Points to remember before investing in a property in India

What specific financial information will the banks look at?Virtually all lenders consider a few things before approving a home loan:

- Credit Score- Income- Existing Loans- Down payment

Applying for a Home Loan?

Credit Score

How is your credit score calculated?

Your credit score is calculated by using a variety of metrics such as:• Payment history - Do you pay off your credit cards every month or carry a balance? Payment

history influences your credit score more than any other factor. A history of timely payments will help your score stay high.

• Credit utilization - This is the amount of credit you use versus the credit you have available• Length of credit history - The longer your history of paying balances and paying back loans, the

higher your score is likely to be.

Income

As far as banks are concerned, how much money you make isn’t nearly as important as your monthly income with respect to total monthly expenses you bear. You don’t necessarily need a high income to qualify for a home loan, but your income will influence the loan amount for which you’re approved.

Existing Loans

Do you have long-term, ongoing debts for things such as car payments and other loans? Lenders will look at whether such payments could affect your ability to pay back a home loan.

Having these loans isn’t necessarily a bad thing—especially if you demonstrate a history of timely payments; but banks do want to get an insight of the extent to which the ongoing expenses eat into your income.

Down Payment Percentage

• Homebuyers ready to put down 20% stand a better chance of receiving a loan. And if you can come up with more than that—even better!

• Gone are the days of easy, tiny down payments. Banks want you to have significant equity from the get-go, and 20% is generally the standard for proving that you’re a serious, capable buyer.

Getting the Approval

Approaching a bank for a home loan needs preparation. An attractive credit history, sufficient income to cover monthly payments, and a sizeable down payment will all count in your favor when it comes to getting an approval.

Major points to keep in mind before proceeding for the final payment

Ensure that your lawyer is present with you throughout the process.

Never make any payment in Cash. Always use a cheque or a method of payment that leaves behind a legal paper trail. Reason: If you have made your payment in cash, the seller might deny it any time and their is nothing you can do about it .

Never put your signature anywhere except on a notarized paper.

Land holding - BAYANA

If you shortlist a property to buy, you can lock it. In Hindi, we call this process as "zameen rokna". For this, a system of “bayana” is followed.

You pay the seller an agreed amount and decide on a mutual time frame ‘x’ (generally 3 months) to make theremaining payment for it. You sign an affidavit to this effect.

After this, the seller cannot sell the property to anybody before ‘x’ time period.

If he violates the bayana and decides to sell the property before ‘x’ time period expires, he must pay a penalty that is initially agreed upon and specified in the bayana affidavit.

Legal Procedures – After BAYANA period passes

Decide upon a date mutually to sign the agreement.

Involve the lawyers for a better understanding of the legal terms and to avoid future nuisances.Draw a set of agreement after both the parties are satisfied.

Final step is the most crucial one, involve your family members and lawyers before signing the paper and confirming the seal. Keep a copy of the final deal agreement, to use in case of any forgery.

Payments

You don’t have to make the entire payment on the day of signing the agreement. You can pay at a later date. The agreement would contain besides other things, the date on which the last installment will be paid.

* What is last installment?• If mode of payment is ‘payment in installments’, then last installment means the last one of all

the installments.• If the mode is ‘one-time payment’, then the entire payment (done in a single block), would be

considered as the last installment.

7 Most important documents to check before buying a property in India

Land titles/construction permits/approvals from authorities

Title clearance certificate

Society clearance and membership

Details of payment of property tax and other charges, bills,

etc.

Sale agreement,Stamp duty and

registration

Taking possession of the flat

At Biz2Credit, we offer a paperless, fast, transparent and easy loan application process. Loan seekers using our online platform get the privilege of a dedicated Case Manager to help them at every stage of the loan application process.

Visit www.biz2credit.in to get more details.

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