loan against registered value or more

[shivali]

Hi,

Till now, all the properties I have seen, all sellers want all cash & only guidance value as the registered value.
I have this basic question..
how do people take loan for more value than the registered value? Does any banks allow that?

Thanks,
Shivali

[shan2004]

AFAIK,There are some banks like ICICI and HDFC which provide higher loans based on market value. They also scam you with all kinds on un-necessary fees.

[agopal]

IDBI bank does this. They will provide loan based on sale agreement value ( and not the value for which you actually register the site ).

[shivali]

Is it ok to take this kind of loan? or can it result in any kind of problem later?

[agopal]

Its not ideal to do this, because :
1. By registering the property at a lower value, you are avoiding stamp duty and making a false statement to the government
2. In case there is any issue later, the seller is only bound to return the amount that you registered for ( which may be far less than the amount you actually paid )

Practically, however, I think most real estate transactions happen this way, because very few sellers will be ready to accept full cash deal.

[agopal]

Also, to add to previous list :

3. When you sell the property, you will have to pay income tax on the "black" portion of the transaction, since it will show up as a profit for you when you sell.

[vsathishmybda]

Hi,

According to my knowledge :

1. Most of the Banks(SBI, HDFC, Canara, SBM etc.) provide loan only on Registered Value
2. You cannot register a property for value less than the guidance value specified by the govt. for the are where property is held.
3. You can register a property equal to the market value (provided its equal or above guidance value).
99.9% of the Seller's will not want this as the implication is that, the entire market value amount registered will be a Capitals Gain for the Seller which has Income Tax Implications.
4. Most Seller's will demand the Purchaser's to register only for guidance value and the rest of the difference in amount they want in Black(not shown to Govt. in the form of addition to Taxable Income towards Income Tax Calculation) so as to avoid Capital Gains Tax Implications. The lesser the Capital Gains shown to Govt., the lesser the Capital Gains Tax.
5. Benefit of registering with full Sale value (market value) will come to rescue in case of any indemnity where the Seller need to pay the Purchaser.
6.Bank will provide loan amount ranging from 65% to 85%(max.) of registered amount subject to loan eligibility criteria of the loan borrower/s.
7. Some Banks provide Land Loan, Some provide composite loan(loan to purchase site + loan to construct on this site subject to commencement of construction within 1 or 2 years of purchase of site - come's under part of Home Loan)
8. Interest Rate for Land Loan is more than Home Loan Interest Rate.
9. Most banks expect Co-Borrowers of Loan to be of Blood relation(Father-Son) / Spouse(Husband-wife).
As far as i know they do not even give loans if Co-Borrowers are siblings.
10. Very very few banks provide Home Loans where Co-Borrowers are Non Blood relation (friends - Mostly banks try not to give). But the Co-Borrowers needs to be Co-Owners of the property.

Trust this information was correct and useful in some ways.

BR,
Sathish V

[msn1270]

Be aware.

In the recent days Income tax department is scrutinising all the real estate transaction of individuals of value 30 Lakhs & above thoroughly by getting the details from the Sub-registrar's office. If you are a income tax filer, promptly you will disclose your home loan amount and the EMI you are paying to get the tax rebate in FORM 16 and the SARAL Returns . Hence IT Department can easily co-relate your Loan amount v/s the registered value.

Central Government is taking measured to tap all the loop holes to mobilise their revenue. As per Income Tax rules, It is illegal to declare false claims which attracts penalty/fines. They may enquire this differences by showing your own disclosed documents as proof anytime by slapping notices. Even the seller comes under the investigation.

For salary class buyers, this may not affect much, as they've already paid their tax component for their earnings at the souce itself. But for others, it will definitely impact one fine day.