To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A will appear every other Monday.
I have finalized on an under-construction property in Nashik. The project is 65% complete, and I am likely to get possession by May. My home loan has been sanctioned by the bank. The bank has said that it would disburse an amount as per the stage of construction. Will I have to pay my entire contribution upfront or can I also pay in the same proportion?
Once your loan is approved, you need to pay up the entire amount of your own contribution to the developer and submit the receipts of such payments to the lender. Your lender will then disburse the required amount to the developer as per the stage of construction.
One of my relatives has requested that I be a guarantor for his housing loan. He said that it is a mandatory requirement with most banks and is merely a formality. Is this true? Will I be held responsible for the payments in any way? Can I withdraw a few years down the line if I am not comfortable?
The requirement of a guarantor depends on the creditworthiness of an individual. However, in some cases the lender may not insist on a guarantor. But being a guarantor is not merely a formality. It is a position of responsibility where the person is directly accountable for the loan, especially in case of regular defaults by the borrower. The guarantor policy differs from company to company, and is subject to some conditions that need to be adhered to. It is, therefore, important that you read the documents carefully and understand their implications before signing. As for the withdrawal option, it will depend on the policy of the loan provider and the track record of the customer in servicing of his loan.
Renu Sud Karnad is joint managing director, HDFC. Readers may write in with their queries and comments to firstname.lastname@example.org