Does downpayment include registration and stamp fees etc. or can we factor it in the loan amount?


#1

Will the bank be able to provide for the stamp duty, registration etc. or do we have to pay it from our pockets?


#2

Stamp duty, registration etc. are costs that need to be borne by the home buyer as the loan amount will not accommodate these components. According to an RBI ruling a couple of months ago, the Loan To Property Value Ratio has been maintained at 80%. Earlier banks used to lend up to 85% of the property value, this may not be the case anymore. This means the home buyer has to shell out more from his savings now towards the purchase of his dream home!


#3

Hi Ashwin,

Banks have been instructed by the Reserve Bank of India (RBI) not to include stamp duty and registration as part of Home Loans that they grant. However, if the Home Loan amount is less than Rs. 10 lakh, then the stamp duty and registration charges can be funded by the bank, says RBI.

Banks may not consider stamp duty and registration charges to be a part of the cost of the house while providing a Home Loan. However, Non-Banking Finance Companies (NBFC) may provide loans for stamp duty and registration when you opt for a Home Loan. However, you must note that the interest rates and the processing fees might be higher in case of some HFCs. So, it is better to compare the total cost of taking the Home Loan instead of looking at whether or not the lender will cover registration charges. In order to save on stamp duty and registration charges, buyers register their property using the guidance value. For more information on this, you can contact your legal advisor.

However, you can claim the charges as tax deductions. Under Section 80C, claims for a maximum deduction amount of up to Rs.1,50,000 can be made also for and including the charges for: Stamp duty, registration and transfer related expenses.

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Cheers,
BB Expert