I am planning to buy a house. The total cost of the project is 50 lakhs. I would like to get maximum loan. How much down minimum payment should I make? Will the registration costs counted as down payment by the bank?
Usually banks lend up to 80% of the loan amount. This means if your property price is 50 lakhs, you can avail a maximum of 40 lakhs as loan. The older the property is, the more apprehensive banks are to finance them. And you will have to take more from your pockets. This is based on bank’s evaluation that as market value of the buildings are reducing on increasing age.
Recently, NHB has made an announcement that for those who availing loans from housing finance companies can avail up to 90% of the property price, ie, you may get a loan up to 45 lakhs from housing finance companies. But you need to check with HFCs that if this has been intiated, and if so, what all are the conditions associated with it. This is because, a higher LTV means more risk for the bank. So obviously they might attach some terms like a higher interest rate or so if the LTV is exceeding 80%.
Down payments normally do not include costs such as stamp duty costs, registration charges, property taxes and transfer charges.
Most of the time if you are purchasing flat from builder or owner of the flat then there might be case that they would not make 50 lakh’s agreement. Bank disperse loan on agreement value, in your case if 50 lakhs is agreement value then you would get 80% loan against 50 lakhs.
Banks use several parameters to evaluate your maximum eligibility for a Home Loan. This will include your income, loans that you already hold, and your monthly outflow. They will measure these using your bank account statement. Most banks will ensure that your loan EMI doesn’t exceed 50% of your take home pay. This might go down if you have existing loans. The best way you to get a higher loan amount is by having a co-applicant for the loan.
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. You can claim the stamp duty and registration charges made by you as tax deduction under Section 80C of the Income Tax Act.
Banks usually do not consider registration and stamp duty charges when calculating your Loan To Value (LTV). LTV is the amount of loan that the bank will provide and you have to pay the remaing amount. The cost of the home will include the square feet rate, amenities, parking space cost and other building related charges. However, in case of affordable homes that are less than Rs. 10 lakhs, banks will take into account the registration and stamp duty charges when calculating your LTV. So, ensure that you have enough money for the down-payment, registration and stamp duty.
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