FAQ's

Built-up Area: The entire area of the floor - the carpet area, walls, lobbies, corridors, atrium areas and basement. It is advisable to cross-check with respective builders/agents the specific meaning of these terms, for colloquially the term may include varying components across different cities in India.

Carpet Area: The usable area within the walls - that is , the area in which you can actually lay a carpet.

Super Built up Area: This refers to the entire area of the building which includes the carpet area, lobbies and corridors, walls, lifts, staircases basements, and other atrium and utility areas. It is advisable to cross-check with respective builders/agents the specific meaning of these terms. This is because like the built up area, colloquially, different components make up a super area in different cities across India.

An Indian Citizen who stays abroad for employment/ carrying on business or vacation outside India or stays abroad under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident. (Persons posted in U.N. organizations and officials deputed abroad by Central/ State Government and Public Sector Undertakings on temporary assignments are also treated as non-resident) Non-resident foreign citizens of Indian Origin are treated on par with non-resident Indian citizens.

Under the general permission available, the following categories can freely purchase immovable property in India:
i) Non-Resident Indian (NRI)- that is a citizen of India resident outside India
ii) Person of Indian Origin (PIO)- that is 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. at any time, held Indian passport, or 

2. who or either of whose father or grandfather was a citizen of India  by   virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955). 

The general permission, however, covers only purchase  of residential  and commercial property and not for purchase of   agricultural land /  plantation property / farm house in India.

No.

Reserve Bank has granted general permission to foreign citizens of Indian origin, whether resident in India or abroad, to purchase immovable property in India for their bona fide residential purpose. They are, therefore, not required to obtain permission of Reserve Bank.

The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with banks in India.

They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration along with a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.

Yes. Reserve Bank has granted general permission for sale of such property. However, where the property is purchased by another foreign citizen of Indian origin, funds towards the purchase consideration should either be remitted to India or paid out of balances in NRE/FCNR accounts

In respect of residential properties purchased on or after 26th May 1993, Reserve Bank considers applications for repatriation of sale proceeds up to the consideration amount remitted in foreign exchange for the acquisition of the property for two such properties. The balance amount of sale proceeds if any or sale proceeds in respect of properties purchased prior to 26th May 1993, will have to be credited to the ordinary non-resident rupee account of the owner of the property.

Applications for repatriation of sale proceeds are considered provided the sale takes place after three years from the date of final purchase deed or from the date of payment of final installment of consideration amount, whichever is later.

Yes. Reserve Bank has granted general permission to foreign citizens of Indian origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.

Yes. General permission has been granted by Reserve Bank to non-resident persons (foreign citizens) of Indian origin to transfer by way of gift immovable property held by them in India to relatives and charitable trusts/organizations subject to the condition that the provisions of any other law, including Foreign Contribution (Regulation) Act, 1976, as applicable, are duly complied with.

Yes. Under the general permission granted by Reserve Bank properties other than agricultural land/farm house/plantation property can be acquired by foreign citizens of Indian origin provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchasers' NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.

Yes. Repatriation of original investment in respect of properties purchased by foreign citizens of Indian origin on or after 26th May 1993 will be allowed to be remitted up to the consideration amount originally remitted from abroad provided the property is sold after a period of three years from the date of the final purchase deed or from the date of payment of final installment of consideration amount, whichever is later. Applications for the purpose are required to be made to the Central Office of Reserve Bank within 90 days of the sale of property in form IPI 8.

Yes. Reserve Bank has granted general permission for letting out any immovable property in India. The rental income or proceeds of any investment of such income has to be credited to NRO account.

Reserve Bank has granted general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc., and authorized dealers to grant housing loans to non-resident Indian nationals for acquisition of a house/flat for self-occupation subject to certain conditions. The purpose of the loan, margin money and the quantum of loan will be at par with those applicable to housing loans to residents. Repayment of loan should be made within a period not exceeding 15 years out of inward remittances or out of funds held in the investors' NRE/FCNR/NRO accounts.

Reserve Bank permits Indian firms/companies to grant housing loans to their employees deputed abroad and holding Indian passports subject to certain conditions.

Authorized dealers have been granted permission to grant loans up to non-resident Indian nationals for acquisition of house/flat for self-occupation on their return to India subject to certain conditions. Repayment of the loan should be made within a period not exceeding 15 years out of inward remittance through banking channels or out of funds held in the investments' NRE/FCNR accounts.

Any Indian Resident, Non-resident Indian or Person of Indian Origin can apply for a Home Loans if they are 21 years of age at the origin of the loan and 65 years or below at loan maturity. Housing Finance Companies (HFCs) usually give Home Loanss for properties located in India to people who are employed or self-employed, with a regular source of income. 

An individual can apply for a Home Loans even before the property has been selected. The loan amount is sanctioned based on the ability to repay. This helps in planning a budget while purchasing the house.

Loan eligibility is calculated based on the ability to repay. Factors such as income, age, qualifications, number of dependants, spouse's income, assets, liabilities, stability and continuity of occupation and savings history are taken into consideration.

You can repay the loan in Equated Monthly Installments (EMIs) comprising principal and interest. Repayment by EMIs commences from the month following the month in which you take full disbursement. Till then, you only need to pay the interest on the amount disbursed.

Before final disbursement, you may have to pay interest on the portion of the loan disbursed. This is called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement up to the date of EMI commencement.

Most HFCs offer the fixed rate as well as the variable rate options to customers.

A rate of interest that is constant throughout the duration of the loan is known as a fixed rate loan.

A floating rate is when the interest rate on the loan changes according to the rates in the market during the period of the loan.

If interest rates are falling, a floating rate loan is a better option. But when interest rates are rising, opt for a fixed rate loan, because you will then know in advance what your EMIs will be.

On the basis of the principal at the start of every month, the interest is calculated in monthly rest. For annual rest, this is done at the beginning of every year.

Processing and administrative fees, pre-payment charges and delayed payment charges, legal fees, technical fees, stamp duty and registration of mortgage deed are all likely areas of expenditure.

A guarantor is insisted on by the HFC so as to ensure that the loan is paid back in full and in time. The guarantor is responsible for the repayment of the loan if the borrower is unable to do so.

You could do this, but some HFCs require a pre-payment fee to be paid. Check with your HFC.

Various considerations would help you zero down on the HFC most suitable for your loan requirements. Analyse the following points before taking your decision:

• Loan amount: The minimum and maximum loan amounts vary between HFCs. Find out if the amount you require falls within this limit.
• Duration: There is no lower and upper limit to the tenure of the loan. Find out if the time limit you want it for can be accommodated. This varies between HFCs. Normally HFCs offer loans ranging form 5-20 years, with some going up to 30 years. For NRIs the maximum tenure could be 10 years in some cases. Depending on your requirements, this would have a bearing on the loan you opt for.
• Interest rate: This varies between HFCs. Fix a duration that you want the loan for and find out the EMI from them. Compare and identify the lowest EMI.
• Pre-payment: Check if the HFC charges for repaying the loan before its due date.
• Flexibility: Find out whether you can change your interest scheme from fixed to variable if so desired or if there are restrictions.
• Guarantor: Some HFCs require this, while others don't.
• Documents required: These may vary between HFCs although there are a few standard documents like proof of income, proof of age and residence and a salary slip.
• Co-owner: If there is to be a co-owner or co-applicant for the loan, the HFC has to accept the relationship between the two.
• Other fees: Each HFC has different fees for administration and processing among others.

You could do this. After discussing the reasons with the current HFC, they may even reconsider the interest rate.

The maximum amount is 85% of the cost of the property, including the cost of land, subject to a maximum amount of Rs 1 crore.

Generally, the amount is up to 2.5 times your gross annual income. But your equated monthly installments usually should not exceed 35 per cent of your gross monthly income. Besides this, HFCs will assess your eligibility based on your ability to repay.

Usually in a period of between 5 to 15 years, but definitely before you retire. A few HFCs also offer a 20-year repayment period, usually at a higher interest rate.

Most HFCs follow the yearly reducing balance method, which accounts for your principal repayments only at the end of their financial year. Thus you pay interest on the principal that you have already returned to the HFC during the year. The effective interest rate is thus higher than the quoted interest rate by around 0.7 per cent. Banks and some HFCs, in contrast, follow the daily or monthly reducing balance method, which results in a lower interest burden.

• Approach an HFC with the latest salary slip and TDS Form 16 of the last two financial years for yourself and your co-applicant. The loan officer will informally tell you the amount of loan you are eligible for and the terms, in areas in which they finance homes.
• Collect a loan application form and confirm the needed documents.
• Visit more than one company since you are likely to get better terms / larger loan amount if you shop for the best deal.
• At your chosen HFC, submit the duly filled loan application along with the required documents and an application fee (around 1 per cent). They will then interview you on the same. After conducting an appraisal of your application, the HFC will give an in-principle sanction of your loan.
• You now have to submit your property documents, which should show a clear title. The HFC will check these and levy an administrative fee (around 1 per cent). It will then disburse the loan, either fully or in installments, directly to the builder / seller of the property.

Usually a spouse can be a co-applicant. Other immediate family members are also acceptable to some companies, depending on merits. If both partners are working, it is better to have your spouse as a co-applicant since this will entitle you to a much larger loan.

A first mortgage of the property to be financed. The title should be clear marketable. Some HFCs may also require collateral security like the assignment of life insurance policies, pledge of shares, NSCs, units or mutual funds, bank deposits or other investments.

Yes. In many Indian states, the agreement between the builder and purchaser has to be registered. This can be done at the office of the sub-registrar appointed by the State government.

The property should be insured against fire and other hazards and the HFC will have to be the beneficiary of the policy.
 

It will take around 15 days for the processing of your application if your documents are in order. Make an application only if you are eligible for the loan since the HFC will not return the application-processing fee. It will take another week for the company to check out your property papers and make the disbursement.

You will have to make your payments towards the property price up-front before the HFC disburses any installment of the loan.

You must submit the property papers and pay an administrative fee (approximately 1 percent). When the HFC clears these papers, you must take the first disbursement of the loan within a stipulated period (usually three months) and avail of the entire loan within about a year's time.

The loan can be either disbursed in full for outright-purchase / ready properties or in a few installments for under construction properties. The disbursement will be made taking into account the requirement of funds and the progress of construction.

Yes. You are eligible for certain exemptions on both the principal and interest components of the loan as per the Income Tax Act, 1961. The principal repayment of the loan up to Rs 10,000 is eligible for a rebate @ 20 per cent U/s 88 of the IT Act. The income tax exemption limit for interest paid on housing loans is Rs 75,000 per annum on self-occupied houses. Therefore an interest payment of up to Rs 6,250 per month can be deducted from taxable income in arriving at the total income tax payment of an individual.

Yes, these loans are available from some HFCs. However the loan terms may be different from the usual housing loans.

Yes. But the loan will have to be repaid before the sale is effected. Some HFCs allow the transfer of loan to the buyer of the property, depending on his eligibility for loan.

Yes, this is allowed by HFCs.