Property Loan

A. Grossly there are 2 steps viz;

  • Sanction of loan
  • Disbursement of loan

The fees which has to be incurred are

  • Processing fees
  • Administrative fees
  • Others vary from lender to lender and optional:
    • Interest Tax: is the tax payable on the interest paid on a home loan and not the principal. This tax is some times included in the interest rate of the loan, or may be charged separately as interest tax.
    • Commitment Fees: Some banks levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.
    • Miscellaneous costs: It is somewhat possible that some banks may levy a documentation or consultant charges

To attract customers, some banks/institutions waiver off processing/administrative fees.

A. EMI or Equated Monthly Installments refers to the fixed sum of money that you will be paying to the bank every month. The EMI comprise of both interest and principal repayment. The amount of the EMI depends on the eligibility or profile of borrower, quantum of loan, interest rate applicable and the terms of the loan. onal to type and stage of property.

A.  Following things should be considered when applying for loan:

  • Study the list of documents required by the lending institution thoroughly, as a failure to submit insufficient or all the documents in the prescribed format could lead to rejection of the application.
  • If you do not fit into the bank/HFCs desired customer profile in terms of the minimum income level, you should put in a joint application, with your spouse as the co-borrower to meet the eligibility criterion. More ever, both borrowers are entitled to tax deductions on repayment of home loan principal (up to Rs1 lakh) and interest paid (up to Rs1.5 lakh) under section 80 C and sector 24, respectively.     
  • A copy of your credit report from CIBIL (Credit Information Bureau India Limited) prior to a submitting a loan request would help you get a clear picture about your credit history and its likely perception by the lending bank. It also provides you an opportunity to get your previous lender to rectify errors, if any, in the report.
  • If you have multiple loans, extinguish personal & possibly other loans as it would affect your repayment capacity and thus chances of getting your home loan sanctioned.

Buying property in a project developed by a builder with doubtful credentials could result in the bank denying the loan and/or lower the loan amount you are eligible for. 

A. Your Home Loan eligibility is determined by your repayment capacity, taking into consideration factors such as your:
• Income
• Qualifications
• Age
• Spouse's income
• No. of dependants
• Stability and continuity of occupation
• Assets/Liabilities.
• Savings history.
The most important concern of banks in determining your loan eligibility is that whether or not you are contentedly able to pay off the amount you borrow.

A. Typically Home Loans are provided for in the range of 75%-85% of the cost of the property depending upon the lender, including stamp duty and registration fees.

  • The maximum amount that you can borrow depends on factors such as: purchase of property, mortgage against property, home renovation or others.
  • Or purchase of land for development etc
  • Besides, your residential status (whether resident Indian or Non-Resident Indian) will also be significant on the maximum quantum of loan that you can borrow.
  • Others as applicable by lenders. 

A. It takes around two weeks for processing of one's application if all the necessary documents are in order and takes another week for the bank to inspect the property papers and make the disbursement.

   The verification of identity and resident or commercial activity is included in processing. It would vary with lender/bank, property and the borrower on case to case basis. To be on safer side please assume that it would take 4-6 weeks time.

These are a range of Home Loans available

  • Home Purchase Loans: for the purchase of a new home.
  • Home Improvement Loans: for implementing repair works/renovations in a home that you have already purchased.
  • Home Construction Loans: for the construction of a new home.
  • Home Extension Loans: for expanding/extending an existing home.
  • Land Purchase Loans: for purchase of land for home construction/investment purposes.
  • Home Conversion Loans: for those who have financed the present home with a home loan and wishes to purchase/move to another home for which some extra finances are required.
  • Balance Transfer Loans: helps you to pay-off an existing home loan and avail the option of a loan with other lender for lower rate of interest.
  • Bridge Loans: for people who wish to sell the existing home and purchase another. This loan helps you finance the new home, until you find a buyer for your old home.
  • Refinance Loans: helps you pay off the debt you have incurred from private sources like relatives/friends, for the purchase of your present home.
  • Stamp Duty Loans: is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of property.
  • Loans to NRIs: to build/buy a home in India. EMI is payable till the loan is paid back in full. It consists of a portion of the interest as well as the principal.

A.  The margin requirement payment is the margin amount of the deal which is paid by the applicant apart from the lender’s contribution and varies from bank to bank like 15% to 30% depending up on the profile of the applicant, duration of loan period, type of property & other factors as decided by the bank. 

It is essential to have receipt of the margin payment done to the seller to disburse the loan.

A. All the documents should be self attested

Basic Requirements of Sanction


  • Application Form complete in all respects
  • 2 colour photos & photo proof
  • Processing Fee cheque / receipt
  • ID Proof (Pan Card/Passport/Voter ID /Employer’s ID card/ Driving License)
  • Age proof
  • Address Proof (Telephone Bill/ Bank Passbook / Electricity Bill/Ration Card/ Letter from Employer)
  • Work address proof
  • Qualification Proof for professional (Self-attested)
  • Marriage certificate if joint applicants
  • Letter reg. external liabilities if any, plan for closure /non-closure
  • LIC policies copies, Surrender Value quotation, Status report
  • Other loan details like amount, lenders, EMIs and others (loan a/c statements)
  • Other as required by lenders


Salaried Class

  • Employer Certificate
  • Salary slips for last 3 months
  • Latest Form 16
  • Bank Statement for latest 6 months
  • Copy of appointment letter /CTC (wherever applicable)
  • Confirmation Letter (for new employment)
  • Proof of earlier employment (for probationers)
  • AS -24 Forms for last 3 years / TDS certificates
  • Investment details
  • Other as required by lenders



  • Latest 3 years Income tax returns (for partnership firm also, if applicable)
  • AS-26 Forms for last 3 years/TDS certificates
  • Computation of Income, P&L a/c, Balance Sheet
  • Partnership deed copy, if applicable
  • Form 16 A, if applicable, Bank statements for latest 1 year (personal & business)
  • Investment details
  • Other as required by lenders



  • PAN/TIN Card
  • Registration of Company documents
  • Partnership deed / MOA of stake holders
  • Latest 3 years Income tax returns (for partnership firm also, if applicable)
  • AS-26 Forms for last 3 years/TDS certificates
  • Computation of Income, P&L a/c, Balance Sheet
  • Partnership deed copy, if applicable
  • Form 16 A, if applicable, Bank statements for latest 1 year (personal & business)
  • Investment details (personal & business)
  • Other as required by lenders


NRI cases (attested)

  • Passport copy, Visa copy
  • General Power of Attorney
  • Pay Slips for last 6months
  • Employer’s Profile past occupational history
  • Employer’s Contract
  • Banker’s Certificate for NRI A/c holder
  • Bank statements for 6 months (both NRE A/c as well as A/c abroad)
  • For Merchant Navy, Continuous Discharge Certificate (CDC) and service contract for last 3 years
  • Investment details
  • Other as required by lenders


Proof of Additional Income (attested)

  • Copy of lease agreement (For rental income)
  • Proof of ownership premises (for rental income)
  • Investment details with income like stock, MFs, MIP or other statements
  • Proof of ownership of Agricultural land (for agricultural income)
  • Other as required by lenders


Other documents would be asked as per lender /bank /institution requirements

A. After obtaining sanction of the loan, at the time of disbursal the applicant should have

(We recommend you to retain photocopies of the original documents for your record purposes) 

Technical documents

  • Copy of Plan and Occupation Certificate/completion certificate issued by Competent Authority
  • Latest latest BMC property taxes paid paid receipts
  • Commencement certificate
  • Copy of the floor plan
  • Copy of latest electricity bill 
  • Copies of previous chain documents as well in order to ascertain transfer of ownership 

Documents pertaining to a flat/apartment being purchased in resale post confirmation of technical:
a. Where society has not being registered

1. Development agreement between land owner and developer

2. Approved plans, IOD, CC & OC (if construction complete)

3. Developer/Lessor NOC

4. Agreement to sale with developer

5. For more please refer to lender.
b. Originally Allotted by a Development Authority

    Please refer to lender

c. In a registered co-operative society 
1. Original Sale Agreement with the vendor duly stamped and registered along with the stamp duty receipt & Index 2 
2. Original money receipt issued by the Sub-Registrar for the registration fee paid. 
3. Original receipt/s of the payments made to the vendor(s) till date (Agreement Value minus loan amount) along with copies of banks statements reflecting debit of payments made to seller. 
4. Letter from the respective authority i.e. Builder/Development Authority/Society (NOC) on its letterhead as per lender draft.

5. Transfer permission from the respective authority i.e. Builder/Development Authority/Society. 
6. Previous chain of Agreement/s with past owner/s in original with original receipt of registration (if any) / Original allotment letter issued to the first owner. 
7. Original stamped receipts of payment issued to the previous & present owners by the Builder/Development Authority/Society/Vendor.

8. Copy of Share Certificate. 
9. Mortgage clearance certificate issued to vendor/past owners in case the property has been earlier mortgaged.

10. Title Report by an Advocate or Solicitor, in not already attached to the previous Agreement for Sale. 
11. Name and number of secretary/chairman/treasurer/builder(signatory to the NOC) for verification of NOC and name and address of vendor 
12. Disbursement request letter 
13. Vendor information form to be typed 
14 Two passport size photographs 
15. TDS payment receipt/challan if agreement value is above Rs.50 lac . For further details please visit 
16. Sellers' self attested pan card and cancelled cheque

17. Tax declaration under section 197 in cases seller if an nri 
(We recommend you to retain photocopies of the original documents for your record purposes) 

Other Requirements: 
1. Confirm that the property being financed is approved by lender. 
2. Cheque favoring the lender for Stamp Duty @ 0.20% of loan amount + Rs. 100/- payable to the Govt. of India. 
3. All owners of the property being purchased will be required to be co-applicants to the loan and also be available on the day of first disbursement.

4. Originals of proof of residence (ration card/electricity/telephone bill/letter from employer/banker's certificate) and identity (passport/driving licence/voter id/ for all applicants and power of attorney if applicable for verification purposes 
5. Cheque/s for payment of interest & ECS form 
6.EMI is required to be paid via ECS from (duly filled & verified by your banker) for payment of monthly installments to be carried on the day of disbursement. . 

Please confirm with lender for all the requirements.

(We recommend you to retain photocopies of the original documents for your record purposes) 

Other as required by lenders

Proof of Additional Income (attested):

  • Copy of lease agreement (For rental income)
  • Proof of ownership premises (for rental income)
  • Investment details with income like stock, MFs, MIP or other statements
  • Proof of ownership of Agricultural land (for agricultural income)
  • Other as required by lenders

Other documents would be asked as per lender /bank /institution requirements

A. The home loan interest rate varies from banks to banks and normally ranges from 8.5% to 14% or as decided by the market and depends on the RBI decided interest rate to lender or prime lending rate (PRL).

A. Fixed Rate Loan: The interest rate of loan obtained which is fixed for the entire duration of loan period whether it is applied on daily, weekly or monthly basis. It is independent of fluctuations of market regulators like RBI / All India Bank Association & only dependent on prime lending rate (PLR) of the respective bank.

Floating Rate Loan: The interest rate of loan which fluctuates according to the fluctuations of market regulators like RBI / All India Bank Association & independent on prime lending rate (PLR) of the respective bank. It keeps varying from lender to lender.

A. The choice on this one is not really easy. Fixed interest rate products are usually 1-3% higher than floating interest rate products but bring a certain level of certainty to your financial planning since you are more or less certain of your monthly outgo.
You may also want to check the terms and conditions associated with a fixed rate product. At times, the fixed rate is applicable only for a limited number of years, which in some case will defeat any assumption of certainty that you may want to build into your financial planning.
On the other hand, floating interest rate products, though cheaper, are linked to a base rate or benchmark rate and can go up or down with a change in the base rate. It would, therefore, make sense to go in for a fixed rate product only if you think the interest rates in the economy are bound to go up over the next few years.
However, if the spread between the fixed and floating rates is fairly high, floating rate options continue to be better. For e.g. if the rate on fixed and floating rate products is 12.5% and 10% respectively, then as long as the increase in base rates is lower than 2.5%, floating rate products continue to be cheaper.

The increase is done automatically by the bank but decrease in rate has to be intimated by the customer.

A. Most banks follow the monthly reducing-balance method, which accounts for your principal repayments at the end of month. Some banks may also follow the daily or yearly reducing-balance method, which results in a lowest or highest interest burden respectively.

A. Banks usually take some additional securities which are called collateral securities in cases of doubtful profiles or some other legal issues. Collateral could be in the form of guarantee from one or two persons, assignment of life insurance policies, the surrender value of which should be equal to the loan amount, deposit of shares, and units or other securities. These additional securities are taken just in case a loan is not paid back; recourse may be taken to such securities instead of depending upon the mortgage of the property which is the last resort. 

A. It is not compulsory to have insurance of your property. But it is always better to get insured for fire, burglary and other appropriate hazards, as required by the banks during the loan tenure. The banks will be the beneficiary of the insurance policy . You will also have to produce proof/evidence, whenever required by the banks. This is an added cost that will add to the final cost of purchase of the property.

The best alternative is to get your personal insurance worth the loan or property amount depending upon your other insurance policies. 

A. Yes, you can take loan for construction in one city while working in another. The banks usually service this loan after getting details of the plot legally verified.

A. Yes, you are eligible for tax benefits on the principal up to Rupees 30000 and interest components of the loan up to Rupees 1.5 lakh under the Income Tax Act, 1961. However as the benefits could vary each year, do check out the current benefits available with your chartered accountant or income tax department.

A. The main criteria for maximum age is your retirement age. The maximum period over which one can pay the loan varies for every bank, and is also different for every scheme. Also your residential status makes a difference. If you are a resident Indian, you could avail of a loan for duration of 5-25 years.  As a Non-Resident Indian, you can only avail of a loan for a maximum period of 7-15 years.

A. Yes, you can pay your loan ahead of schedule, if you want to but after minimum 6 months. According to recent regulation bank cannot charge you any penalty on repayment of entire amount. However you could also opt for part prepayment with no penalty what so ever. 

A. Since you are borrowing money it is sensible to borrow from one who would lend you at lowest rate.

Please look out for hidden costs like processing / administrative fees, prepayment fees, also in some cases disbursement fees.

Please understand the type of interest; floating or fixed and also on daily, weekly, monthly or annual basis.

Ask for break up of EMI (amortization) i.e; principal & interest parts and schedule of the entire loan period. If floating, ask whether it would change according to the market (insist on written document).

After considering all the above & other relevant factors (reading fine print, hidden charges) you might decide on lender.     

A. Having taken a loan, you may at some stage be tempted to transfer your loan to another bank or lending institution which is offering you a lower interest rate than you currently have. While taking this decision do make sure that you factor in any foreclosure costs associated with your existing loans (charges linked with an early closure of your loan).
The bank you are transferring your loan may also be charging you a processing fees. Do take these costs into account and ensure that the savings you make on lower interest rate are higher than the costs associated with the loan transfer.
It is sensible to ask the existing lender to reduce the interest rate before arriving at the decision.

A.Choosing the lender first: Most people want to know how much loan they will be eligible for before they finalize the property. Nothing wrong with that.

But you don’t have to go to your lender just to get the eligible loan figure from him.
If you are below 40 years, just multiply your (and your spouse’s) yearly gross income by four / five and that should be a rough and ready amount of loan that you should be able to get provided you are not repaying other loans.
The best way is to select your property and then find out if any other lender has funded for another flat in the same building.
Also, if you approach lenders now, you are likely to get slightly better rates, as lenders reserve their best rates for immediate disbursement cases.


Miscalculating the down payment:  A lot of people buy property under construction, assuming they can pay the down payment amount proportionately while the bank disburses the rest.
All lenders without exception insist on your bringing in the entire amount of the down payment before they will make the first disbursement on the property.

The margin amount is calculated on amount mentioned in “Agreement to Sale” and not the deal amount decided verbally.

No Window Shopping: The mantra here is to bargain and bargain some more. You should shortlist four or five banks and get the short-listed banks to compete for your loan. The cost of your loan depends a lot on your ability to negotiate.
Remember that all terms and conditions of a housing loan are negotiable. Interest rates offered by banks take your income and repayment profile into consideration, apart from of course, your negotiation skills. Apart from interest rates, also check various charges like processing fees, pre-payment charges, legal fees, valuation fees and other hidden costs.

Falling for teaser loans: The Home loan scheme like ‘less interest rate in the first year’ is and good scheme but definitely costs more overall. Some lenders offer lower fixed rates of interest in the initial few years and shift to regular floating rate after the period.
It is important to understand the impact on overall cost of such changes.

Not insuring your home loan: Do you want to pass on the home loan to your family? If the answer is no, then buy a life insurance and critical illness policy when you take a home loan.
Life insurance policies provide monetary benefit on death of the borrower and ensure that the family members inherit the home, not the home loan.
Critical illness policy will take care of the home loan liability if your income gets interrupted due to any major illnesses such as a stroke or organ failure. There is also property insurance available with most of the lenders but be judicious.

Delayed or missed payments:  It can impact you not only financially but can also affect your credit history. On the one hand, you may have to pay a penalty or fees associated with delayed or missed payments, while on the other your credit history will reflect these missed or delayed payments in CIBIL records.

A. The tips are well explained as follow

  • All interest rates are negotiable & depends up on your profile
  • Approach the perspective lender after finalising the property & just before the disbursement
  • Try doing group booking, offering large loan requirement & if the property is in the same society then lot of the requirement will be common as valuation/verification, others
  • Negotiating on month end as the lender have targets to achieve
  • Good repayment records if any
  • Prepare a good profile and provide investment details
  • Wavering of processing/transaction fees 

A. It will depend upon lot of factors like nature of business, purpose of loan, tenure of loan, repaying capacity of the person/business, others. It is like taking business loan.

Usually nationalised banks do not give for more than 5-10 years, but some private banks like ICICI Bank, HDFC and others do give if their requirement is fulfilled. The requirements may vary from case to case. The interest rate is higher than normal home loan rates. Professionals like doctors, chartered accountants & others are considered as special cases are offered on same basis as home loan.  

A. The sound and wise advice would be; taking a loan when you could afford it, i.e; your EMI should not affect your essential living standard. Take only that much where you can repay without disturbing your lifestyle.  

You may take the loan for longer duration according to your present repaying capacity but as your appetite increases repay as fast as possible.

Leverage to your advantage & not to the lender.

Please consider property or life insurance as it safe guards your family from any untoward event.

Take the entire structure of your debt including other mortgages, credit card, consumer loans, car loan & others into consideration before deciding on it. Take chartered accountant advice before plunging into it. 

CIBIL stands for Credit Information Bureau (India) Limited founded on August 2000. It is the way to know your credit rating with the banks. Ratings has scores from 300 to 900. The greater the score better the rating for you. Post Inception, it has come to play a critical role in India’s financial system. Whether it is to help loan providers manage their business or help consumers secure credit faster and at better terms, the use of CIBIL’s products have led to a massive change in the way the credit life cycle is managed by both loan providers and consumers. For more & detail information visit