Ask Mint | For a property sale, the chain of title should be established

Ask Mint | For a property sale, the chain of title should be established

To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A will appear every other Monday.

I purchased a DDA freehold built-up flat by availing of a housing loan from HDFC. I am the third party. One of the documents—the possession offer letter issued by DDA to the original allottee—was misplaced by the second party. HDFC asked for an indemnity bond (from me and the seller, i.e., the second party) for the loss of the possession letter. The seller and I furnished an indemnity bond to this effect, and HDFC sanctioned my loan based on these.

Could a problem arise in the future regarding the title of the property, consequent to the loss of the possession offer letter?

Resale transactions of properties have an inherent risk if the earlier chain of title is not established in favour of the seller, as it then becomes difficult to establish the true ownership.

Though the “offer-letter of possession" is an important link document, in your case, its loss would generally not pose a problem, with respect to the establishment of title. as the other major link documents such as allotment letter issued by DDA and conveyance deed executed by DDA in favour of the first or subsequent owner are available in the original. Since buying a home involves a large investment, it is advisable to be cautious.

I am working with an MNC in Mumbai and have a monthly income of Rs35,000, in addition to incentives. I am planning to repair and extend my house in my hometown, which is a “housing construction". Can I get a full loan of Rs3 lakh for this? What are the documents required?

I’m also looking to buy a new house for about Rs25 lakh in my hometown.

If I can avail 85% of the loan amount from HLCs, how can I bridge the remaining 15% amount.

What is the limit to which I am eligible for a loan? Right now, I can go for up to 50% of my salary as EMI. Lastly, can we switch from a floating rate to a fixed one?

Your question is in multiple parts and I shall attempt to answer them separately.

• You wanted to know if you could get 100% finance for home improvement.Usually, loan providers finance 85% of the cost of renovation.

However, if the property has already been financed, you may approach your existing provider for a 100% finance. This will depend on your repaying capacity and previous repayment track record.

• Usually, most loan providers finance 85% of the property, subject to an individual’s repayment capacity. The balance (minimum 15%) has to be your contribution.

• The loan amount a person is eligible for depends on his repayment capacity. Several factors are considered while assessing an individual’s repayment capacity, such as income, age, qualification, number of dependants, liability, stability of income and savings history.

• Yes, you can switch from a floating rate to a fixed rate and vice versa. However, there are costs for switching, which you must keep in mind.

Renu Sud Karnad is executive director with HDFC.

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