Housing Loans

Loans under the bank’s housing finance scheme can be granted to individuals/ corporates for:-

• Purchase of plot of land for construction of residential house thereupon, provided a declaration is obtained from the borrower that he/she will start constructing a house on the said plot, with the help of bank finance or otherwise, within a period of 2 years failing which interest rate applicable to Commercial Real Estate shall be charged wef account open date.
• Construction of House/Flat/ Dwelling unit
• Outright Purchase of an existing house/ flat/dwelling unit (fully built/ under construction)
• Supplementary finance  for repairs/ renovations/ additions/ alterations/ completion of an existing house/ flat/ dwelling unit, constructed/purchased from own sources or with the help of bank finance, whether liquidated or outstanding. 
  Note: - For purchase/ addition/ alteration/repair/ renovation/ completion of an existing dwelling unit, it shall be ensured that the residual life of the property, as certified by the approved valuer, is more than the door to door tenor of the loan.
• Housing loan can be sanctioned for construction/ purchase of 2nd dwelling unit per family or purchase of land/plot irrespective of whether the 1st dwelling unit has  been constructed/ purchased from own sources or bank finance.

• Individuals having stable source of income, owning or proposing to own house property singly or jointly, belonging to any of the following categories:

  • Permanent Employees of State /UT/ Central Government, Government / Semi-Government Undertakings, Autonomous Bodies and Govt Institutions.
  • Employees of Pvt/Public Ltd Companies with a minimum of 3 years of cumulative service and minimum 1 year service with current employer.
  • Professionals, Self Employed Individuals / Businessmen with a minimum 2 years standing in the current profession/ Business.
  • Persons engaged in agricultural and allied activities.
  • Pensioners State /UT/ Central Government, Government / Semi-Government Undertakings, Autonomous Bodies and Govt Institutions
  • Contractual employees of State /UT/ Central Government, Government / Semi-Government Undertakings, Autonomous Bodies and Govt Institutions shall also be eligible, subject to below noted conditions:
  • The remaining period of contract is equal or more than proposed tenor of loan (not mandatory for contractual employees working with current employer for more than 03 years uninterruptedly).
  • Mortgage of underlying property shall be mandatory in case of loans to contractual employees.
  • Branch Heads shall have no powers to sanction cases where occupation of one or more borrowers/ co-borrowers is of contractual nature.
  • Non-Resident Indians working with reputed companies in countries falling in following risk categories as per classification provided by ECGC shall also be eligible for financing under the scheme.
  • Insignificant Risk.
  • Low Risk.
  • Moderately Low Risk

  Recommending/ sanctioning authorities to satisfy themselves about the income earned by the Non-Resident and take necessary safeguards for extending finance and regular repayment of such loans (For further details, refer annexure (2) to this document)

  • Banks own staff shall also be eligible under public category, provided NOC for same is obtained from HR.
  • Corporate Entities shall also be eligible(For further details, refer annexure 3 to this document)
  • Where ever the property owner(in case of pre-owned or ancestral properties) is/are not having independent source of income, the income earning near relative (s)/ legal heir(s) like son(s)/ daughter(s)/ spouse/siblings living with the property owner(s) may join as Joint-Borrowers/ Co-Borrower(s) for the loan and his/her/their income can be considered for arriving at loan eligibility. In such cases, the age of property owner(s) shall not be considered for deriving loan eligibility or fixing tenor of loan.

  The housing loan borrowers shall be eligible for Top Up Loans as well.

• Minimum age at the time of loan application: 18 years

1. For Construction/Purchase of House/Flat/Dwelling unit: Cost of project less by stipulated margin subject to repaying capacity of borrowers(s)
2. For purchase of Land/ Plot for construction of House/ Building: The maximum quantum of finance shall be the minimum of the following:
   • 75% of cost of plot/ land
   • 75% of total Housing Loan eligibility
   • Rs.75.00 lacs

However, Zonal Credit Committee may consider loans upto a maximum of Rs.100 lacs for purchase of plot/land. Similarly Divisional Credit Committee/ Central Credit Committee may consider loans to the extent of Rs 500.00 lacs for purchase of land/plot for construction of residential house there upon.

1. For Addition/Alteration/Completion of house: Estimated cost of addition/alteration/completion of dwelling unit less by stipulated margin subject to condition that, where ever applicable, necessary permission has been obtained from the competent authority.
2.  For repairs / renovation/: Estimated cost of repair/renovation of dwelling unit less by stipulated margin.

Note:  Loans for repair/ renovation of a single residential property can be availed multiple times.

• Minimum Margin for Construction / purchase/ repair/ renovation/addition/alteration of house/flat shall be:

The moratorium period shall be computed from date of 1st disbursement with below noted ceiling:

Borrower(s), at the time of loan application may be advised to exercise option of repayment of interest during moratorium on actual basis or capitalization of this interest and factoring it into EMIs.

Principle along with interest shall be repaid in Equated Monthly Instalments (EMIs) after moratorium which shall be re-fixed with every increase/decrease in interest rate during the tenor of loan. The repayment period and EMIs calculated for repayment shall be decided on the merits of each case on a realistic basis after taking into account the repaying capacity of the borrower.

In order to ensure that regular instalments are received and defaults are minimized, it is to be ensured as under:  

1. In case of borrowers maintaining operative account with our bank – A debit authority for debit of monthly instalment to be obtained and necessary standing Instructions (SIM) to be created in the system in this regard.
2. In case of borrowers not maintaining operative account with our bank, recovery/ Repayment of EMIs in Housing Loan accounts be considered through NACH/RECS (Debit) or any other feasible repayment/ recovery mechanism.

(However, at least three post-dated cheques be obtained for collection of first three instalments, as registration of NACH mandate with the drawee bank usually takes a month or two. Once the NACH gets executed, the pending cheques (if any) may be subsequently returned to the borrower. Besides, as a due diligence process, for borrowers maintaining operative accounts with other banks, the processing fee/CIBIL Fee should be obtained in the form a crossed cheque upfront and the said cheque be got realised immediately, which will serve the dual purpose of borrowers signature verification with the other bank and KYC verification as well)

• Upfront Fee/ Processing charges: 0.25% of Loan amount + applicable GST 
  Minimum Rs 2000+ GST   Maximum Rs 50000+ GST
• INSPECTION CHARGES:  Actual transportation charges or Rs. 500/- + applicable GST (whichever higher). The amount shall be credited to account XXXXXXXXXXXXXXXX.

• Gross deductions inclusive of loan EMI/s (existing as well as proposed) should not exceed:

  Gross  Annual Income	Permissible deductions
  Upto 6 Lakh	Gross  deductions  must  not  exceed  65%  of  Gross monthly Income
  From  Rs  6.00  Lac Upto 12 Lakh	Gross  deductions  must  not  exceed  70%  of  Gross monthly Income
  Above 12 Lakh	Gross  deductions  must  not  exceed  75%  of  Gross monthly Income
  For State/Central/UT Govt Pensioners, the total deductions (excluding commutation) shall not exceed 50% of their Net monthly pension/income.

  The gross deductions shall not include deductions for investments like voluntary provident fund, insurance premiums, recurring deposits etc
   

• NIL 

• In addition to primary income of the applicant(s), below noted incomes can also be considered for assessing the quantum of finance.

  1) Income of family members/close relatives:
  a) Income of all the joint owners of the property: Income of family members like spouse/ children/parents/ siblings who are joint owners of the property shall be considered for computing MPBF by making them Joint Borrowers. Non-earning owners shall also be included as joint/ Co- borrowers.

  b) Income of earning family members: Income of family members like spouse/children/parents/siblings who are not joint owners of the property can also  be included by making them  Joint Borrowers/ Co-Borrowers subject to condition that they have a steady income by way of salary/ business/ profession and his/ her/ their salary/ business/ operative account is maintained with any Bank (preferably J&K Bank). However, income of a maximum of 03 family members (other than applicant/s) shall only be considered.

  Note: Only residual income of spouse / children/siblings/parents i.e. income net of all deductions including deductions towards servicing of already availed loans (if any) to be considered. The income proof documents of spouse / child (ren) as applicable / stipulated under scheme shall be obtained to verify their income. Besides, it shall be ensured that the deduction towards jointly availed housing loans is considered where computing eligibility in case of other loan facilities in favour of such borrowers.

  2)  Rental income net of taxes, cess etc can be considered in cases where the borrower intends  to  purchase/construct  a  house  and proposes to let it out on rental basis on account of his posting outside the headquarters or because he has been provided accommodation by his employer.However, rental income shall be accepted to the level of actual rent received/receivable and it needs to be ensured that major portion of the income shall be from sources other than rental income.

  3) In case of the individuals running their business/profession on proprietorship basis, Depreciation may be added to the Net Annual Income, subject to below noted conditions:
  a)  The  depreciation  amount  will  be  ascertained  on  the  basis  of previous two years Audited/Actual Balance Sheets.
  b)  Average of depreciation charged during previous two years shall be allowed to be added to the net annual income

  Note: Principal repayment obligation on account of any business loan availed by the borrower for purchase of such fixed assets shall be deducted while arriving at the net income of the borrower for the purpose of loan eligibility.
   

• A) Income Proof (For borrowers/Co-borrowers):

  i)        Salaried Individuals: 
  Any one in order of priority:-
  1.  Latest Salary certificate (average of 03 months may be considered in case of any extra ordinary change in salary)
  2.  ITR of last 2 years along with Form 16 (average to be considered)

  (Salary certificate must contain information about all the deductions along with the date of birth, date of appointment, date of confirmation and date of retirement. Digitally generated/ delivered pay certificates, without signature of DDO can be accepted. However, information parameters like DOB, date of retirement, net pay etc shall be checked for accuracy from available records. Further, these shall be invariably self-attested by the applicants/ borrowers.

  Note: In case of employees falling within ambit of any MoU between the bank and the respective Govt Department/ Institution, documentation and other parameters as per such MoUs shall be applicable.
       Copy of order of engagement with full T&C,  in case of contractual employees

  ii)       Pensioners: 
          Copy of PPO and Monthly pension slip
      Statement of pension account for last 06 months (for pensioners not maintaining pension account with the bank).
  iii)      Self Employed Professionals and Businessman: Any one in order of priority:- 
  1.  Copies of last 02 years ITR (average to be considered)
  2.  Audited/CA Certified Balance Sheet and Profit and Loss Statement for last year as per statutory requirement.
  3.  Income certificates issued by Chartered Accountants (For annual income upto Rs 2.50 lacs).

  iv)      Persons engaged in agriculture and allied activities: 
  Income certificate from CA/Tehsildar subject to condition that the sanctioning authority is reasonably satisfied about the genuineness of the Income Amount mentioned therein.

  Note:

  As mandated by ICAI, CAs shall register the documents/certificates/reports certified/attested by them on UDIN Portal.
   

In case of purchase of land/Plot/ready built house/ construction of house on pre-owned land/ plot/ Repairs/Additions/Alterations/Extension of existing houses:

Primary:

1. Equitable/Registered Mortgage of land/house property/flat to be constructed/purchased.  The title of the property must be clear marketable and free from encumbrance (not applicable to properties already charged against existing facilities)
    
2. Where mortgage of    house /flat cannot be  created immediately and /or possession of house/flat is not given, e.g in situations like house/flat or under construction house/ flat or to be constructed house/flat  is being purchased/ from  the  Housing  Board/       Co-operative  Society  / Development Authority/ Construction Company/ Builder and  title/conveyance  deed  is  executed  in  favour  of purchaser  only  after   completion  of  full  or  partial construction after purchaser making full payment of the cost  of  house/flat,     a  tripartite  agreement  shall  be executed amongst the 1) Housing Board/ Development authority / Co-operative Society/ Construction Company/ Builder, 2) The Borrower and 3)The Bank  where in the Housing  Board/ Development Authority / Co-operative Society/ Construction   Company/ Builder under takes that the title  to house/ flat    shall be transferred to the Borrower    immediately   on   receipt   of   entire   sale consideration and the   Bank’s lien shall also be marked in their/ his    records, thereafter to be followed by execution of mortgage deed in favour of the Bank once the project has been completed and Sale Deed (Deed of apartment/Conveyance Deed   in case of Flats) has been executed. Charge to be registered in favour of the Bank with the   concerned   authorities.   Besides tripartite agreement, an affidavit cum undertaking from the Housing Board/ Development Authority /Co-operative Society/ Construction Company/Builder to the effect that the construction shall be as per the sanctioned plan & building byelaws, to be obtained.

Note: Wherever a builder is not ready to sign Tripartite Agreement or the operative levels are not able to obtain TPA for whatsoever reasons, the concerned Zonal Heads/ Zonal Credit Committees will have powers to dispense with this requirement on case to case basis, depending on the merits of individual case.

In such cases where the TPA is not obtained from builders of under construction housing projects, the concerned sanctioning authority shall comply to below noted stipulations:

1. Obtain an undertaking from the borrower(s) that in case of cancellation of his her allotment or non- conclusion of sale transaction with the builder, he/she/they will route the refund amount from builder towards adjustment of outstanding in loan account availed for purchase of said flat.
2. At the time of disbursement of such housing loans, intimate the builder that the prospective buyer has availed finance from bank/branch for purchase of said flat. Besides the builder(s) shall be requested to remit the refund amount to bank in case of cancellation of allotment of the buyer or non-conclusion of the sale transaction.

Collateral Security:
No collateral security /3rd  party guarantee is required under the scheme except following categories of borrowers:

1. Pensioners- guarantee of spouse / Legal Heir(s),who is / are entitled for family pension along with additional guarantee of one individual
2. NRIs- 3rd party guarantee of two resident Indians of sufficient means to withstand the liability      
   
   Note: The mortgage of the existing house property shall not be insisted for loans up to Rs.05.00Lakh (Rs.10.00 Lakh in case of Permanent Employees of State /UT/ Central Government, Government / Semi-Government Undertakings, Autonomous Bodies and Govt Institutions granted for the purpose of repairs/additions/ alterations  /extension  of existing houses. These loan cases shall be secured by third party guarantee of two persons or Assignment of Life Insurance Policies, Gov’t Securities, IVP’s, NSC’s KVP’s or FDRs of own bank etc. However, negative lien over the existing house property for which the facility is granted shall be obtained along with an irrevocable power of attorney executed by the borrower authorizing the Bank to sell the house in case of default.