June 25, 2012 11:45 pm
I am planning to buy a property and would like to take a Home Loan towards it.
Which bank is recommended, trusted and safe for home loan?
Dear Ram, From your reply, I’m unable to understand this agreement value & registration value. Please provide an example for my own understanding.
Hi Ram, based on your query I understood the following – please correct if I am wrong
If the final cost agreed between builder and you is 20L. Then banks will be willing to give 85% of that amount(of course u might get extra amount also by increasing that amount to some 23-25L)
Now while registration, the quoted amount is way less than that 20L. You can also mention that the actual cost is 10-15L during registration. so you pay less registration charges.
So in your case , you mean to say that in the above two cases, for SBI , we have to quote only one rate.
Please correct if I am wrong.
Dear Mr. Ashal
In India, lot many people pay lesser registration charges to Govt by declaring the property cost at lower rates. For example, if the property is purchased at Rs 35 Lakhs, it will be declared by the buyer as only Rs. 20 Lakhs to Govt to enable him to pay lesser registration charges. This will result in savings of about Rs. 1.5 Lakhs in registration charges.
However, the bank housing loans will be taken by the buyer at 80% of 35 Lakhs only. Bank team will assess the property value based on their internal resources and sanctions loan to about 80% of 35 Lakhs.
By this process the buyer will be benefited to about Rs. 1.5 Lakhs in registration charges.
However, some Nationalised banks like SBI may not allow this practice. If the loan is sanctioned at base price of 35 Lakhs, the bank insist buyer to pay full registration charges to Govt based on 35 Lakhs only.
But, some Govt banks like IDBI allows variation in original purchase price and registration price. They allow buyer to register the property at 20 Lakhs only. Hence, there will be huge savings to buyer, even though the housing loan interest rate is about 0.5-1.0% higher than SBI.
Hence, in my opinion, the buyer has to check this before applying for loan to SBI or other similar banks.
Dear Ram, Thanks for providing the example with nos. So you mean to say the buyer in question is able to save 1.5L Rs. Really? Look closely. In future as & when the same house ‘ll be sold by this person, the cost of purchase ‘ll be 20L Rs. not 35L Rs. & now there ‘ll be huge capital gains tax liability on this person. Take your own pick.
I was not aware banks could do that (i.e. allow variation in original purchase price and registered cost). Thanks for informing. My only contact is with HDFC (because of very good service); it does not allow this. May be next time I will have to inquire at different banks.
Dear Ashal, you are right. There will be huge capital gains liability at the time of selling – if selling price and registered price are same. I was at the receiving end of this phenomenon. The owner of a shop I wanted to buy insisted on low registered price (60 % of the actual cost) to avoid capital gains tax (even though I was the one paying the registration charges)- because previously he had bought the shop with low registered price. The cycle is perpetuated. It is costly for the person who breaks this cycle.
So what Ram says will continue to happen.
SBI Loan may be the best one, but, they give loan on the basis of Registered Cost of the property, not on the Agreement amount with the Builder/seller.
Hence, in my view, it is too costly to take loan from SBI.
Banks like IDBI give loan on the basis of Agreement amount with the Builder/seller. They dont bother about the amount for which Registration is done. One can go for lesser registration amount (may be equal to Govt market value) and pay the Govt. lesser registration charges, there by avoiding lot of registration charges.
In my view, one has to think in this angle also while going for loans.
This is my personal view only and I am not insisting anybody to pay lesser registration charges to Govt.
Dear Ram, my take ‘ll be SBI with Max Gain home loan option.
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