•  Purchase of a plot of land for construction of House

• There is no upper limit for sanction of a Home / Housing loan.
• The eligible loan amount is determined by the income of the borrower and the cost of the housing project.
• Banks usually finance up to 40 to 60 times the net monthly income of the borrower or 75-85% of the cost of the housing project. whichever is lower.
• Some banks also include Stamp Duty for registration of the housing property, Purchase of Furnishings and Consumer Durables as a part of the project cost.

The interest rate applicable on Housing loans is linked to the Prime Lending Rate (PLR) /Advance Rate of the financing bank.

Banks offer the option of choosing fixed and floating rates of interest on housing loans. Under fixed rate option the interest rate remains same during currency of the loan and under floating rate option the interest rate will up or down with the financing bank's Prime Lending Rate (PLR) /Advance Rate. Banks also offer the option of combining fixed and floating rate options by allowing you to opt for fixed rate for a few years and floating rate thereafter.

Some banks charge interest on daily reducing balance basis and some banks charge interest on monthly reducing balance basis.

• Two Passport size photographs.
• Proof of identification (Not required in case of existing account holders) - Copy of Passport, Identity Card issued by the employer, Voter Id Card, PAN Card etc.,
• Proof of address - Copy of a utility bill (electricity, water, telephone, gas etc.) in borrower's name at the given address, Voter Id Card, letter from employer, Credit Card statement etc.
• Proof of income : Latest salary Slip showing all deductions and 
  
  Copy of Form 16 issued by the employer for past one/ two years or copies of income tax returns filed.
• Statement of Bank Account for last 12/24 months.
• Post dated cheques for the monthly instalments of the loan

A. Purchase of a ready built house or land for construction of a house

1. Copy of Sale letter/agreement
2. Copy of Approved Plan and Approval from the Local Authority.
3. Copy of Sale Deed/ Title Deed of the property
4. Non-encumbrance report from an advocate on the bank's panel.

1. Documents listed at 2 to 4 under 'A' above and
2. Estimate for construction/ addition/ alteration/ renovation from Architect.

1. Allotment letter of house /flat allotted to the borrower from the Development Authority.
2. Demand letter from the development Authority for making payment for the allotted house / flat.

1. Copy of Share Certificate issued by the Co-operative Housing Society.
2. Copy of the Sale Deed/Title Deed of the land allotted to or belonging to the Co-operative Housing Society/ Private Builder.
3. Non-encumbrance certificate for the land/property of the Co-operative Housing Society/ Private Builder from an Advocate on bank's panel.
4. Letter regarding estimated cost of the flat/house with schedule of demand for instalments from Co-operative Housing Society/ Private Builder.
5. Copy of approved plan/map of the flat/ house.
6. Certificate from the architect/Co-operative Housing Society/ Private Builder regarding current stage of construction.
7. No Objection Certificate from Co-operative Housing Society/ Private Builder for noting of the bank's lien on the flat/ house to be allotted.

• Only a few banks finance purchase of property on Power of Attorney basis as the title of property remain in the name of the seller.
• As the housing property cannot be mortgaged to the bank as security by the borrower, alternate security(ies) is/are required to be provided.
• Depending upon the type of property, documents from the above lists will be required.

• Equitable mortgage of the housing property to the Bank. Equitable mortgage attracts stamp duty in some States like Gujarat.
• If the housing property cannot be mortgaged as security, the borrower is required to provide alternate security(ies) like mortgage of other immovable property, Term Deposits, NSCs, Shares etc. good for the amount involved.
• Term Loan agreement on non-judicial stamp paper.
• Third Party Guarantee - Banks may ask for guarantee of a person whose networth is good for the amount involved.
• Insurance of the housing property with the Bank Clause.
• Copy of Insurance Policy with noting of the Bank's interest as financer in the insurance policy.

In case of construction of a house, the loan amount is released in suitable instalments at various stages of construction based on progress report from an architect and inspection by bank official(s).

In case of construction of house/ flat, the repayment starts from the month following the month of completion of construction or 18/24 months from the date of sanction of loan, whichever is earlier.

Banks also charge differing amount sof penalty on late payment of installments / other indiscipline in the loan account. The penalty clause should be looked into carefully to avoid any future problems.