Property purchase

How to buy property in India

Property purchase

Before you buy property in India make sure you are fully aware of your legal situation. In general, the purchase process is straightforward. This article outlines its basic progression.

You should always have a lawyer verify all documents included in the purchase. Do not make any payments until all documents are checked by your lawyer.

Once you have found a property and you and the seller have agreed on a price, an agreement of sale is drawn up. After you signed the agreement you have to pay a deposit of between 10 and 20 per cent of the property price. Never make any payment in cash, even if you are promised to receive a proper receipt. Many sellers try to avoid tax payments by not declaring the parts of the total sum they have received in cash.

You should use an Indian bank as mediator to pay for the property. Many banks offer documentation through bank services which hold your payments back until you are the registered new owner of the property.

After you paid the deposit your lawyer should check whether the seller is the legitimate owner of the property and allowed to sell it. There should also not be any outstanding mortgages on the property. The seller should provide a no encumbrance certificate stating that the property is not already mortgaged.

When all documents are approved they have to be stamped at the Stamp Duty office. You and the seller have to sign them and you have to pay the outstanding sum. Finally, to become the legitimate owner of the property, you need to register with the Registry of Deeds. Your final governmental duties have to be paid now. They include Stamp Duty of between four and fourteen per cent, depending on the region. An additional registration fee has to be paid as well. It accounts for one till two per cent of the property price.

Mortgages in India

Expatriates are generally able to get mortgage loan in India. However, loan conditions in India are usually worse than in Western Europe and the USA. You should therefore consider obtaining finance from a bank in your home country instead.

Loans available in India can cover up to 85 per cent of the property price. They usually run ten to fifteen years but can be set up for only five years as well. Your repayments including interest cannot be higher than 50 per cent of your total income. New mortgages can be assumed till the age of 70. Interest rates in India typically range from 10 per cent to 12.5 per cent.

Further reading

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