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Ask Mint | Home loans: don’t just go by rates

Ask Mint | Home loans: don’t just go by rates
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First Published: Mon, Apr 19 2010. 09 08 PM IST

Renu Sud Karnad  Managing Director, HDFC Ltd
Renu Sud Karnad Managing Director, HDFC Ltd
Updated: Mon, Apr 19 2010. 09 08 PM IST
I plan to book a flat in Dobmivali, Navi Mumbai. I was told that if I get the flat, which is under construction, registered now in my name and if I want to sell it after, say, five years, the new buyer will have to pay registration charges and stamp duty only on the incremental amount. So, if I get the registry done for a flat worth Rs50 lakh now and after five years I sell it for Rs60 lakh, then the new buyer will have to pay registration charges and stamp duty only on Rs10 lakh. But some others have told me that the registration amount and stamp duty is levied on the entire cost of the property. Please clarify what is the norm.
—Himanshu Jain
Renu Sud Karnad Managing Director, HDFC Ltd
Firstly, we would like to state that the suburb of Dombivali falls under Thane district and is not a part of Navi Mumbai. With regard to your question on stamp duty and registration charges, as per Article 5 (g-a) of Schedule I of The Bombay Stamp Act, 1958, if a flat/tenement is resold within a year from the date of agreement, then the new buyer gets a rebate on the stamp duty to be paid by him. He has to, however, mandatorily pay the registration fees of 1% of the new agreement value.
I was recently looking to buy a house. I found two houses at very affordable rates and want to buy both. Can I take a loan for both the houses at the same time from the same bank or should I apply with two different banks? Which one will work out cheaper for me?
—Ashwin Pratap
Housing loan eligibility is essentially based on the repaying capacity of the borrower. Hence, you can apply for loans for both the properties at any point in time as long as you have the capacity to service both the loans. Regarding the second part of your question, it is entirely up to the borrower to approach a single lender or more than one lender. Home purchase involves substantial financial considerations and housing loans are long-term commitments of 15-20 years. There will be some periods during the tenor of the loan when interest rates move up and some periods when they move down.
It is, therefore, important to choose a good housing finance company, which can handhold you right through the home buying process. Several factors, such as expertise, quality of service, in-depth domain knowledge and the company’s level of commitment and transparency, the company’s loan procedure, product range, fine print that goes along with the interest rate, documentation, quality of services offered, and safe retrieval of the title deed and other relevant documents of the property deposited as a security for the housing loan on closure of the loan, are critical. Our advice is that you don’t make a decision purely on the basis of interest rates.
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First Published: Mon, Apr 19 2010. 09 08 PM IST