Celebrate Immediate Possession Of Your Dream Home – Loans For Resale Homes

Owning a home is one of the most satisfying experiences for any person. It is among the most important and expensive purchases you will make. 

Home loans are a great way to finance the purchase of your dream home. But they can also be used to fund various other projects. For example, if you want to build a new house or buy land on which you plan to construct one in the future. Then, home loans for resale homes are ideal. They will help you meet these requirements. 

What is a Resale Home?

A resale home or property can be moved into right away. Resale means the current owner received the property from the developer or another seller. These properties are sold “as is.” 

If you commute to work long, buying a resale home may be a better option than a brand-new apartment or plot. As the majority of infrastructure in developed areas is already in place, finding a market, a bank, a school, a hospital, and other essential facilities will not be difficult. With a resale home, you will have immediate possession. This means you will not have to wait for construction to be completed before moving in.

Resale properties are largely the buyer’s responsibility to evaluate banks and negotiate the best offer on a home loan. This segment is treated differently by banks than under-construction properties. Buyers should be familiar with the home loan process before buying a resale home.

Home Loans for Resale Homes

Loans for resale homes can be used to purchase brand-new houses and pre-owned ones. They are also available for residential properties like condos or apartments and commercial buildings like office spaces.

Home Loans For First-Time Home Buyers

As a first-time home buyer, you must have a steady job and a good credit history. If you’re looking for more accessible options, it would be better to opt for one specific home loan designed for first-time buyers. You can also justify paying higher rates of interest if you can afford it because there are certain benefits associated with these loans, such as reduced down payment requirements and lower monthly payments over time.

Home Loan Eligibility Criteria For Resale Homes

When it comes to buying resale homes, you need to keep the following points in mind:

• Age of the applicant

You may apply for a loan for any property if you are over 18 years of age, including resale homes. Banks typically extend home loan terms until the end of the borrower’s working life. 

The loan’s term will end when you retire, regardless of when you take it. This is a typical scenario. Depending on the credit score and repayment capacity, financial institutions may extend the tenure. They might also provide mortgage insurance.

• Age of the property

A property’s age is an important consideration. It should be considered when deciding the kind of home loan you will apply for. Resale homes are dated by when they were first occupied, not how long they have been owned.

In some markets, purchasing a home may be impossible. This is because there is no space for new development. The resale home finance segment is just as important to lenders as the new supply segment. 

Banks will not approve a home loan request for a property in poor condition or disrepair. Even if the property is over 30-40 years old, well-maintained property has a better chance of loan approval.

• CIBIL Score

Applicants with a perfect CIBIL score of 750 or higher are more likely to be approved for a home loan with easy and affordable repayment terms.

• Fixed Obligations to Income Ratio (FOIR)

Low FOIR values indicate a higher disposable income. This increases the borrower’s chances of repaying their loan on time. Lenders will most likely offer low FOIR borrowers favourable terms on home loans.

Home Loan Applications for Resale Homes

The applicant can apply for a loan for a resale home separately or jointly. Co-applicants for a loan on a resale home are not required to be joint owners. However, they must be family members, such as parents, spouses, brothers, sisters, or children.

Home loans are based on criteria such as customer profile, repayment plan, maturity age, property age, and other terms the bank deems applicable. 

Documents Required For a Home Loan 

To complete their documentation and approval process, banks often request the following documents:

• Completed application form
• A passport-size photo
• PAN Card
• Passport
• Driving license
• Voter ID card
• Bank statement for the last three months
• Income tax return for the previous financial year
• Address proof (recent bill of mobile phone, electricity bill etc.)
• Property-related documents (sale agreement, sale deed, letter of allocation, paid receipt of Land and Building Tax, non-encumbrance certificate, and so on)

Impact of GST on Resale Homes

In addition to affecting the real estate sector, the Goods and Services Tax (GST) also impacts resale homes. Since resale properties are immovable, GST is generally not applicable. However, sellers must pay stamp duty and registration fees (which may vary from state to state).

Home Loan Tax Benefits for Resale Homes 

The tax break is the best part about buying a resale home with a home loan. You can take advantage of it once you have ownership of the property. 

Section 80C allows for a deduction of up to Rs.15,000 from the principal amount. Under section 24B, up to Rs. 1.5 lakh is exempt from interest tax. A resale home can be purchased more profitably by borrowing money.

Conclusion

Loans for resale homes have become popular because they help you fulfil your dream of owning a house. These home loans enable you to purchase an already-built home at a lower price. It is perfect if you are looking for an investment property or want something that will be ready in no time.

If you want to learn more about home loans, look at related blogs on Piramal Finance. You can also take a look at their various financial products and services.