An Article about “REAL ESTATE LOANS”


Buying a property necessitates in depth knowledge of real estate and choosing the right kind of loans. Several banks are stepping up their exposure to real estate. These banks are entering into agreements with builders for real estate loans. The scheme mainly caters to builders / promoters developers of real estate. According to RBI figures loans to builders, along with retail credit (like home loans, credit cards and personal loans) constitute a big chunk of banks total loan portfolio.
Banks normally give real estate loans to builders / real estate developers of repute. Experience of3-4 years is a must to avail the loan. The quantum of loan is decided after scrutinising the financial statements and cash flow statement of the applicant. The maximum amount of loan varies from case to case and from bank to bank. Repayment is done in lump sum installment after the completion of project/selling of the flats. The number of installments is restricted to 3 to 4.
The interest rate is normally determined and charged according to the prime lending rate of the bank. Builders can either opt for a fixed or floating rate of interest.
Builders / real estate developers can fill up the loan application either in person or utilise online facilities and apply for loan. A nominal processing fee is charged by the banks.
1. Application form with photograph affixed thereto.
2. Copies of certificates Educational qualifications.
3. Residence proof
4. Proof for existence of business and business profile with last three years income tax return.
5. Last 3 years income and expenditure statement and balance sheet.
6. Last 3 months personal and business bank statements.
Terms and conditions of loan may vary from bank to bank.
Banks provide loans against mortgage of property. Businessmen, self employed professionals, salaried persons are all eligible to apply for the loan. It enables the borrower to apply for loan against a fixed asset.
The maximum amount of loan depends on a number of factors, like customer’s profile, his financial status and repaying capacity, tenure of the loan etc. The repayment tenure increase or decreases with the quantum of loan. Repayment of loan shall be made through Equated Monthly Installments or EML
Interest is charged at the predetermined rate as per the terms and conditions. Interest can be either on fixed or floating rate basis. Interest rate can be discounted for existing clients and in special cases according to the policies of the bank.
Customers can apply for mortgage loans by filling an online form. They can also visit the nearest branch of a particular bank. Normally, banks charge 1-2% of the actual loan amount as processing fee.
1. Proof of identity (passport copy voters ID card driving license)
2. Address proof (ration card Tel Elect. Bill, passport copy)
3. Bank statements (latest 6 months bank statement passbook)
4. Latest salary slip of current dated salary certificate with latest form 16 under Income tax Act, 1961.
5. Proof of ownership of fixed asset being mortgaged.
1. Address proof (ration card Tel Elect. Bill passport copy)
2. Bank statements (latest 6 months bank statement passbook)
3. Latest IT return along with computation of income, B/S & P & Lalc for the last 2 years duly certified by a chartered accountant.
4. Qualification proof of the highest professional degree.
5. Proof of continuation of business(Trade license establishment sales tax certificate)
6. Other mandatory documents (sole proprietorship. Declaration. Or certificate, copy of partnership deed, Cert. copy of MOA, AOA & Board resolution.)
7. Proof of ownership of fixed asset being mortgaged.
The word low cost housing seems to have lost its relevance in metro cities in the country. The population explosion and the resultant need for the housing is acutely felt for decades. In the earlier Five Year Plans, there was no separate mention of urban development and it was clubbed together with housing for the allocation of plans provision.
However, the planning documents expressed the need to take remedial measures for arresting the deterioration in housing conditions in the urban areas, and to address the problems of congestion and slums. One of the earliest efforts by the UnionGovernment was the introduction of social housing schemes for industriallabourers and economically weaker sections. It provided 50 percent loan and 50 percent subsidy to the State Governments for constructing rental tenements. This was in 1970-85 period.
While the demand for the housing units is skyrocketing, the national ‘Housing and Habitat’ policy does not say how to acquire land for the social housing. The housing boards created to provide housing for the poor, started building high priced flats, which were clearly out of the reach of the poor specifically in metro cities. Since most of the land in metros cities is in the hands of private builders demanding astronomical prices.
It remains out of the reach of the middle class people. Land values are the basic factor affecting the housing for the masses. Presently the slow down in the real estate sectors have seen a number of schemes for the affordable housing. But they are far away from the city centers and transportation to the work place takes 3 to 4 hours or more in most distressing conditions. Because of the out dated rent acts,rental housing is no more available. The Government should come out with rational rental housing laws to promote the houses on rent with the provision to purchase them on hire purchase basis. It should be remembered that not all the persons can purchase houses on ownership basis and hence the rented housing units comprising of around 300 sq. ft. area should be promoted. In fact if we have to house the millions, rental housing is the only solutions for the housing problem.

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