Finance plays a critical role in the purchase of your home. The important issues that are to be considered include modes of arranging finance and its implications on taxation.

Options

Interest paid on housing loan can be claimed as deduction under u/s.24 (b) to the maximum extent of Rs.1, 50,000 per year. Such limit is per person and not for one property. Hence, a loan can be taken in two joint names for one house to claim deduction of Rs.1.5lakhs each for both the persons repaying the loan.

Repayment of the principal amount of housing loan is also eligible for the rebate u/s.88 subject to a maximum sum of Rs.20, 000/- per year.

In taking a housing loan, the following issues need to be considered:

1. Bank or financial institution offering loan: It is generally safe to take a loan from one of the leading financial institutions.
   
   
2. Rate of interest: The rate of interest on housing loans is currently (2007-2008) between 9.5% to 11.5% depending on the tenure of the loan, fixed /floating rate, credit profile of the borrower etc.
   
   
3. Fixed/floating you can either opt for fixed or floating rate of interest. The fixed rate is generally 50-75 basis points higher than the floating rate. The floating rate is linked to the PLR (Prime Lending Rate) of the lending institution.
   
   
4. Tenure of the loan: The tenure of the loan should be decided by the buyer after taking into consideration various things like repayment capacity per month, earning potential over the next few years, other expected outflow on property maintenance should also be considered.
   
   Generally, housing loans are available ranging from 5 years to 25 years some banks also offer step-up housing loans which charge a lower EMI for the initial years which gets increased for the later period. Such loans are generally considered favorably by those house buyers who are in the early stage of their careers and who expect earnings to improve significantly over a period of time.
   
   
5. Processing fees: A Processing fee is charged by financial institutions for verifying the title report, financial performance, valuation of flat and so on. This fee can be up to 1% of the loan amount. During special periods like property exhibitions, banks and financial institutions offer special interest rates and waivers/concessions in processing fees, so buyers can benefits from such offers.

• Salary certificates and form No.16 for last three years
• TDS certificate for last 3 years
• Bank statements showing credit entries for salary/Professional fees received for past 12 months
• Professional qualification certificates etc.

• Promoters  will provide all the Necessary Documents

• Proof of age – copy of passport, driving license etc.
• Proof of residence-copy of ration card, passport, society letter etc.
• Photographs with signature.