Do Banks Provide Loans For Stamp Duty Payment?
Loan For Stamp Duty Payment- The cost of purchasing real estate goes up with stamp duty. Do banks make loans to cover this extra spending? In India, homebuyers are required by the Indian Stamps Act & the Registration Act of 1905 to spend a substantial sum of money in order to legally register their property. Stamp duty rates on real estate vary from state to state in the United States because they are state levies. But a buyer will typically have to pay stamp duty equal to at least 4% of the property’s worth; in Delhi, for example, women who purchase homes must pay 4% in stamp duty in order to register their properties. In some areas, the cost can reach 8%; women who purchase a home in Kerala, for instance, must pay 8% in stamp duty in order to register their property.
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Therefore, a homebuyer in Delhi will need to set aside Rs 4 lakh for stamp duty on a property costing Rs 1 crore. However, depending on current rates, they will need to set aside Rs 8 lakh to pay stamp duty in Kerala.
This sum increases even more when the registration charge is included. Given that Delhi’s registration charge is 1%, the buyer in Delhi must therefore arrange an additional Rs 1 lakh, bringing his total liabilities to Rs 5 lakh. In Kerala, the buyer will need to budget an additional Rs 2 lakh beyond stamp duty, as the state already levies a 2% registration cost. The entire amount owed by this buyer is now Rs 10 lakh.
What options do homebuyers have, given the size of the sum and the possibility that most may not have saved enough money for both the down payment and this additional expense?
Do banks include registration fees and stamp duty in property loans?
In the best-case scenario, banks in India will only lend up to 80% of the cost of the property through house loans. Depending on the applicant’s profile and the amount of the down payment, this sum may be significantly less. Regrettably, stamp duty and registration fees are not yet include in the cost of purchasing a property by Indian banks. This means that a bank would only approve up to 80% of the Rs 1 crore, or Rs 80 lakh, even though a Kerala homeowner must spend Rs 1.10 crore to pay for a Rs 1 crore property.
There are plans to incorporate stamp duty in the cost of a house loan
Media sources state that banks are awaiting Reserve Bank of India (RBI) clearance on a proposal that would allow them to factor in stamp duty & registration fees when determining the worth of properties, and then approve loans based on that value. It will come as a major relief for buyers if the plan gets an RBI nod.
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