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Home loans to become paperless soon

Posted on by HomeCapital Team

Applying for a home loan involves a ton of paperwork and the traditional application process is quite inefficient. With fast-paced adoption of digitization, paperless home loans are the inevitable future, offering quicker turn around time and unparalleled convenience.

According to a recent notification by the Ministry of Electronics & Information Technology (MeitY), allowing home loans to be brought under the digital documentation category. While the in-depth aspects are still being ironed out, vendor and supplier agreements as well as contracts will be available in a demat format.

Many lenders have already digitized their end-to-end experience but official regulatory and systemic support enables end-to-end digital loan management and underwriting.

What is the significance of home loans becoming paperless?

Provided stamps and registration (of the state governments) laws are also amended, online property transactions are soon going to be possible. This will cut costs in real estate and land records offices. It will also help them modernize their operations.

E-execution of agreements will also facilitate presence-less registrations. Property owners and other concerned authorities can maintain digital title deeds and sales agreements as valid land records.

After online verifications, it will become easier and smoother for banks and other creditors to quickly disburse loans to the applicants’ accounts.

Not just loan dispersal, even in future if there are some disputes, electronic records will make it easier for both the creditors and the applicants to handle lawsuits since all the information is verified and remotely accessible. A digital journey can also leverage cutting-edge tech stacks built upon natural language processing capabilities and artificial intelligence.

At the same time, applicants will have access to more loan options from various lenders, while seamlessly getting access to multiple products, offering flexibility and more choice to choose from.

With home loans becoming paperless, the lending process will become instantaneous and will not require physical intervention unless absolutely necessary. Online services will be able to present home loan options from multiple banks and finance companies to present personalized solutions to the borrowers – they will be able to compare loans, terms and conditions, tenures and interest rates, and make spot decisions.

Why is it necessary to make home loans paperless?

It is a natural progression. Almost every aspect of urban life has been digitized, from payments to investments. While lending has seen a rapid uptake in personal or consumer loans, high-ticket products like home loans are yet to take advantage of the larger Digital India push.

Getting a home loan in India continues to be a time-consuming and paperwork-driven process. It is ridden with multiple layers of documentation and approvals from multiple authorities. From documentation to verification and attestation, everything is done manually.

There is also always scope for human error. Bureaucracy and red tape further exacerbate the situation. Even with small clarifications and oversights the process may get delayed because the bank may need to contact the applicant multiple times.

In the case of a home loan, the asset acts as collateral. The banks need to make sure that they are lending the money towards the property, which is a verifiable project. The property verification process itself is quite lengthy. The paperwork branches out based on whether the property is new or there is another owner from whom the property is being bought. The bank also needs to check whether all the permits pertaining to the property have been cleared, which translates into a slower processing time.

Homeville Group is changing the way home loans are done in the country. HomeNxt is the digital mortgages platform of Homeville Group, a technology company focused on building a housing credit enablement network through its technology platforms.

HomeNxt is a digital mortgage platform engineering the home loan process to make it fast, simple and transparent. We combine smart technology with industry partnerships to deliver lightning-fast home loans.

We are making the home ownership process simpler, faster and more accessible for billions of Indians. Our platform allows you to obtain home loans from the comfort of your home thanks to an API-driven distribution strategy on the demand side and open banking model on the capital side.

Conclusion

With the entire home loan process becoming paperless, there will soon be a time when applicants will be able to apply for home loans directly through their phones and the loan may be approved within a few days. Vital pieces of data such as credit scores and the borrower’s data are already available online.

Lenders are equally thrilled about digitisation’s scope since an efficient process offers fast turnaround, lower operating costs, and a superior customer service experience.

Everything you need to know about broken period interest

Posted on by HomeCapital Team

Broken period interest is also known as part period interest. It will be easier to understand what is broken period interest with the help of an example.

Just remember that if the loan disbursal date is more than 30 days before your first EMI, you need to pay the broken period interest for all the days exceeding 30 days. The example below will make it clear.

After your home loan application has been approved and the bank has decided to give you the loan, the date for your first EMI will be finalised. Banks and NBFC’s have a fixed date on which the EMI is debited for all customers. Suppose, your first EMI falls on the 5th of every month and your first EMI will be on June 5. But the bank disburses the loan amount to your bank account on April 25.

The bank doesn’t want to let go of even a single day of its money being with you. So, it will charge an interest for the extra 11 days the money is with you before your first EMI begins to get calculated from May 5 onward.

This additional interest for 11 days that the bank charges is called the “broken period interest”. It is not added to your overall payment to the bank. This is an additional money that you pay to your creditor.

Note: when calculating, every month is considered to have 30 days whether they have 31, 30, 29, or 28 days.

Is it legitimate to pay the broken period interest?

Many believe that the it is an additional amount of money that banks and creditors make off their customers. It depends on how you look at it. If the home loan amount comes to your bank account earlier, it means it is available to you earlier. It is not like the money comes to your account and it is not visible in your bank account statement. You can use the money the moment it comes to your account.

In terms of EMIs, you may wonder why you need to pay more than the number of EMIs you have agreed to pay in the form of broken period interest rate.

Ideally, the money should come to your bank account according to the number of EMIs and the date of the first EMI. But with most of the banks and creditors, once your home loan has been approved, the process of transferring the loan amount is initiated as early as possible, and after that, how many days it takes for the money to come to your account depends on many random events. It may come to your bank account just one day before your EMI begins, or, as is the case in the above example, 10-11 days, or even more. Therefore, how much broken interest rate you pay depends on when the money comes to your bank account before your first EMI begins.

Is broken period interest an additional charge on your home loan?

In terms of the number of EMIs you’re going to pay, broken period interest may definitely appear like an additional charge. Usually, how much money you’re going to pay back to the bank is gauged by the number of EMIs you’re going to pay. You don’t consider the broken interest rate when negotiating for a home loan but there is no escaping it if the loan comes to your bank account way before your first EMI begins. The bigger the gap is between the date of the money disbursed to your account and your first EMI, the more broken period interest you pay. Hence, it is in the interest of the bank or the creditor to transfer the money to your bank account as early as possible, and if you don’t have any use of the money before the date of your first EMI, then you are needlessly paying extra money to the bank in the form of broken period interest.

Is broken period interest a significant amount?

It depends on how much home loan you have taken and what your interest rate is.

For example, if you have taken a home loan of Rs. 20 lakhs with an interest of 8% p.a., you will be paying Rs. 1,60,000 every year, which means, Rs. 13,333 every month, approximately. You can divide this amount by 30 (days) to get an approximate amount of Rs. 444 per day. Hence, using the above example, for 11 days, you will be paying a broken period interest of Rs. 4,884 (all the calculations have been rounded off for clarity).

Conclusion

How do you pay your it? You can get the broken period interest deducted from the disbursed loan amount, or you can get it added to your first EMI.

Can you avoid paying broken period interest or at least minimize it? It depends. The bank would request you to sign a Disbursement Request Form (DRF) which would state the date on which you want the disbursement from the bank. You can talk to your bank or your creditor and request them to disburse the amount after a certain date. Using the above example, you can ask them to disburse the amount as near to May 5 as possible. The safest bet is having to pay a minimum amount for broken period interest.

Steps to verify the legality of a property

Posted on by HomeCapital Team

How do you verify that you are purchasing a legally verified property? Investing your hard-earned money in a property that may be involved in a legal dispute or litigation can be quite a harrowing experience. Let us find out if the property you are about to invest in is legally verified or not.

The real estate sector is growing rapidly, with new towns and cities being developed and satellite industrial and residential zones being built around major metropolitan areas. As people have greater purchasing power, many professionals are buying their first or even second homes. However, with the increasing number of real estate sales and purchases, there has also been a rise in disputes over land. When investing in property, it’s crucial to be vigilant and ensure that you are investing in a legally verified property.

There are many things that you can do to make sure that you are investing in a legally verified property but it is not feasible to verify every aspect. Nonetheless, there are lots of red flags you can detect by observing and asking for information that is available openly.

Ask for the bank approvals

You can only obtain a home loan for a legally verified property. When you apply for a home loan, the bank or housing finance company has its own process for verifying the legality of the property. In most cases, the property you purchase with a home loan serves as collateral. You will provide all relevant documents to the bank, as they are investing a significant amount of money in the form of the home loan. To protect their investment, the bank or finance company will conduct both legal and technical verifications of the property before granting the home loan. This is because until you have fully repaid the loan, the property remains the property of the lender and they want to ensure that there are no disputes associated with the property in case of a recovery.

Check the title papers

The title paper or deed establishes ownership over an immovable asset such as a real estate property. When a property changes hands, the title or deed is transferred to the new owner. For instance, if you purchase a legally verified apartment, your name will appear on the title paper or deed. The title papers provide information about the rightful owner of the property, their rights and privileges over the property, as well as the description and location of the property.

It is advisable to request and review the title papers before purchasing a property. Once you have the title papers, you can verify the documents at the sub-registrar’s office or through designated websites of individual states in India.

Crosscheck encumbrance certificate

The encumbrance certificate tells you that the property is legally free from any mortgage. There is no pending loan with the property. The certificate also carries the name of the previous owner, if applicable. For a legally verified property, the information in the encumbrance certificate must be in order.

Match the approved plan with the actual site

Make sure that the property is not built on an illegally encroached site. Even if the property is fully built, sooner or later, it will get into a legal dispute. In many instances, such properties are demolished by government authorities, with no compensation to the people who bought the it or constructed on a disputed site. A legally verified property should have been built on a site that is sanctioned for construction purposes.

Even if the property is built on a legally sanctioned site, make sure that the property is built based on an approved map. Ensure that the number of floors that the property has are within the range of legal permissions.

Ask if you can see the property tax slips

You can check property tax slips if you are considering purchasing a resale property. To pay property tax, the property must be legally registered and regularized. If property tax has been paid for several years, it is a good indication that there are no legal disputes regarding the property, no encroachments, and that it was built on the designated land.

For instance, in Uttarakhand, a colony is at risk of being demolished because the houses were built on railway land and many new owners who bought properties in the colony were unaware of this issue. The Supreme Court has so far protected the inhabitants from becoming homeless, but their situation remains uncertain.

Find out if the project has a registered society

It is a common practice that a housing society or an apartment building has a registered resident welfare association or welfare society. A society can only be registered legally if it represents a legally verified housing society.

Conclusion

To check if a property is legally verified is one of the most important steps you must take before deciding to invest in the property. The stakes are quite high. The redress can be quite convoluted once you get trapped. The time that you may save by not checking the legal verification is minuscule compared to the years that you may have to spend trying to recover your losses.

What is Annual percentage rate (APR) and how is it calculated?

Posted on by HomeCapital Team

Calculating the Annual Percentage Rate or APR helps you to know the actual cost of borrowing money to buy a home or any other piece of real estate. You will be surprised to know that the yearly cost of taking a loan may be completely different from the rate that is advertised by banks and other housing finance corporations.

The annual percentage rate is calculated by adding all the associated costs that you need to bear when taking a loan.  In addition to the interest rate that you pay, it further includes processing fees and other charges. By calculating the annual percentage rate, you get a clearer picture of the cost of availing a loan. Therefore, APR is also referred to as the total cost of borrowing money over a one-year period.

What is the difference between interest rate and annual percentage rate?

When taking out a loan, the amount you will pay back is less dependent on the interest rate and more on the annual percentage rate (APR). This means that even if different banks offer the same interest rate for a home loan, they may have different ways of calculating processing fees, loan insurance, closing costs, and other expenses.

As a result, your loan expenses will be higher if the APR is higher, even if the interest rate is the same across different banks and housing finance corporations. To negotiate a better loan offer, it is important to understand the difference between interest rate and APR. The interest rate is the amount of money you will pay back in one year based on your loan terms, while the APR is the total amount you will pay back over the course of the loan (e.g., 30 years) based on your loan terms.

Points to remember:

  • Gives you a complete measure of how much you will pay in total over your entire tenure.
  • Includes the cost of borrowing the principal amount as well as other fees and charges taken by the bank or the housing finance company giving you the loan.
  • Influenced by the fees and charges levied by individual agencies.
  • It is higher than the interest rate.

How is Annual Percentage Rate calculated?

To calculate the annual percentage rate (APR), it’s important to understand how the interest rate is calculated on the principal amount.

For example, if you take out a loan of ₹50,00,000 for a tenure of 20 years at an interest rate of 8%, the annual interest you will pay will be ₹4,00,000. Over the 20-year tenure, you will pay an interest of ₹80,00,000, based on the 8% fixed annual interest rate.

To represent the principal amount of ₹50,00,000, we can use the variable P. To represent the total amount of interest that will be paid in 20 years, we can use the variable I (₹80,00,000).

The number of days in the tenure is used to calculate the APR. In this case, 20 years is equal to 7300 days (365×20). We can call this number N.

Since the annual percentage rate (APR) is calculated by adding all costs together, let us say that the additional costs in this scenario are as follows:

  • Processing fee: 1.5% of the principal amount, or ₹75,000
  • Insurance fee: ₹11,000
  • Miscellaneous charges: ₹8,000

The total additional cost is ₹94,000. Let us call this variable A.

To calculate the APR, we can use the following formula, using the variables defined above:

APR = [{(A+I)/P}/N]x365x100

Where:

  • P = ₹50,00,000
  • I = ₹80,00,000
  • N = 7300
  • A = ₹94,000

Therefore, for a principal amount of ₹50,00,000 with an annual interest rate of 8%, a tenure of 20 years, and additional costs of ₹94,000:

APR = [{(94,000+80,00,000)/50,00,000}/7300] x 365 x 100 = 8.094%

As you can see, the actual interest rate that you will be paying over your entire tenure may be slightly more than 8%, which, over 20 years, can make a big difference. How? With an annual percentage rate of 8.094%, the amount of interest you will be paying comes out to be ₹80,94,000.

Why is it important to know how APR works?

It is important to know how APR works because it provides a more accurate representation of the true cost of a loan. The interest rate is a significant factor in determining the cost of a loan, but it is not the only factor. APR considers other costs associated with the loan, such as processing fees, closing costs, and insurance, and expresses them as a yearly rate. This provides a more comprehensive understanding of the total cost of the loan, which can help borrowers make more informed decisions when comparing loan offers. Additionally, APR can help borrowers understand the long-term cost of a loan and make more informed decisions about how much they can afford to borrow and how long they should take to repay the loan.

The pros and cons of buying property in urban cities

Posted on by HomeCapital Team

Urban cities have long been a popular choice for those looking to purchase property. With their convenient locations, diverse housing options, and strong investment potential, urban cities have much to offer. However, as with any investment, it’s important to consider the pros and cons before making a decision.

In this blog post, we will explore the factors to consider when buying property in urban cities and the pros and cons of doing so.

What are urban cities?

Urban cities are densely populated areas with a high concentration of buildings, businesses, and people. They are the economic, political, and cultural centres, with diverse populations, advanced infrastructure and a wide range of amenities and services.

They are characterised by high population density, expensive land, high rents, and substantially higher cost of living. They also have a significant impact on regional, national and global economies, acting as engines of economic growth.

Factors to consider when buying property in urban cities

When buying property in an urban city, it is important to consider a variety of factors that can impact the value and suitability of the property. These factors include:

1.    Location

The location of the property is one of the most important considerations, as it affects accessibility to amenities, transportation, and the general livability of the area. Factors to consider include proximity to essential services such as supermarkets and hospitals, access to public transport, and the general safety and security of the area.

2.    Property type

Consider the type of property that you want to purchase, whether it’s a single-family home, a duplex, or a bungalow. Each type of property has its own unique set of advantages and disadvantages, and you’ll want to choose one that best meets your needs.

3.    Budget

Realistically assess your budget, both for the purchase price and for ongoing expenses such as maintenance, property taxes, and utilities. It is important to have a clear understanding of the financial requirements of owning property in an urban city.

4.    Lifestyle considerations

Consider your lifestyle and how the location, property type, and surrounding amenities fit with it. Urban cities offer a wealth of cultural and entertainment opportunities. On the other hand, it can be harder to find parks and outdoor spaces in urban regions, so it is important to consider how important this is to you before making a purchase.

5.    Future prospects

Factors such as population growth, infrastructure development, and economic prospects of the area play a crucial role in determining the future prospects of the property you intend to buy. Analyse the future prospects of the area, especially if you are buying property for long-term investment.

Pros of buying property in urban cities

When considering purchasing property in an urban city, it is important to weigh the pros before making a decision. Some of the key advantages of buying property in urban cities include:

●      Convenience and accessibility

One of the main advantages of buying property in an urban city is the convenience and accessibility to amenities. Urban cities offer easy access to essential services such as supermarkets, hospitals, and educational institutions.

Additionally, public transportation is typically well-developed in urban cities, making it easy to get around and reach your destination quickly.

●      Investment potential

Another advantage of buying property in an urban city is the potential for investment returns. Properties in urban cities tend to appreciate in value over time, which can lead to a significant return on investment.

Additionally, rental demand is typically strong in urban cities, providing investors with passive income.

●      Appreciation in property value

Urban areas experience a high level of development, leading to a constant increase in property value. This is a sign of the area’s growth, and the value of the property increases with it.

The property market in urban cities is usually dynamic, and with increased population, job opportunities and growth in infrastructure, the property demand increases.

●      Development

Urban areas are typically well-equipped with modern infrastructure and public facilities, such as parks, libraries, community centres, and transportation systems. This can lead to a higher quality of life for residents, as they have easy access to a variety of services and amenities.

Additionally, urban cities often have more developed and better-maintained infrastructure than their suburban or rural counterparts.

Cons of buying property in urban cities

Before making a choice, it is essential to give due consideration to the disadvantages associated with purchasing a property in an urban setting. The following are some of the primary drawbacks associated with investing in real estate in urban cities:

●      High cost of living

Urban cities often have a higher cost of living, including higher prices for housing, food, utilities, and other essentials. This can make it more difficult to afford basic necessities and may also make it harder to save money.

●      Limited space

Urban cities often have limited space, and properties can be smaller and cramped compared to suburban or rural counterparts. This can be especially challenging for those with children, pets, or for those who simply want more space.

●      Noise and pollution

Urban cities can be noisy and polluted due to the higher level of traffic and industrial activity. Noise pollution can affect sleep and mental health, and air pollution can be harmful to one’s physical health.

●      Crowded

Urban areas can be crowded, which can make it more challenging to find privacy and solitude. Urban areas are known for their hustle and bustle, which can make it more challenging to relax and unwind.

●      Limited green spaces

Urban cities often have limited green spaces, such as parks and gardens, which can make it more challenging to find natural environments and opportunities for outdoor recreation.

Conclusion

In conclusion, purchasing property in an urban city can offer many advantages, such as convenience, accessibility, and strong investment potential, as well as a diverse range of cultural and lifestyle opportunities.

However, it also comes with its own set of challenges, such as high costs of living, limited space, noise and pollution. When making the decision to purchase property in an urban city, it is important to carefully consider your priorities and lifestyle to ensure that it aligns with your needs and expectations.

If you are ready to make your dream of owning a property in an urban city a reality, HomeCapital offers an amazing opportunity to make it happen with its down payment assistance program. This program is specifically designed to help first-time home buyers with an interest-free, seamless application process. With HomeCapital, you can now own your dream home in an urban city with ease.

What is cash-out refinancing on a home loan?

Posted on by HomeCapital Team

In cash-out refinancing on home loans, you replace your existing loan with a new one, preferably with a higher amount than the existing one.

Let us break this down with an example,

Currently, you owe a ₹30 lakhs home loan to Bank A. But you need an additional ₹5 lakhs to remodel your home. Taking a personal loan or using a credit card for the new requirement turns out to be more expensive. Instead, getting a home loan incurs you less interest compared to other forms of credit.

You approach Bank B for cash-out refinancing. If your repayment history is strong, along with a healthy credit score, Bank B can consider loaning you more money and thus offer a ₹35 lakh home loan.

Hence, Bank B transfers ₹30 lakhs to Bank A, while disbursing ₹5 lakhs to you directly for remodelling. In the end, you pay EMIs to Bank B for a total principal of ₹35 lakhs. This is how cash-out refinancing on home loans works.

What is no cash-out refinance?

This form of home loan readjustment is also called “rate-and-term” refinance. It involves securing a lower interest rate and getting more favourable terms on the home loan. Here, you are not shifting your loan to another creditor.

People opt for no cash-out refinance to negotiate better payment terms. Maybe the interest rates have decreased over the years and now you would like your bank to reconsider the interest component. You can lower your EMIs after negotiating, while the principal balance remains unaltered. Unlike cash-out refinance, you do not get spare cash. But due to the new interest rate, there can be a direct impact on the monthly EMI as well as your tenure.

When is it a good idea to go for cash-out refinancing?

You can opt for cash-out refinancing on your home loan for multiple reasons:

  • Another bank is offering a lower interest rate.
  • You need to raise some funds for home renovation or meet other expenses.
  • Another bank is offering better terms and conditions that make it easier for you to pay the EMI due to a change in tenure as per your convenience.
  • You are dissatisfied with the way the current bank provides its service to you.

Is it a good idea to get cash-out refinancing to meet your credit requirements for home upgrades?

It can be a strategic move to increase the market value of your home. This in turn gives you more negotiating powers.

You can also go for cash-out refinancing on your home loan to change the way you pay interest on the home loan that you have availed. You can switch between fixed interest rates or floating interest rates, or vice-versa.

Is there a restriction on how you can use the extra money from cash-out refinancing?

Although in the beginning, we have used the example of home renovation to go for cash-out refinancing on a home loan, you can use the extra credit for any purpose. It can be used for child’s education needs, urgent medical expenses, or even business requirements.

Some people use cash-out refinancing on home loan for debt consolidation. Compared to other debts, interest on your home loan is lower than a personal loan or a credit card. You raise additional funds through cash-out refinancing and pay your existing debt to avoid paying more interest. You can pay back multiple loans and close them so that in the end, you are liable to pay only one lender. This is also called debt consolidation.

Advantages and disadvantages of cash-out refinancing on home loan

With cash-out refinancing, you can raise funds for other needs while enjoying a low-interest rate. Compared to other unsecured loans, cash-out refinancing on home loan helps you borrow at a lower interest rate.

When you use the funds that you raise out of cash-out refinancing to renovate your home – adding another room or changing the woodwork or extending the boundary wall – the value of your property increases, and this further builds your equity.

You can reduce your monthly EMI by either paying a lower interest rate or by extending your tenure with the new creditor. This takes off the financial burden of each EMI repayment.

By transferring all your debts to a single creditor, you not only reduce your interest rate, but it also makes it easier for you to track and make the payments.

Conclusion

Just make sure you have a valid reason for cash-out refinancing. For example, paying your credit card debt by raising money from cash-out refinancing may seem alluring as an idea, but if your debt problem originates from your habit of overspending or not managing your finances well, you may find yourself in a debt spiral.

There are also closing costs to consider when opting for this type of refinancing. Just as you need to incur costs when availing your original home loan, you may have to go through certain processes and charges again.

How to safeguard yourself from land encroachment?

Posted on by HomeCapital Team

Owning or buying a property is a major milestone for many individuals, whether for personal or investment purposes. However, if your land is left unattended or vacant, it may be vulnerable to land encroachment.

Land encroachment is a pervasive problem in India, with a significant number of cases pending in court. It is crucial to be aware of your property rights and know how to handle its issues legally.

In this article, we will delve into the meaning of land encroachment, the provisions of the Land Encroachment Act in India, and effective strategies for dealing with land encroachment.

What is land encroachment?

It is the unauthorised use or occupation of someone else’s property. This can occur on abandoned or unused spaces if the legal owner is not actively involved in its upkeep. It is important for property owners to be aware of the legal steps to take and their rights in such cases.

Land Encroachment Act and punishment

Land encroachment, as defined by Section 441 of the Indian Penal Code (IPC), 1860, is the act of unlawfully entering someone else’s property without permission to commit an offence, threaten possession of the property, or stay on the land uninvited. Those found guilty of land encroachment may be punished with a fine of ₹550 and imprisonment for up to three months, as outlined in Section 447 of the IPC.

In addition to the penalties outlined in the IPC, the judiciary may also take action to stop or restrain the encroachment and may award compensation for damages incurred because of the encroachment, as outlined in the Land Encroachment Act. Property owners who wish to seek damages for land encroachment may file a claim in court according to Order 39 (rules 1, 2 and 3).

Mutually addressing land encroachment

There are a few different ways to resolve land encroachment issues. One way is to follow the steps outlined in the Land Encroachment Act. Another way is to try to come to a mutual agreement with the encroacher. Some options for resolving the issue through mutual means include:

● Mediation
Mediation is a process in which a neutral third party helps facilitate communication and negotiation between the disputing parties. This can be an effective way of resolving conflict without going through the legal process. Mediation can save time and money and can be a less confrontational method.

● Selling the property to the encroacher
The property owner may choose to sell the property to the encroacher, providing them with legal ownership. This can be a way to resolve the issue if the encroacher is interested in owning the property.

● Renting the property to the encroacher
If the encroacher is interested in using the property for a specific period but does not want legal ownership, the property owner may choose to give the property to them on pre-decided and mutually agreeable rent. This can be a way to resolve the issue until legal formalities can be completed

Legally handling land encroachment

In India, the Land Encroachment Act allows property owners to defend their property against encroachers and provides several legal options for resolving the issue. Here are the options to consider:

  1. Injunctions
    An injunction is a court order that requires the encroacher to either take a specific action or refrain from acting. Permanent and temporary are two types of injunctions. A permanent injunction is a long-term order forbidding the use of the property, while a temporary injunction is a short-term order prohibiting the use of the property for a specific period. To seek an injunction, you can file a case against the encroacher according to Order 39, Rules 1 and 2 of the Act. The court will examine the application and may require the encroacher to file a response. Based on the response, the court will decide whether to accept or reject the request for an injunction.
  2. Ex-parte injunctions
    In some cases, the court may issue an ex-parte injunction, which is a decision made without waiting for the response of the other party. This may occur if the defendant refuses to respond to the application or if the potential response would result in significant loss for the applicant.
  3. Claiming damages
    If you are a property owner who has suffered losses due to land grabbing or encroachment, you may be able to claim damages or compensation from the encroacher. This can include compensation for physical damage to the property or injuries to the owner, as well as mental losses suffered.

Documents Required

If you decide to pursue a legal solution for your issue, you will have to provide documentation to support your case. These may include the title deed, which is a legal document that shows ownership of the property; the purchase agreement, which is the document that outlines the terms of the sale; the mutation certificate, which is a document that records changes in ownership of the property; and utility bills, which can serve as evidence of your ownership of the property.

It is important to gather and organise these documents before beginning the legal process, as they will be essential in supporting the case.

Conclusion

In conclusion, land encroachment is a common issue faced by property owners in India. It is important to be aware of your property rights and the provisions of the Land Encroachment Act in India to safeguard yourself from potential land encroachment. Regularly checking on your property, securing it with fences or gates, and obtaining the necessary documentation can all help to prevent land encroachment.

If you’re in the process of buying a property, HomeCapital can help make the process smoother and less stressful with our interest-free assistance for payments such as the down payment, payments on possession, stamp duty payments, and other property payments to developers.

All you need to know about the property rights of women in India

Posted on by HomeCapital Team

In India, the issue of property rights for women has been a long-standing discussion rooted in deep-seated cultural and societal prejudices. Despite laws and policies in place to protect and uphold the rights of women to own, inherit and control property, women have traditionally faced significant obstacles in asserting these rights.

This article will delve into the current laws and regulations surrounding women’s property rights in India.

Women’s property rights under Indian Law

In India, the law surrounding inheritance and sharing of property differs for individuals from different faiths. It means each community has varying personal laws. Three of the most important laws about property sharing in India are the Hindu Succession Act of 2005, the Indian Succession Act of 1925, and the Muslim Personal Law Application Act of 1937.

The Hindu Succession Act of 2005 applies to Hindus, Jains, Sikhs, and Buddhists, and governs the inheritance and sharing of property among members of these communities. The Indian Succession Act of 1925 applies to Christians, Jews, and Parsis, governing the inheritance and sharing of property among members of these communities.

The Muslim Personal Law Application Act of 1937 applies to Muslims. As a result, these laws may have different provisions and rules regarding the rights and sharing of property for men and women.

5 Property rights every Indian woman must know

The following is a rundown of several of the most significant property rights that any Indian woman needs to be familiar with.

1.     A woman’s purchased property is her sole property

It’s essential to remember that a woman’s legal ownership of property she acquired before marriage does not change after marriage It indicates that the woman’s marital status has no bearing on the property’s ownership.

In India, this is a crucial aspect of protecting women’s property rights since it ensures that a woman’s economic independence and autonomy aren’t affected by her marital status.

Property bought by a husband in his wife’s name after their marriage becomes her exclusively and cannot be disputed under Section 14 of the Hindu Succession Act.

The objective of this measure is to provide married women with the same legal rights and protections as their male counterparts when it comes to property ownership. The woman has complete autonomy to dispose of the property as she sees fit, including selling, renting, or mortgaging it.

2.     Right To Residence

According to the Protection of Women from Domestic Violence Act 2005 (PWDVA) in India, a woman has the right to reside in a shared household, which includes the right to reside in any part of the house, whether it is owned by her or her husband.

This law applies to all married women, regardless of their religion. However, it is important to note that the right to a permanent place to live is not specifically provided as a legal protection against discrimination in India. PWDVA’s goal is to protect women from domestic violence and abuse, and the right to reside in the shared household is one of the reliefs provided under the act.

3.     Inheriting spouse’s property

Married women in India have equal rights to their husband’s property after his death, whether it is tangible or intangible property, along with the other heirs. This protection is provided under various laws, depending on the religion.

However, it is important to note that the exact rights and procedures for inheritance may vary based on the specific law and the circumstances of the case.

4.     Women are not liable for their spouse’s debts

The Married Women’s Property (MWP) Act states that any property possessed by the wife is protected from the debts of the husband. This includes both tangible and intangible property.

This implies that a woman’s property cannot be utilised as a settlement for the obligations owed by the husband, even if the debts were incurred during their marriage. This provision is in place to protect women’s property rights and ensure that they are not held liable for debts incurred by their husbands.

5.     Ancestral property

Whether their parents are still living or not, and regardless of whether they are married or not, women have an inherent right to their portion of the family’s inheritance.

The Hindu Succession Act of 2005 states that a woman has the same prospect as a male who has to inherit the family’s wealth. This applies to all Hindus, Jains, Sikhs, and Buddhists. This right is also provided to daughters of other religions under their respective personal laws. This provision ensures that women have a right to their ancestral property, which they can inherit and pass on to their children.

Conclusion

In conclusion, India’s legal system provides certain property rights to women, although these rights may vary depending on the religion of the woman and her husband. While laws and policies exist to protect and uphold the rights of women to own, inherit, and control property, societal and cultural biases still make it difficult for women to assert them. It’s important for women to be informed of their rights and to understand the laws and regulations surrounding women’s property rights in India.

Benefits of applying for a home loan online

Posted on by HomeCapital Team

Purchasing a home is a significant milestone and a financial decision that requires careful planning and deliberation. Most do not have the full amount needed to make this purchase outright, making home loan a requisite proposition. In the past, the process of applying for a home loan involved visiting bank branches and navigating a lengthy and tedious process. However, with the advancement in technology and versatile digitisation of financial services, it is now possible to apply for a home loan online, streamlining the process and making it convenient and efficient. In this article, we will discuss the numerous benefits of applying for an online home loan and how it can help you achieve your goal of homeownership.

Online home loan benefits:

The following is a list of the most significant benefits that potential borrowers of online home loans can enjoy:

1. Comparing the alternatives:

Online research is extremely essential and online home loans offer full transparency. With the ability to easily compare the options offered by various lenders from the comfort of one’s home, it is much more lucrative than physically visiting each bank and reviewing their criteria.

While researching online lenders, one can review their websites to get a better understanding of the different types of home loans on offer such as floating-rate or fixed-rate loan, balance transfer, and top-up.

You can also access fact sheets, detailed brochures, and the FAQ sections to understand more about the fees, annual percentage rates, and additional charges levied by various lenders. This homework can help you make an informed decision and potentially save a significant amount of money.

2. Hassle-free processing:

Applying for an online home loan is a favourable and straightforward process. There is no need to visit a lender in person or wait for an appointment with a branch manager. Instead, applicants can easily complete the loan application from the comfort of their home in just a few minutes. This simplifies the process of purchasing a new home and eliminates any external dependencies or delays.

Online home loan forms are intuitive and allow applicants to easily provide the necessary information. In some cases, financial information, such as a credit score, can be automatically obtained with the applicant’s consent using just their PAN card information. Online calculating tools are also available for applicants considering a balance transfer or foreclosure, helping them save a lot of money in the long term.

3. Unparalleled flexibility:

One of the standout features of online home loans is the flexibility they offer. Applicants have the freedom to adjust their home loan requirements to suit their needs without any limitations. This allows them to tailor their home loan to fit their specific financial situation.

Many lenders provide online calculators, such as an interest and EMI calculator, that allow applicants to explore different financial scenarios and simulate a personal track for repayments based on the interest rate, tenure, and other charges. These tools are easy to use and only require the applicant to input basic details about the potential loan. Furthermore, these tools also help generate an amortisation schedule for a clear repayment path.

Based on these variables, the calculator tool will estimate the applicant’s tentative EMIs, providing a brief idea of how well the home loan plan may fit their financial budget and planning. This information can be used to tailor the home loan application, ensuring a higher rate of approval.

4. Seamless journey:

The online home loan process is seamless largely paper-free, including document submission and verification. Most of the personal information entered by the user can be verified digitally thanks to India’s robust public technology stack. While property and project details are verified by authorised third parties, ensuring the applicant doesn’t have to commute and manage the burden of paperwork.

It is important for applicants to have all necessary documents ready to ensure a smooth and efficient process. By having all the necessary documents in-hand, the verification steps can be completed quickly, indirectly speeding up the turnaround time for the home loan sanction.

Conclusion:

In conclusion, applying for an online home loan offers numerous benefits that make the process of purchasing a home rather stress-free. One can research remotely about the interest rate, available tenures, documents required, and more from their comfort zone. In turn, eliminating the need to step-out and visit a branch or fix an appointment.

If you’re worried about coming up with the down payment for your home, do checkout HomeCapital’s down payment assistance program. You can avail interest-free assistance that covers the down payment, stamp duty & registration, and other intermediary charges. Flexible tenures are also available and the entire process is fully digital. 

At Homeville Group, we are building a digital credit enablement platform to accelerate housing.

Our platform HomeCapital enables home buyers to get up to 50% of the home down payment amount as interest-free credit, helping accelerate the home-buying journey. On the other hand, HomeNxt is a digital mortgage platform engineering the home loan process to make it fast, simple and transparent.

Understanding Technical and Legal Verification in Housing Loan

Posted on by HomeCapital Team

The majority of financial institutions make use of a wide variety of risk assessment methods to determine whether or not a borrower is creditworthy. These kinds of instruments are necessary for both the application and the authorisation of housing loans. Despite this, there are circumstances in which loan applications are denied owing to various legal and technical reasons. To ensure that you are adequately prepared to verify your application for a housing loan, we have compiled all of the information on your property’s technical and legal verification.

What is the legal verification of a property?

There are two phases involved in the process of legally verifying the property in preparation for the home loan. In the first step, the search that is associated with the property, as well as the validation of the papers that are associated with the property, are examined. The title summary is then prepared in the subsequent step of the process. In this report, each and every legal verification and property check is discussed in detail.

Legal verification impact on housing loan application

A property embroiled in a court fight or requiring a complicated financing structure will never get funding from a bank or other financial institution. If the lender receives an unfavourable Legal Verification report from the team of legal experts, your whole home loan application will be denied.

Important documents for legal verification of property

The following is a list of the essential documentation required for the legal verification of the property.

1.    Sales agreement

The terms and circumstances agreed upon by the property buyer and developer are investigated. In addition, the agreement’s total sum is evaluated, and this evaluation serves as the foundation for determining the loan amount that will be disbursed.

2.    Non-agricultural order

This is the statement that outlines that authorisation has been granted for the land that was previously used for agricultural purposes to be used for purposes other than agriculture.

3.    Copy of the 7/12 extraction

The particulars of the property, including its size, location, and ownership, are investigated in great depth and thoroughly checked out.

4.    Occupancy certificate

The fact that the relevant authorities have issued an occupancy certificate to a building or project implies that it is fit for human habitation.

5.    Commencement certificate

The approval to begin building is shown on the legal document known as a commencement certificate, which the local government agency grants with jurisdiction over the area.

6.    RERA Registration

The authorised RERA certification of the builder and each residential project under consideration is investigated.

7.    Plan approval copies

Verification is performed on the copy of the building plans that the local government has approved.

What is technical verification of a property?

Checking the property’s physical particulars is an integral part of the technical verification process for the property. Determining the property’s true worth on the market should be considered the primary purpose of the technical inspection of the property. The independent chartered accountant and government-registered valuer are the ones who carry out the technical verification of the property.

After doing a comprehensive check of the property’s technical aspects, the appraiser will then provide the assessment to the bank so that the latter may decide on the house loan. The following elements are included in the technical verification of the property:

  • Verification of the property’s address
  • Examining the site’s dimensions, including the overall built-up plus carpet area
  • The flat’s latitude, longitude, and coordinates
  • Property location information
  • Total realistically attainable value

Technical verification impact on housing loan amount

Imagine that you are about to spend ₹ 1 crore on a piece of real estate. You may be fully aware that most banks won’t provide loans for more than 80 percent of the value of a property. As a result, you get ₹ 20 lakhs from a different source and then submit an application to the bank for a housing loan of ₹ 80 lakhs. The bank’s technical appraisal team inspects your property and concludes that it is worth ₹ 90 lakhs.

If the lending institution you’re considering can only lend at an LTV of 80% and won’t budge, you’ll be limited to a house loan of about Rs. 72 lakhs. If you want to continue, you’ll need to come up with another ₹ 8 lakhs.

Technical and legal verification charges on housing loan

Lenders often outsource technical and legal verification of a property to independent firms. Therefore, it is customary to place the whole financial burden of this on the borrower. Some financial institutions charge a discrete technical and legal evaluation fee, while others may include it in the overall processing cost.

The technical and legal verification service cost will vary from one mortgage lender to the next. The standard technical and legal evaluation fee levied by most banks is between ₹ 5,000 and ₹ 10,000.

How to simplify technical and legal housing loan verification

Relationships between developers and financial institutions are common. Applying for the developer-recommended mortgage may speed up the home loan approval process. Apply for a mortgage loan at a bank with a working relationship with the builder.

You won’t have to do any time-consuming and perhaps embarrassing legal and technical due diligence. These speeds up the home loan procedure and reduces the costs associated with legal and technical verification.

Conclusion

Before your lender starts the process of verifying your information and evaluating your property, it is essential to have all of the required documentation available. At the end of the day, you can put your mind at ease knowing that the home you want to purchase is in good standing, legally and technically.

If you are seeking down payment assistance, go no further than India’s most prominent financial institution, HomeCapital!

Get your house buying done faster with a few easy steps. Choose your term length, upload the required documents, E sign them, and immediately get approved for the loan.

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