To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A appears every other Monday.
I am a chartered accountant running my own business in Mumbai. I am planning to buy a five-year-old property in Andheri and want to take a home loan for this. However, I am finding it very difficult to get the loan amount I require as the lending institutions are valuing the property much below the price at which I plan to buy it, though most of them say I am eligible for a higher loan amount. Please advise.
Resale property transactions generally have an urgency factor associated with them wherein either the buyer or seller wants the deal to conclude at the earliest possible. Hence, not many lending institutions/banks may be comfortable in valuing a resale property as it involves special understanding, particularly with regard to documents and valuation. This, in addition to you being a self-employed professional, could make it more difficult.
At HDFC, we provide up to 80% of the value of the resale property and the valuation is undertaken with the help of in-house valuers.
We have special counsellors at our offices who look at resale properties as they understand the real estate market much better. We provide assistance on all legal and technical aspects of the resale property and also examination of critical documents such as title deed, agreement copies, share certificate, etc., associated with buying the property, thus providing almost free advice on whether the customer should go ahead and make the purchase.
The process is fundamental to HDFC’s systems and is a part of its well-oiled mechanism with trained personnel to guide the customers. This usually saves them a lot of time and hassle.
In your home loan cover, is the home insured as well or is it just the loan?
In a home loan cover, the life of the loan borrower is covered. And in the event of the policyholder’s death, the policy sum assured (which is the amount defined at the outset of the contract) gets paid through the policy. This amount would be sufficient to pay the outstanding loan as on the date of death provided the loan instalments are paid in time.
However, one can look at an insurance policy to cover the risk of damage to the home separately. Such covers are provided by general insurance companies for a nominal amount. For your information, HDFC ERGO (the general insurance arm of HDFC) also provides such covers.
Renu Sud Karnad is joint managing director, HDFC.
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