs have
been prepared on the basis of advice received and may vary from person to person,
based on facts of such case. Reasonable efforts have been taken in collecting, preparing
and providing quality information, but we do not warrant or guarantee the accuracy,
completeness, adequacy or currency of the information. The contents of the FAQ are
subject to changes / amendments made by the CBDT / Finance Ministry.