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Legal & Technical Verification of Home Loans That You Should Know

Highlights

  • Looking to buy a dream home on a loan? Read out the importance of legal and technical verification associated with the property
  • What does the verification team seek before approving the property transfer deal? Read this to know all

One often looks at the interest rate of home loans but doesn’t emphasize on the legal and technical verification that can make or break the case for him/her. Yes, having a home loan, which can be profoundly large in size, at a lower rate of interest results in a sharp reduction of interest outgo over time. But what if the home loan application gets rejected or attracts a higher rate of interest on grounds of legal and technical aspects concerning the property you wish to buy? Yes, it’s possible! Ensure you know the criticalities of these before applying for a home loan. Else the dream home will be in your dreams only and not in reality.

We understand how much a home could mean to you, so we have put on a note explaining the legal and technical verification of home loans. Read that and put yourself in a better position by the time these verifications happen with regards to the property you want to buy.

Let’s Start with Legal Verification First

Certified lawyers will come and ask for the property chain, which shows the transfer of the property in question from one individual to another on specified dates. Ensure you have a property chain describing how and when the property entitlement has been transferred amongst individuals. If you are buying a brand new property and not a resale one, the property chain will involve the one who sold the land to your seller who then went on to make a home on it. In the case of a resale property, the chain can have multiple names.

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How Will You Get the Property Chain?

You should ask the seller to provide you the property chain. He/she might give you photocopies of the same, take that and give it to the legal surveyors to check. In case the seller has sold the property to someone else, it can be seen through the chain. This could prompt legal surveyors to put this point in the legal report, which will mean the transaction won’t go through any further. You can claim the margin money paid to the seller while signing ‘Agreement to Sale’. If he/she resists, you can take legal action against the seller by giving a proof of the payment, a copy of the lawyer terming the transaction as bogus. So, the chain eliminates any foul play that can be the case otherwise.

Now Come to the Technical Verification & Valuation

The technical verification will be made based on the property map, which shows the extent of land on which the home is to be made. In addition to this, the technical team also validates the structure of the property whether it is in line with the map. Any modifications beyond a set % can make banks increase the rate of interest. After that, the process of the valuation report will begin. The technical verification team besides assessing the extent of land use for the construction of home also checks the labour cost, cost of materials procured and several other details about the property. This gives the technical team an idea of the per square feet cost of the property.

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All these details could, however, vary from one location to another. For example, a posh location will most likely have greater labour cost and material prices compared to a low profile location. Based on all these, a technical report is prepared which goes on to decide the value of the property you want to buy. You can thus get the loan at around 75%-90% of the property value.

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  • Home Loan Interest Rates September 2020
    Axis Bank7.75% - 8.55%
    Bank of Baroda7.00% - 8.40%
    Citibank8.20%
    HDFC6.95% - 8.00%
    ICICI Bank6.95% - 8.05%
    Indiabulls Housing Finance Limited8.80% - 11.05%
    Kotak Bank7.20% - 9.30%
    LIC Housing6.90% - 7.90%
    Piramal Capital & Housing Finance9.00% - 9.10%
    PNB Housing Finance8.60% - 9.45%
    Reliance Home Finance8.75% - 14.00%
    State Bank of India/SBI6.95% - 7.60%
    Tata Capital9.20% - 9.35%