To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A will appear every other Monday.
I am working in Mumbai and intend to purchase a property in Chennai. During the loan process, an HDFC sales executive told me that I need to pay the Maharashtra Stamp Duty of 0.1% of the value of the property, over and above the processing fees. If I am buying a property in Tamil Nadu, why should I pay stamp duty in Maharashtra?
There are two kinds of stamp duty, one that is paid on the value of the property subject to government ready reckoner rates, and the other on the loan amount from your loan provider. In your case, while the stamp duty paid on the property agreement will have to be paid according to the Tamil Nadu state norms, since the property is located there, the stamp duty on the loan agreement will be as per the Maharashtra state regulations, since the loan agreement is being executed at our Mumbai office. In Maharashtra, the stamp duty on loan agreements is 0.1% of the total loan transaction.
My builder suggests I need to take a loan from the bank he has a tie-up with, although there is no special rate discount from them. I am a little sceptical about this and want to make sure there are no hidden motives behind these tie-ups. Since HDFC is also one of the banks this builder has recommended, I want to know what these tie-ups are all about and how this will benefit me. Also, must I take a loan from these institutions only?
When a financial institution approves housing loans, it does a proper due diligence by checking the developer’s track record and scrutinizing the required property documents so as to ensure the building is legal and all necessary clearances have been obtained. This is a time-consuming process. In several cases, institutions such as HDFC conduct these legal and technical appraisals in advance and pre-approve the property to save homebuyers time and avoid hassles so they can avail their loan quickly. Additionally, there are different promotional schemes the financial institutions announce from time to time, which are exclusive to that developer, such as unique repayment options or special discounts on fees, and so on. All these facilities put together, form a part of the tie-up. I would suggest you find out from the developer the exact details of the tie-up he is referring to and, if need be, visit the loan provider for guidance.
Finally, it is entirely your decision which institution you would like to take the loan from, provided the institution has approved that project.
Renu Sud Karnad is joint managing director, HDFC. Readers may write in with their queries and comments to askmint@livemint.