Everything you need to know about home loans for resale flats

Everything you need to know about home loans for resale flats

Buying a home is quite a complex process. In most cases, people opt to purchase new or under-construction properties. Such people typically have to wait for a few months, if not years, to get possession of their home. But if given a choice, one would always prefer to move into their new home as soon as the purchase process is completed. Well, there is an entire resale property market dubbed the secondary housing market for this purpose. But this situation is possible only if you complete the transaction without the help of a home loan. However, if you intend to take a home loan to purchase a house from the resale market, there are a few things you need to consider. Here’s all you need to know about home loan for resale flats.

Factors to consider before taking on a resale property loan

There are three main points to keep in mind while taking out a resale property loan. They are as under:

Understand the paper trail: Anyone who’s ever applied for any kind of loan knows that lenders generally ask for a long list of documents. This list is usually even longer when you apply for a home loan and when you are applying for a home loan on resale flat, it increases further. Apart from the regular list of documents, you need to provide the change in ownership document, which is the most crucial one in case of resale flat home loans. The paper trail increases further if the previous owner is still repaying a home loan.

The property is appraised: Whether you purchase a new property or an existing flat, lenders will always appraise the property. They usually have a technical team in place that conducts property appraisals. Based on the appraisal, lenders determine whether or not to sanction the loan, as well as the loan amount to be sanctioned. In case of resale flat home loans, most lenders are cautious about sanctioning a loan for a property that is over 20 years of age.  

Be aware of the terms and conditions: Banks and HFCs exercise a lot more caution while financing a home loan for resale flat. Firstly, there are very few lenders who actually sanction this loan. The few lenders who finance this loan generally have a lot of conditions in place e.g. you may be asked to pay a minimum down payment of 20% value of the property as opposed to 10% or 15% for under-construction properties. You could also get shorter loan tenures of 10-15 years as opposed to 20 years or more.

Home loan eligibility criteria for resale flats

The eligibility criteria for home loan for resale flats are generally the same as that for a regular home loan. This simply means that the borrower:

• Should be above 18 years of age while applying for the loan.
• Should have stable employment/ regular income (in case of self-employed individuals or business owners) with a minimum experience of three years.
• Should be under 65-70 years of age at the end of the loan tenure (depending upon the lender’s requirement).
• Should be able to submit all documents listed in the loan application.
• Should have good credit scores of more than 750 points and good credit repayment behaviour.

Documents required

To apply for a home loan on resale flats, you need to submit the following documents:

• A duly filled loan application form.
• 2 passport size photos each of all applicants (in case of a joint home loan).
• D. proof documents – PAN card, Aadhaar card, Voter’s ID, Passport, driver’s license etc.
• Address Proof Documents – Passport, Aadhaar card, electricity or telephone bill, Driver’s license etc.
• Bank statements of the last six months.
• Proof of employment and salary slips in case of salaried employees and business address proof in case of self-employed applicants or business owners.
• Income tax returns of the last three years.
• Property documents – sale deed, agreement of sale, letter of allotment, building or land tax paid receipt, no objection and non-encumbrance certificates etc.  
• Copies of approved plan along with local body approvals.

Final thoughts: Home loans on resale flats are easily available if you keep all the above mentioned points in mind. Having a good sum to pay as down-payment, purchasing the property form an individual who does not have a running home loan and choosing a relatively used property is in your best interest if you wish to take out this loan.