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Is it possible to get a housing loan to buy 2nd hand house/flat?
Posted on: 20/Jul/2017 1:07:28 PM
There are some snags in obtaining a housing loan while buying a 2nd hand or used house/flat. So, there are many restrictions imposed on this front. It is far easier to assess a new house/flat and also to furnish all the required documents and proofs making it easier to obtain a housing loan.
However, in the instance of an old house, the assessment is rather a tough process. Generally, a bank representative visits the place to be bought for assessment.
The assessor will gather data pertaining to the various aspects such as the age of the building/construction, whether it is still strong enough, and others.
The assessor will present his report to the bank. The bank will decide regarding offering a loan based only on this report.
Further, it is a practice that whereas the loan for new houses may be even up to 100%, it would be a surprise if the loan for the old house is up to 75%. Generally, the trend is to assess the old houses at lesser values. If it is an independent house, the value of the plot/ground would have appreciated. So, loans may be given based on this.
However, in the case of old multi-storeyed apartments, they resort to the UDS (Undivided Share) and segregate as 300 or 200 sq, ft. So, higher amounts of loans cannot be sought. Further, the duration given for repayment of EMIs of the loan will be lesser as compared to buying a new one.
There is a policy that while buying a new house, one should keep at least 10% to 20% of the margin amount. However, in the case of buying an old house/flat, this will be higher by 5% to 10%.
So, mainly because the various snags mentioned above, most banks have a lot of restrictions while offering a housing loan for an old house/flat. At the same time, the banks do also confirm that the loans will continue to be given for the purchase of old house/flat as well.
