The property market has so much to offer both first-time and seasoned home buyers. While a sparkling new apartment might be what you have your eye on, sometimes a resale flat comes along which is too good to pass up. Flats in Chennai are the most preferred type of property to invest in. Instead of waiting for the completion of construction on new flats, you could always look at resale flats which you can take possession of immediately.
Now comes the question of financing the purchase. Developers have partnerships with reputed banks that ease the home loan process. However, when you buy from another individual, you have to go through the process on your own. Additionally, the tax implications of this purchase are different from purchasing directly from the developer. In this article, we explain how to get a home loan on resale properties.
Like any home loan, the determining factors happen to be the Borrower’s age and their income. But here, the age of the property is also taken into consideration. Anyone who is above 18 is eligible to apply for a home loan in India. Generally, the loan tenure extends till the average age of retirement, which is 60 years. But in special cases based on the applicant’s credit score, repayment capacity, etc. the lender may extend the tenure.
When we refer to the age of the property being a factor, it is not so much the age, as the condition it is maintained in. When applying for a home loan to buy resale flats, you are likely to get approved for a higher amount when the property has been maintained well. This is regardless of the age of the building. Even if the building is new, but the flat is in bad condition, then the banks are likely to reject the application. Make sure you pick the right properties that will actually give you value as an investment and asset.
The value of the home loan will differ from the assessment conducted by the lending institutions. A technical team is deployed to the property who will then survey its structural integrity, and whether it matches the specifications mentioned in the approved plans. Then the applicant’s age, credit score and income are reviewed. If everything is up to mark, you can get even up to 90% of the property value approved as a home loan.
However, the banks evaluate the property with depreciation in mind, but the sellers may be asking more than the going rate. The home loan amount you are eligible for may be significantly lesser than the selling price. In the more established residential areas like TNagar, Porur, etc, even small flats may go for prices upwards of 75 lakhs.
So, the wise thing to do when buying resale flats in Chennai, is to be prepared to meet a larger chunk of the financial commitments from your own pockets. It is better to have at least 30% of the property value upfront, unlike the 10% required for under-construction properties.
The process involves a lot of documents that need to be produced at the bank. The documents need to be exactly to the specifications provided by the bank. If not, there is a chance for the loan to get delayed, or worse denied. The complete chain of documents for the property has to be produced by the seller. If the apartment community is still owned by the developer, then the developer has to sign the sale agreement in addition to the seller. They also need to issue a No Objection certificate.
The following list of documents have to be produced by the borrower:
- Valid ID proof like License, Passport, Aadhar, Voter’s Id, etc.
- Address proof for the permanent address of residence, like Electricity bill, license, Aadhar card, etc.
- Passport size photographs with a solid background and neutral expression.
- PAN Card
- Bank statements for the past 6 months
- IT returns for the last 3 years
- Salary slips in case of salaried employees
The property documents that need to be produced are:
- Chain Documents
- Immediate title deed
- Copy of the Sale Deed
- Copy of agreement of sale
- Nil-encumbrance certificates
- Property tax payment receipts
- Copy of the approved building plan
- No-objection certificate from the builder
Lifestyle Housing is a reputed developer of luxury apartments in Chennai. Our apartments in Porur are great for investors and first-time homebuyers. We commit to educating our customers on all things real estate. Our experts are well versed in real estate laws and are trained to guide our customers to the most viable and beneficial home loan for them.