A dash of Pepper…

…with a splash of Mint

What has kept us on our toes – Part 2

Posted by Pepper on April 12, 2014

Post continued from here.

Before we even started looking for homes, we made a trip to the bank to find out more about their eligibility criteria and the amount they were willing to sanction for us. We submitted all our papers and applied for an in principle sanction. The bank told us all our documents were in order. Even the amount they were willing to sanction was in line with our expectation. We discussed the interest rate, and got our EMIs calculated. They submitted these calculations to us in writing. Although the calculated EMI for amount X was making us faint, we weren’t too bothered at that time, because we really didn’t intend to take a loan for amount X. This process was carried out only for our understanding, and for us to know how much we were eligible for.

We looked at the flat next to my parents’ on the very evening that the broker called. The home was perfect for us because of the proximity to my parents. However, since it was way over our budget, we really didn’t think we could afford it. We put it on hold and moved on to see other properties.

After 2 days, we got another call from the broker. He told us that the house next to my parents had another serious buyer. But since he had shown us the property first, he wanted to know our decision before it was sold to the other ‘party’. It made us panic. We couldn’t afford to buy that flat, but we subconsciously hoped it would stay on hold for us. Since the other buyer seemed to be desperate to close the deal the same day, we made another trip to the flat.

And then, we were given a total of 1 hour to make a final call. ONE HOUR! After an hour, the other buyer would go ahead and seal the deal. We liked the house, the only problem was affordability. No matter which way we looked at it, the house was way out of our reach. The monthly EMI would take away almost all our combined earnings. Would we be able to survive on a petty sum every month? We’re used to a particular lifestyle, would we be able to switch to something so much more low key?

That one hour was extraordinarily stressful for us. Why were we expected to make such a huge decision in 60 minutes? I spoke to my dad’s brother on phone and he encouraged us to not think beyond a point. He was convinced this was a good buy. After a lot of mental struggle, we decided to go ahead with it. We met the owner and paid them a *huge* non refundable advance  as confirmation for closing the deal.

We were in for a shock when we went to the bank the next day. At first, they told us they couldn’t process our loan because we did not have Income Tax returns for the past 3 years. I corrected them and said WE DID have our US Income Tax Returns. They cribbed and asked us why we didn’t have Indian tax papers. I told them it was for the simple fact that we were not living in India. It hasn’t even been 3 years since we’ve returned to India. How on earth were we supposed to have  Indian tax papers for the past 3 years then? Why could they not consider our US tax returns? Why were they saying this to us now? Why did they tell us all our papers are in order when we first showed them? They had no response. From then on began our problems.

The bank has really harassed us beyond words. The interest rate they gave us was incorrect. All of a sudden, their rate of interest was much higher than what they initially claimed. They had no regard for the document they gave us in writing in which they calculated our EMI at the incorrect interest rate!

Some day they told us our interest rate would be even higher because we apparently owned 2 other houses! Huh? This was because the permanent address shown in Mint and my passport is that of our parents’ home. We told them we don’t own those homes! Our parents do. They wanted proof of us not owning our parents home.

Another day they had a problem because Mint’s offer letter did not mention his retirement age. Huh? We told them he wasn’t in a Government job. Which private company mentions the retirement age when they roll out the initial offer letter? Stupid people. After much cajoling they had agreed to process our loan, but now, very randomly they told us they would be sanctioning 30 lakhs lesser than what we had asked for.

We had paid a big sum as advance for this house. We couldn’t back out of this deal. It would mean incurring the biggest financial loss of our lives. All our life’s savings and hard earned money being washed down the drain. Neither could we magically conjure up the deficit 30 lakhs that the bank refused to give! That was a huge sum. Other than the huge advance, we had already put in the remaining XX lakhs as part of the 25% payment that had to be made from our side. The bank is only willing to sanction 75% of the property value if the property was above 70 lakhs. So we had basically put in A LOT of our money, and we were in a fix.

That was almost 2 months ago. And this is today. We’ve paid the processing fee in 2 banks, so that our application comes through from atleast one. Unfortunately, we need an NOC from the society office and the society issues that to only one bank. We’re still in a mess. Sometimes we think we’ve managed to sort out the mess. Sometimes we come back to square one.

And if once more a bank employee looks at me and says ‘you’ve not even paid tax for three years?’, I swear I will go ahead and punch his face so hard, he will remember it for the rest of his life. We are law abiding citizens so stop making us feel otherwise. Just because we were not living in India and just because you are stupid enough to not consider our US tax returns, it does not mean we have not paid tax! IDIOTS!

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25 Responses to “What has kept us on our toes – Part 2”

  1. Hey! This seems really weird! As you might know, I have been living in CA since some years. Last april, my parents closed a deal on an apt which i am financing through a loan. We had earlier approached three banks that were totally okay with our situation. We went ahead with H**C bank that makes everything super easy for NRIs. Like, they worked with my scanned docs, IRS returns and e-files of credit scores and all that. I went to India in May-June and signed the bank docs and I was done. I am very surprised with the way the bank has behaved with you guys. :-/

    • Pepper said

      BUT, BUT, BUT I never said NRIs have trouble buying homes in India, princessbutter! But we’re not NRIs anymore. We reside in India. Even the bank told us that they accept all US documents including tax papers for NRIs. They told us they will accept our US tax returns if we are still employed in the United States. But we’re not. Either we have to still be employed and paying tax in the US, or we need to have worked in India and paid tax here for 3 years. We don’t fit the NRI bracket anymore and neither have we been in India for 3 years. They can’t put us in NRI category and neither do they have a policy which allows them to go ahead without 3 yrs of Indian IT returns. They don’t know where to put us. That is the problem.

  2. R's Mom said

    Aiyoooo what super confusion… I still didnt get the bank’s theory of not paying taxes…its absurd…..But again, honestly I am very very challenged in this field so I may be wrong person to even give any advice…I hope things work out for you rey!

  3. Bank officers are so keen to sanction loans that they do not check documents thoroughly in the first instance. They often come out with shockers when, as in your case, the borrower cannot back out or has to pay a heavy price for backing out. All the best! Hope things work out soon.

  4. stutigupta said

    Wow. Is it a public sector bank – we got our loan sanctioned pretty easily from a private bank for our first house, but for our second we decided to go public sector (sweet deal on interest rates), and the bank made us make some fifteen trips to 3 branches, before finally sanctioning and disbursing. And that’s when all our papers were in order. I can only imagine how hassled you must be.

    But don’t worry it’s an irritant at most. They will finally come around. Take a pregnant woman with you next time you visit them and let her do the talking – they are better then. I was expecting when we got out loan, and I got much better results than my husband. Also because I scream easily.

    All the best !

  5. D said

    Which bank is this Pepper? you can mail me at skirtsanddupattas1@gmail.com. This sounds too weird….We have taken a housing loan from H**C, was pretty much hassle free, though no US element involved. And this thing regarding owning other houses as well just because the passport address says so sounds extremely illogical!!! I mean they sound mental…

    All the best, hope you are out of this mess very soon.

  6. anjeneyan said

    I have availed home loans more than once. I prefer HDFC as they are more professional than the rest and any way home loans are their main business. I always prefer to get the loan sanctioned first before making any commitments for purchase of residential premises.

    HDFC also insists on technical clearance of the flat. If any one else has availed housing loan for another premises in the same building, then technical clearance ( legal documentation, Municipal clearance) is easier. During negotiation for house, as purchasers we have to make it clear that it would be a full cheque transaction, the housing loan would be 80 % or 85% of the agreement value plus the stamp duty . If that is acceptable, then only there is some point in proceeding further.

    This way there would be clarity on what you can pay/afford and what additional assistance you would require.

    In terms of the new Income Tax requirements, you may have to deduct tax at source prior to giving purchase consideration to the seller. In addition, there is a probability that the income tax return for the financial year in which the flat is purchased, would go for scrutiny. Hence it would wise to keep the source of funds for purchase of flat in a clear cut manner. Bank statements, loan documents should be kept separately.

    If the loan is availed jointly, it would be appropriate to understand the Income Tax deduction that can be taken from income by both the borrowers. The payment of consideration for the flat and the loan can be then structured to suit the same.

    Trust this is of some assistance.

    • Pepper said

      Hey thanks.. though I must say we’ve been in this mess for 2 months and I know most of these procedures verbatim.

      To start with – Yes. We’ve also applied to HDFC and they are much, much better than the Government bank we’re dealing with. Secondly – what you say obviously makes a lot of sense. We’d not want to make any commitments for purchase until we have a sanction from the bank. But here is the thing – no bank will give you a real sanction till you show them the sale agreement (which obviously comes after you finalise the house and pay a part of the money). Before than, they will only give you an In principle sanction. We did have our IPS letter too! But they change clauses when it comes to the actual sanction 😐

      Not only HDFC, almost *all* banks these days insist on technical clearance. And yes, we know other people who’ve acquired a loan through HDFC in the same building as our flat, yet HDFC seems to be taking a lot of time in giving us the clearance. It doesn’t help that we’ve had a lot of bank holidays recently. Anyway, things seem to be moving finally and we hope we’re nearing the end.

      I think I did mentioned this in the post. We do have a full cheque transaction. That was one of my criteria. No black money. Yet, we can only get financing for 75% from most banks. Not 80. They sanction 80% if the property value is below 75 lakhs. Ours is way more than that. So we can get only 75%. It puts some more strain on us, but we choose it, so I won’t complain.

      You are right about the TDS and about keeping all our documents in order. We’ve tried to keep that in mind.
      It is a jointly availed loan, though we haven’t gone over the Income Tax deduction that will be taken from both our incomes. Must look into that as well.

      Thanks a lot for the input!

  7. raji said

    Did you try SBI? We had same problem with Indian Bank, but SBI loan came with no hassle.

  8. First of all congratulations to you and Mint on the home buy. It is going to be amazing when you move in and settle down in your nest . Interest rates it’s always like that till we sign there is no guarantee. Our pre approval was for a rate and emi but it changed everyday and we could get the final closing amount only the day we were going to sale deed office. Stress we went through was unimaginable. Hang in there it’s going to good once everything in place. Good luck. !!

  9. Buying a property in Mumbai, is anything but straightforward, even if you have money and papers sorted. It scares me to think, we would be going that way sometime soon 😦 First finding a decent enough house, then bank loans, then NOC, stamp duty, registration…it can drive you to the wall. My dad recently bought a commercial property, we were shown one, and sold another (the adjacent one). CAN YOU IMAGINE?

  10. Smita said

    (((((HUGS)))))

    Do I need to say anything more?? You know I had actually told a bank employee that I feel like Bangung this file on your head (after our loan amount was reduced because their valuation was much less than the property price)!!! Like you we had also applied for loans in two banks and lost some 10-12 k in process……I can not tell you how frustrating the whole thing was!!!!

    Be positive and I am sure things will get thru!!!

    • Pepper said

      Haha,, Smita, I told a bank employee I wanted to punch him too. I am glad they didn’t take action against that. But really, they drive up the wall!

  11. MoRS said

    Really? I am surprised. I remember our loan processing was quite smooth ( we were in the same situation, just 1 years indian tax papers). I think the key is to take a loan from the back where your salary goes. I would guess you would fall under “high” income group, so you should be having a wealth manager kind of guy assigned to you. Usually going through this guy cuts all the crap . He handles all the paperwork. In fact we never had to make a trip to the bank ourselves. FYI – Ours was ICICI. I’d also like to let you know that we squeezed ourselves beyond our budget when we bought our place too. But it worked in the long run. The salary grows and it’s only a matter of time when you are comfortable again.

    • Pepper said

      Yep.. we do fall under the ‘high’ income group, but we’ve nevr really bothered to follow up with our wealth manager. Must do that.
      Also, I had IT papers for 1 year, but Mint has no tax papers for India. He started working only 10 months ago and will file taxes only now. So my income alone was not adequate for the loan we wanted. Mint’s was, but he had no tax papers. I guess they gave us a harder time cos of that. Though HDFC was nicer and didn’t cause too much trouble, the other bank drove us mad.

  12. Arch said

    Oh God! These banks and their procedures can get so damn tiring. They don’t have proper policies in place and they enjoy harassing a customer naming a hundred procedures. Hugs Pepper! I hope you get out of this mess soon!

  13. Jazz said

    Omg what all headaches Pepper.. But keep calm, it will sort out slowly but surely.. Take care, good luck..

  14. Ashwathy said

    They wanted proof of us not owning our parents home.
    WTF!! Yeh kya bakwas hai?! 😯 And why on earth do they want Mint’s retirement age?!
    My guess is that they were looking at ways to NOT give you the loan. But it beyond me as to WHY. Mint is a salaried emplyoee with a decent salary. When you have proved you can pay back the loan then what is the problem?!

    • Pepper said

      Nope, they’ve been begging us to take the loan from them. They call us so many times and beg us to stay with them everytime we threaten to move to another bank. There is no reason for a bank to not want to give a customer a loan (unless their income isn’t enough).

      Also, banks don’t have the time to go around in circles. If they don’t want go give you a loan for some reason. They will say that to you straightforward in the very beginning. They don’t have the time to look for loopholes and put across their point in an indirect way.

      Also, as per RBI mandates, the interest rate increases if you own more than one home. So I guess they wanted to make sure that our permanent address ka flats weren’t owned by us. I do understand they have to take all measures to make sure they don’t miss out anything. But still – it sounds ridiculous when you have to face it.

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