Lalji Biz

02/08/2021

Title deeds and NOC documentation issues

The title deeds and NOC documents have to be furnished in the bank's format for application. Borrowers who don't provide such documents in proper format, will ruin the entire exercise and won't get any home loan. To avoid falling into such uncomfortable situation, enquire about all the documents required by banks beforehand and take necessary steps to get them ready within the stipulated time frame.

01/08/2021

Downpayment for Home Loan

Banks require the borrower to fund at least 10 per cent to 20 per cent (varying from bank to bank) of the entire loan amount as the down payment for the . This amount has to be deposited before the disbursal of the home loan. In the absence of such down payment the bank will refuse home loan to the borrower. For a home loan of Rs 10 lakh this could mean anything between Rs 1 to 2 lakh. This amount must be readily available with the borrower.

In a scenario where the valuation of the property by bank is considerably lower than the market price of the property, the balance will also have to be paid by the borrower. This effectively increases the down payment. The obvious remedy to this tricky situation is to get the property valued beforehand and have the down payment ready.

Some banks also allow NSCs, provident funds, LIC policies etc for down payment. It is generally a good procedure to check the down payment requirement of various banks and choose the one which requires the lowest amount to be deposited initially or fits your budget well.

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31/07/2021

Property valuation by Banks

The bank has its own experts for legal, technical and financial appraisal of the property in question. It evaluates the property on its own established parameters and assigns a value to it. This value can be significantly lower than the price you quoted for the property. Thus the bank will only lend you up to the amount it valued. This can cause a significant gap between what you need and what the bank is willing to lend. To avoid this situation the borrower can get the property valued before applying for home loan from a bank approved valuator.

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30/07/2021

Home Loan interest rate dilemma

Whether to go for a fixed rate or floating rate interest for is a dilemma which almost every home loan borrower faces. Even after deciding on a particular loan regime, the home loan terms and condition fine prints can create havoc with your interest rates.

For example even if a borrower has opted for fixed rate home loan and the bank has promised him a rate which he feels is good, the catch is in the fine prints which authorises the bank to vary this fixed rate every two years, things can go worse for the fixed rate borrower.

Similarly if the bank doesn't pass you the benefit of lowered interest rates in floating interest rate regime, it will be of a little value. Avoiding such a situation essentially means that you study the terms and conditions of home loan carefully and clearly ask the bank about such things.

In case of floating interest rates the facts can be verified by checking how the interest rates on home loan dropped during low interest periods. Ask your bank for some historic floating rate changes.

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29/07/2021

Deadline is July 31st, 201 to submit Certificate of tax deducted at source to employees in respect of salary paid and tax deducted during Financial Year 2020-21, and also for the following:-

Statement to be furnished (in Form No. 64C) by Alternative Investment Fund (AIF) to units holders in respect of income distributed during the previous year 2020-21

Quarterly statement of TDS deposited for the quarter ending June 30, 2021

Return of income for the assessment year 2021-22 for all assessee other than (a) corporate-assessee or (b) non-corporate assessee (whose books of account are required to be audited) or (c) partner of a firm whose accounts are required to be audited or the spouse of such partner if the provisions of section 5A applies or (d) an assessee who is required to furnish a report

Quarterly return of non-deduction of tax at source by a banking company from interest on time deposit in respect of the quarter ending June 30, 2021.

Statement by scientific research association, university, college or other association or Indian scientific research company as required by rules 5D, 5E and 5F (if due date of submission of return of income is July 31, 2021)

Application in Form 9A for exercising the option available under Explanation to section 11(1) to apply income of previous year in the next year or in future (if the assessee is required to submit return of income on or before July 31, 2021)

Statement in Form no. 10 to be furnished to accumulate income for future application under section 10(21) or section 11(1) (if the assessee is required to submit return of income on or before July 31, 2021)

Due date for claiming foreign tax credit, upload statement of foreign income offered for tax for the previous year 2020-21 and of foreign tax deducted or paid on such income in Form no. 67. (If the assessee is required to submit return of income on or before July 31, 2021.)

Statement to be furnished (in Form No. 64C) by Alternative Investment Fund (AIF) to units holders in respect of income distributed during the previous year 2020-21

Furnishing of Equalisation Levy statement for the Financial Year 2020-21

Due date for e-filing of a statement (in Form No. 3CEK) by an eligible investment fund under section 9A in respect of its activities in financial year 2020-21

Quarterly statement in respect of foreign remittances (to be furnished by authorized dealers) in Form No. 15CC for quarter ending June, 2021under section 92E.

29/07/2021

Desired Home Loan amount not being sanctioned is another challenge

The amount sanctioned is based mostly on repayment capacity of the borrower. Many things come into picture, when the bank decides how much home loan a person can get. The monthly income, financial history, other unpaid loans with the borrower, past repayment record, credit card usage history if any, bounced checks, average balance with the banks, continuity in present employment, total years in employment, nature of employment etc.

These factors are all clubbed together to help the bank decide whether it will be able to recover its money satisfactorily or not. If you get rejected due to any such criteria, you can increase your eligibility by clubbing together your spouse's, father's, son's, relative's income and make them a co-borrower.

In addition to it, if you have sufficient funds in NSCs, provident funds, LIC policies etc. you can keep them as collateral and ask the bank to finance your home loan.

28/07/2021

Processing fee not being refunded is another risk with Home Loan applications.

With every application form for , banks require about 0.25 per cent to 1 per cent of the loan amount to be submitted as the processing fees. This processing fees is generally NOT REFUNDABLE.

In simple words this means that for whatever reasons, if the bank finds that you don't deserve the home loan, this fees won't be returned. This is the cost of applying for home loans. If in any case, the bank you have applied to states that it will refund the processing fees in case the bank doesn't sanction you the home loan, it is better to get any such declaration in writing and make sure that the clause is enforceable.

A verbal statement by bank authorities won't be of any use unless it is properly and legally documented. In all other cases there is little remedy for processing fees being not refunded.

27/07/2021

Due date of 30th July, 2021 for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA, 194-IB, 194M for the month of June, 2021

27/07/2021

Quarterly TCS certificate in respect of tax collected by any person for the quarter ending June 30, 2021, to be submitted by 30th July, 2021.

27/07/2021

The Income Tax Department has extended the deadline for filing ITR for the financial year 2020-21 till September 30, 2021.

In case of delay in paying the income tax or if there has been an outstanding, the taxpayer is required to pay interest on the outstanding tax, under three sections 234A, 234B and 234C of the Income Tax Act 1961.

In case you miss a deadline, the interest will be charged at the rate of 1% every month on the outstanding tax amount as per section 234A. Even if you miss a date by 5 or 6 days, you will be charged for the whole month because a delay of 6 days will be considered as a delay of one full month.

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27/07/2021

Home Loan Rejection at the first stage is normal

Strange but true, many of the applications do not pass even the first test. They are out rightly rejected due to incompatibility between the borrower's qualifications and lenders requirements. It could be the age criteria, income criteria, proper documents not being submitted, the bank not being able to verify your details properly, not passing the field investigations conducted by the bank and many more.

The best way to avoid being rejected in this way is to check the eligibility requirements of lending banks carefully and apply only to that bank which matches your profile.

Keeping proper documents ready and providing accurate, verifiable details to the banks will ensure that you sail through the preliminary verification process.