Housing Finance
For what purposes can I get a housing loan from a housing finance company (HFC) ?
You can avail a housing loan for buying or constructing a home, extending an existing home, to undertake improvements and renovation or even to buy a plot of land from Development Authorities.
Who can be co-applicants?
The proposed owners of the property, with respect to which you are seeking financial assistance, will have to be co-applicants. However, all co-applicants need not be co-owners.
What is meant by "Own Contribution"?
Own Contribution is the cost of the dwelling unit less the loan amount. Generally, the loan is upto (75- 85)% of the cost and the balance needs to be brought in by the applicant directly and is called own contribution.
Can I repay my loan ahead of schedule? Do I have to pay any charges for the same?
Yes, you can repay your loan ahead of schedule. Early redemption charges are payable in the case of loans from certain HFCs, while the same is not applicable in the case of certain others. Hence, this should be a key point when selecting a housing finance company for a loan.
How will the housing finance company decide the loan amount I am eligible for?
Your repayment capacity as determined by the housing finance company will help decide your loan eligibility. Repayment capacity takes into consideration factors such as income, age, qualifications, number of dependants, spouse's income, assets, liabilities, stability and continuity of occupation and savings history.The main concern is to make sure you can comfortably repay the amount you borrow.
What are the documents to be submitted along with the application?
A) For New Customers
a) Common for all applicants:
- Allotment letter of the co-operative society/ association of apartment owners.
- Copy of approved drawings of proposed construction /renovation.
- Detailed cost estimate from architect /engineer for the property to be constructed/ renovated.
- If you have been in your present employment / business or profession for less than a year, mention details of occupation for previous 5 years, mentioning position held, reasons for change and period of the same.
- Applicable Processing Fees.
- Any other information regarding your repayment capacity that is necessary and will assist HDFC in appraising the case.
b) Additionally
If You Are Employed:
- Latest salary slip/salary certificate showing all deductions.
- If your job is transferable, permanent address where correspondence relating to the application can be mailed.
- A letter from your employer agreeing to deduct the monthly instalment towards repayment of the loan from your salary. This will expedite the processing of your loan application.
If You Are Self-Employed:
- Balance Sheets and Profit & Loss Accounts of the business/profession along with copies of Individual Income Tax Returns for the last three years certified by a Chartered Accountant.
- A note giving information on the nature of your business/profession, form of organisation, clients, suppliers, etc.
B) For Existing Customers
- Detailed cost estimate from architect/engineer for the property to be constructed/ renovated.
- Applicable Processing Fees.
- Any other information regarding your repayment capacity that is necessary and will assist HDFC in appraising the case.
What is an EMI?
You repay the loan in Equated Monthly Instalments (EMIs) comprising principal and interest. Repayment by way of EMI commences from the month following the month in which you take full disbursement.
What is pre-EMI interest?
Pending final disbursement, you pay interest on the portion of the loan disbursed. This interest is called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement upto the date of commencement of EMI.
What is the size of the EMI?
The EMI is 1/12th the Equated Annual Instalment. The size of the monthly instalment comprising principal and interest depends on the quantum of the loan, the interest rate applicable and the term of the loan.
What security will I have to provide?
Typically the security for the loan is a first mortgage of the property to be financed, normally by way of deposit of title deeds and/or such other collateral security as may be necessary.
Interim security may be additionally required, if the property is under construction. Collateral or interim security could be assignment to HDFC of life insurance policies, the surrender value of which is at least equal to the loan amount, guarantees from sound and solvent guarantors, pledge of shares and such other investments that are acceptable to HDFC.
Please do ensure that the title to the property is clear, marketable and free from encumbrance. To elaborate, there should not be any existing mortgage, loan or litigation which is likely to affect the title to the property adversely
Can I repay the loan ahead of schedule?
Yes. You can repay the loan ahead of schedule. An early redemption charge is payable which varies from time to time. Currently, the early redemption charge is 2% and is payable on the amount being prepaid in case you decide to repay the loan in part or full.
Do I get a tax benefit on the loan?
Yes. Resident Indians are eligible for certain tax benefits on principal and interest components of a loan under the Income Tax Act, 1961. Interest repayment of Rs. 1,00,000 p.a. (for a loan on or after April 1, 2000) can get you a tax saving upto approximately Rs. 33,000 p.a. Moreover, you can get added tax benefits under Sec 88 on repayment of principal amount upto Rs. 20,000 p.a. which can further reduce your tax liability by Rs. 2,000 p.a.
Does the property have to be insured?
You will have to ensure that the property is duly and properly insured for fire and other appropriate hazards during the pendency of the loan and to produce evidence whenever called upon to do so.The HFC will be the beneficiary of the insurance policy.
FAQ FOR NRIs( Based on HDFC Home Loans)
How can NRIs in the Middle East countries avail of a housing loan from HDFC?
HDFC has made it easier for the Gulf based NRIs to apply for a loan to HDFC - India. HDFC through its office in Dubai and Service Associates in Kuwait, Oman and Qatar, now offers advisory services in real estate and real estate financing to the Middle East based Non-Resident Indians who wish to acquire homes in India:
If you are based in Kuwait, Qatar and Oman and wish to apply for a loan to HDFC - India, these offices would be happy to facilitate the process. If you are based in Bahrain and Saudi Arabia, you can contact the HDFC office in Dubai. You can approach these offices for any loan information, submission of loan application and documents or for any assistance in processing your application. These offices will also co-ordinate your request for disbursement and address any queries that you may have regarding your loan account.
For what purposes can I get a housing loan from HDFC?
HDFC can consider a loan to you for buying or constructing a home, extending an existing home, to undertake improvements in your home or even to buy a plot of land from Development Authorities.
Does HDFC finance persons of Indian origin( PIO)holding foreign passport?
Yes. As per current guidelines of the Reserve Bank of India, persons of Indian origin holding foreign passports are eligible for loans from HDFC.
Are there any special terms and conditions for a loan to a PIO?
All other terms and conditions (relating to rate of interest term of loan, fees,appraisal norms, own contribution, remittances and repayment of loan)remain the same as those for loans to NRIs
What security would I have to offer for the loan?
Security for the loan will be mortgage of the dwelling unit financed and any other additional security as may be required.
Do I need to be physically present to avail a loan?
No, the power of attorney can apply and carry out the necessary formalities on behalf of the client. Along with the loan application, the format for the PoA would also be provided.
How do I make the payment?
The borrower shall pay the installment of loan, interest, other charges, by remittances from outside India through normal banking channels or out of NRE/ FCNR/ NRO/ NRSR account in India.
Can I buy property anywhere in the world?
The loan is only for property present in India.
Is HDFC finance available for properties all over India?
Yes. You can avail of a loan from HDFC to acquire a property anywhere in India.
Who can be co-applicants?
The proposed owners of the property, in respect of which you are seeking financial assistance, will have to be co-applicants. However, all co-applicants need not be co-owners.
In what form do I make payments to HDFC?
Payment of fees, charges, Pre-Emi, additional interest and incidental charges:
Cheque drawn on an Non-Resident (Ordinary)/ Non-Resident (External)/Non-Resident Special Rupee account
Post dated cheques drawn on any of the above accounts
Demand draft/pay order from an Non-Resident (Ordinary)/ Non-Resident Special Rupee account
FCNR account
Funds transfer from abroad
Cash payments are not to be accepted
Customers making applications at Dubai office are required to make fee payments in UAE Dirhams through cheque/demand draft.
Payments towards EMI: Payments towards EMI are to be made through post dated cheques drawn on an Non-Resident (External)/ Non-Resident (Ordinary)/ Non-Resident Special Rupee account.
Clearance of arrears by defaulters
An NRI who is not repaying his loan regularly, may subsequently opt to clear his outstanding loan through direct remittances from abroad through normal banking channels, from the Non-Resident (External) account in India or through his Non-Resident (Ordinary)/ Non-Resident Special Rupee account /cash (withdrawn from his Non-Resident (Ordinary)/ Non-Resident Special Rupee account).
What is meant by "Own Contribution"? Is it necessary that the own contribution have to be paid through the NRE account?
Own Contribution is the cost of the dwelling unit financed less the loan amount. The own contribution should be met from direct remittances from abroad through normal banking channels or from the Non-Resident (External) Account/Non-Resident (Ordinary) or the Non-Resident Special Rupee account in India.
Can I repay my loan ahead of schedule? Do I have to pay any charges for the same?
Yes, you can repay your loan ahead of schedule, by remittances from abroad through normal banking channels, your Non-Resident (External) Account/Non-Resident (Ordinary) or the Non-Resident Special Rupee account in India. No early redemption charges are payable.
How will HDFC decide the loan amount I am eligible for?
Your repayment capacity as determined by HDFC will help decide your loan eligibility (this is subject to 85% of the cost of the property or Rs.50 lacs, whichever is lower). Repayment capacity takes into consideration factors such as income, age, qualifications, number of dependants, spouse's income, assets, liabilities, stability and continuity of occupation and savings history. And, of course, HDFC's main concern is to make sure you can comfortably repay the amount you borrow.
What are the documents to be submitted along with the application?
The following documents are to be submitted along with the application:
- Photocopy of the labour contract and English translation duly countersigned by your employer
- Latest salary certificate (in English) specifying the following:
Name (as it appears in the passport)
Date of joining
Passport Number
Designation
- Photocopy of labour card/identity card
- Photocopy of labour card/identity card
- Photocopy of valid resident visa stamped on the passport
- Photocopy of monthly statement of local bank account for the last 4 months
- Property related documents
What is annual rest?
Interest is calculated on annual rests. Annual rest means the principal repayments are credited at the end of HDFC's financial year. The effective rate of interest varies depending on the term of the loan.
Is the interest rate fixed for the duration of the loan?
HDFC offers the fixed rate as well as the adjustable rate (Variable) home loan to the NRI customers.
What is an EMI?
You repay the loan in Equated Monthly Instalments (EMIs) comprising principal and interest. Repayment by way of EMI commences from the month following the month in which you take full disbursement.
What is pre-EMI interest?
Pending final disbursement, you pay interest on the portion of the loan disbursed. This interest is called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement upto the date of commencement of EMI.
What is the size of the EMI?
The EMI is 1/12th the Equated Annual Instalment. The size of the monthly instalment comprising principal and interest depends on the quantum of the loan, the interest rate applicable and the term of the loan. Please refer to the EMI Calculator for further details.
What security will I have to provide?
Typically the security for the loan is first mortgage of the property to be financed, normally by way of deposit of title deeds and/or such other collateral security as may be necessary.
In addition interim security may be required, if the property is under construction. Collateral or interim security could be in the form of assignment of life insurance policies, the surrender value of which is at least equal to the loan amount, pledge of shares and such other investments that are acceptable to HDFC.
Please ensure that the title to the property is clear, marketable and free from encumbrance. To elaborate, there should not be any existing mortgage, loan or litigation which is likely to affect the title to the property adversely.
Do I have to register the sale agreement?
In many states in India, the Agreement for Sale between the builder and purchaser is required by law to be registered. You are advised, in your own interest to lodge the Agreement for registration within four months of the date of the Agreement at the office of the Sub-Registrar appointed by the State Government, under the Indian Registration Act, 1908.
Do I have to insure the property?
You will have to ensure that the property is duly and properly insured for fire and other relevant hazards, as required by HDFC, during the pendency of the loan and to produce evidence thereof to HDFC each year and/or whenever called upon to do so. HDFC should be the beneficiary of the insurance policy.
Will HDFC assist me in selecting accommodation of my choice?
HDFC will assist you in finding the property of your choice. For information on this service, do contact our Property Services.
How is my loan reassessed if there is a change in status from Non-Resident Indian to Resident Indian?
The repayment capacity of the applicant(s) based on Resident status is reassessed and a revised repayment schedule worked out. The new rate of interest will be as per the applicable rate on Resident Indian loans at the time of conversion (for that specific loan product). This revised rate of interest would be applicable on the outstanding balance being converted
Can I submit the loan application at your Dubai office and avail the loan in India?
Yes. You can submit the loan application at HDFC's Dubai office and the disbursement of the loan can be taken by you or your Power of Attorney holder in India.
Can I download the loan application and use it to make an application to HDFC?
Yes. You can either download (in a pdf format) the application form or get the application form by email or normal mail. Alternately, you can collect the application form from any of the HDFC Offices.
Can I make payment for the fee in foreign currency?
If you are based in Dubai, then you can pay the fee in UAE Dirhams (UAED). Please check with HDFC's Dubai office for the applicable Dirham-Rupee exchange rate for determining the fee payable in UAED.
Can I give a Power of Attorney in favour of a person of my choice in India to complete loan formalities on my behalf?
Yes. It would be desirable to appoint a Power of Attorney in India to represent you in dealings with HDFC. The Power of Attorney should be executed as per the draft provided by HDFC. This draft is also available at any HDFC office.The Power of Attorney can be given to any person of your choice in India.
Is the interest rate fixed for the duration of the loan?
HDFC has two schemes, (a) Fixed Rate Home Loans (b) Adjustable Rate Home Loans. Under the Fixed Rate Home Loans the rate applicable on the date of disbursement remains fixed during the entire duration of the loan. For terms and conditions of Adjustable Rate Home Loans
Does the Agreement for Sale have to be registered?
In many states in India, the Agreement for Sale between the builder and purchaser is required by law to be registered. You are advised, in your own interest to lodge the Agreement for registration within four months of the date of the Agreement at the office of the Sub-Registrar appointed by the State Government, under the Indian Registration Act, 1908.
Are there any restrictions on transfer of immovable properties?
In terms of Chapter XX C of the Income Tax Act, 1961, the Central Government has the first option to purchase certain immovable properties exceeding certain value and as such transactions covered by this Chapter can be proceeded with only after complying with the requirements prescribed therein.
Does the property have to be insured?
You will have to ensure that the property is duly and properly insured for fire and other appropriate hazards, as required by HDFC, during the pendency of the loan and to produce evidence thereof to HDFC each year and/or whenever called upon to do so. HDFC should be the beneficiary of the insurance policy.
How is my loan reassessed if there is a change in status from Non-Resident Indian to Resident Indian?
The repayment capacity of the applicant(s) based on Resident status is reassessed and a revised repayment schedule worked out. The new rate of interest will be as per the currently applicable rate of Resident Indian loans (for that specific loan product). This revised rate of interest would be applicable on the outstanding balance being converted. A letter is given to the customer confirming the change of status.