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Old 4th January 2011, 17:38   #166
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Originally Posted by saildrive View Post
In short they are covering their back side; hope & pray that I get my posseession before this rule is passed - will save 4 odd lacs to be paid to the authorities :(
However I dint quite get what you mentioned above RS
SD, they can't do this to you. If the money is collected from you as "towards Service Tax", then it has to be deposited to the Govt, else their goose is cooked.

Can you tell me the timeframe when this happened?

If you have made payments, towards purchase of an under-construction property, after July 1, 2010, then the Builder is right in loading the Service Tax.

Quote:
Originally Posted by saildrive View Post
Thanks RS

However I dint quite get what you mentioned above RS
Haha, there are a lot of ways to circumvent the laws for the Builders.

Even the salaried class can contribute to the scrimping on Service Tax by
making a "notarized" amenities agreement etc. However, this involves a lot of faith into the Builder and the principle of "Honor Among Thieves"**, since notarized agreements regarding transfer of property are not enforceable in the court of law.

** - Disclaimer - Please note that the above phrase is used purely as a figure of speech, there is no intent to hurt anyone's sentiments.

Cheers,
R_S
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Old 4th January 2011, 17:42   #167
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Are notarized maintenance agreements enforceable?
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Old 4th January 2011, 17:44   #168
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Are notarized maintenance agreements enforceable?
I'm sorry I didn't understand - could you give some more details about the agreement?
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Old 4th January 2011, 18:36   #169
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Is the property value more than 1 Cr ?
How did they arrive at figure of 4.1 lacs ? It should be 10 % of 25% of total cost of flat.
NO - The cost is about 52 lacs i guess.

RS
I booked the flat in November 2009, paid about 12 lacs by March 2010. My loan sanction and deductions have started from 2010 April.

I will try and get the copy of the receipt / invoice to be certain of the payout and the perecentage.

The builder is supposedy a reputed one therefore I dont foresee any malified intentions - fingers crossed! But anyways - I havent paid a penny of this ST, so am playing the wait and watch game at the same time hoping that I get possession before the rule is implemented
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Old 5th January 2011, 08:14   #170
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@roadie_swift,

Thanks for all the responses, appreciate your patience in answering them.
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Old 5th January 2011, 20:47   #171
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Originally Posted by DCEite View Post
Is the property value more than 1 Cr ?
How did they arrive at figure of 4.1 lacs ? It should be 10 % of 25% of total cost of flat.
Persons engaged in civil works (construction of building, roads, etc) have different options for payment of services -

1. Normal provision - they may take the total price and deduct the material component and on the balance amount they can charge the service tax @ 10.3%

2. Abatement provision 1 - In this the value of UDS in land is excluded. The service tax is calculated on the 33% (10.3% of 33%) of the value of flat.

3. Abatement provision 2 - In this the value of UDS is included. The service tax is calculated on the 25% (10.3% of 25%) of the value of flat + UDS.

4. Works contract - Service tax is calculated @ 4.12% of the total value of flat, excluding value of UDS.

So it is difficult to trace the method adopted by the builders / developers.


Quote:
Originally Posted by saildrive View Post
NO - The cost is about 52 lacs i guess.

RS
I booked the flat in November 2009, paid about 12 lacs by March 2010. My loan sanction and deductions have started from 2010 April.

I will try and get the copy of the receipt / invoice to be certain of the payout and the perecentage.

The builder is supposedy a reputed one therefore I dont foresee any malified intentions - fingers crossed! But anyways - I havent paid a penny of this ST, so am playing the wait and watch game at the same time hoping that I get possession before the rule is implemented
IMO the rule is already implemented. These builders / developers were just play games with the service tax department by interpreting the law from different angles. To plug this the law was amended and hence this rule.

If the builder is not aware of this, then you have a chance to escape the ST. Insist on registration of the Flat and the UDS before he is aware of the implementation.

As a general rule all builders / developers / contractors are liable to service tax. They may name the contracts / agreements in what-ever fashion they want or they may route the transactions in any manner, most of the them are made to pay service tax.
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Old 6th January 2011, 09:17   #172
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There's this strange issue with my home loan agreement. As per the agreement, I was supposed to be given a Home Insurance which was a one time payment for which I had given a cheque during the loan disbursement. After many a follow ups, I finally got a copy of the Home Insurance taken from National Insurance and was horrified to find that the Insurance amount was less than what was mentioned in the Home loan agreement document which says "Home Insurance equal to the market value of the property or the max loan amount was applicable". Strangely neither of the conditions were met and when I enquired with the bank they said that the Insured Sum was correct and as per the consturction cost value and that they had goofed up in the agreement document. I was not alone in this goof up, there were many others but it seems I was the first to question them about this. Many communications to the bank in this regard has gone un answered and the bank is unwilling to give in writing about this mistake. What should I do?
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Old 6th January 2011, 09:35   #173
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Interesting thread to observe. I have few queries regarding home loan takeover from ICICI to IndianBank. Currently, I am paying EMI for 12.25% interest. Initially started with 7.25% in Jan 2006 for 240 months. After lot of interest rate corrections, last year and this year its rounding around 12-12.25%. They have retained the same EMI amount but increased the tenure back to 240 months.

Just wondering how can I restart the EMI with same principal for 240 months?
Where has all the EMIs paid from the last 5 years gone?
As per ICICI the principal amount recovered is very minimal.

Hence I want to move the loan to Indian Bank which is giving 9.25% floating.

Please advice on options.
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Old 6th January 2011, 10:25   #174
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Red face re: Help with a home loan!

Quote:
Originally Posted by blackstallion76 View Post
Interesting thread to observe. I have few queries regarding home loan takeover from ICICI to IndianBank. Currently, I am paying EMI for 12.25% interest. Initially started with 7.25% in Jan 2006 for 240 months. After lot of interest rate corrections, last year and this year its rounding around 12-12.25%. They have retained the same EMI amount but increased the tenure back to 240 months.

Just wondering how can I restart the EMI with same principal for 240 months?
Where has all the EMIs paid from the last 5 years gone?
As per ICICI the principal amount recovered is very minimal.

Hence I want to move the loan to Indian Bank which is giving 9.25% floating.

Please advice on options.
The EMI's paid by you until now has gone as interest part with a minimal principal amount being repaid. Ideally the bank should have given an option to you to either increase the EMI or increase the tenure every time they change the interest rates. Hardly any bank does that considering the documentation involved in that. Now that you are back tio sqaure one you need to get out of the high interest ICICI bank at the earliest. If you a getting a good deal from Indian Bank go ahead.

There is a website called bankbazaar.com where you have some calculators which show whether a home loan transfer is beneficial to you or not, try that and see.
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Old 6th January 2011, 13:09   #175
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Default re: Help with a home loan!

Quote:
Originally Posted by blackstallion76 View Post
Just wondering how can I restart the EMI with same principal for 240 months?
Where has all the EMIs paid from the last 5 years gone?
As per ICICI the principal amount recovered is very minimal.
That is not correct. Ask for "Amortization Schedule" from bank from start of loan to this point.

In initial years Interest component is actually higher but principal payment is significant because you have been paying it for 3 years now.

And if you are getting a 9.5% rate, transfer is no-brainer. In fact, get some letter from that bank and talk to ICICI about transfer. Most likely you would get 10.5% offer from ICICI itself.
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Old 6th January 2011, 18:49   #176
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Default re: Help with a home loan!

Quote:
Originally Posted by ghodlur View Post
There's this strange issue with my home loan agreement. As per the agreement, I was supposed to be given a Home Insurance which was a one time payment for which I had given a cheque during the loan disbursement. After many a follow ups, I finally got a copy of the Home Insurance taken from National Insurance and was horrified to find that the Insurance amount was less than what was mentioned in the Home loan agreement document which says "Home Insurance equal to the market value of the property or the max loan amount was applicable". Strangely neither of the conditions were met and when I enquired with the bank they said that the Insured Sum was correct and as per the consturction cost value and that they had goofed up in the agreement document. I was not alone in this goof up, there were many others but it seems I was the first to question them about this. Many communications to the bank in this regard has gone un answered and the bank is unwilling to give in writing about this mistake. What should I do?
Btw, what bank is this?

Normally, all banks charge a mandatory property insurance, which is equivalent to the reconstruction cost of the property only, so it is significantly lower than the actual market value of the property.

In case you feel the bank has misled you and you have documentary evidence of that, you can by all means go to the consumer court. Just bear in mind that it will be extremely painful and time-consuming.

If they have insured your property for the reconstruction cost amount, and charged you a premium for the same amount, I do not think you have been ripped off by the bank, and there is no loss per se.

But if you want to just punish the bank because they goofed up, a lawsuit is the way to go.


Quote:
Originally Posted by blackstallion76 View Post
Just wondering how can I restart the EMI with same principal for 240 months? Where has all the EMIs paid from the last 5 years gone?
@blackstallion76 - First up, it is impossible that you will have started on the "same" principal amount. I mean, even ICICI Bank does not loot its customers so blatantly. This is the equivalent of highway robbery!! I'd politely suggest you to check the facts once more - chances are, at least some of your principal amount must have been reduced.

Majority of your EMIs have gone towards the interest portion - if you can get an internal statement of account from ICICI (called a Stat Card by Bankers), you'll get to know how many re-pricings your loan has gone through.

Even the tenure of 240 that you see right now is probably a very rosy picture - it might even have turned up to 500+ sometime last year, and then reduced back. I have personally seen Stat Cards showing tenures of 534 months and such like. In these kind of cases, it is very easy for the interest portion to far outweigh the principal portion in your EMI.

Switching to the low-interest loan is always the better option, but just make sure you calculate your total cost of switching properly -
  • You'll pay foreclosure charges @ 2% to ICICI
  • You'll pay processing fees @ 0.50/1.00% to Indian Bank
  • You'll lose out on the property insurance premium already paid at ICICI, and yet will have to re-pay it at Indian Bank
  • You are probably a few steps down the repayment ladder on the Amort Schedule of ICICI right now, so a bit larger portion of your EMI is going towards the principal. At Indian Bank, you'll start right at the top of the Amort, and, if the economy worsens again, five years down the line you'd be again wondering where all your money went.
Better option would be to negotiate (read haggle, and haggle really hard) with ICICI Bank, and get them to drop the rate to whatever max extent they can, and then give the effect of the rate-drop to your tenure.

Please do not fall into the alluring trap of reducing your EMI.

Cheers,
R_S

Last edited by roadie_swift : 6th January 2011 at 19:06.
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Old 6th January 2011, 18:57   #177
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Quote:
Originally Posted by roadie_swift View Post
Normally, all banks charge a mandatory property insurance, which is equivalent to the reconstruction cost of the property only, so it is significantly lower than the actual market value of the property.

In case you feel the bank has misled you and you have documentary evidence of that, you can by all means go to the consumer court. Just bear in mind that it will be extremely painful and time-consuming.
That is bundling of two products, Loan and Insurance. This is illegal.Banks can "Offer" insurance but it can not "Mandate" it.

In this case, quick resolution would come from Insurance ombudsman.
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Old 6th January 2011, 19:36   #178
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That is not correct. Ask for "Amortization Schedule" from bank from start of loan to this point.

Most likely you would get 10.5% offer from ICICI itself.
@NetfreakBombay - You are absolutely correct in your suggestion to negotiate with ICICI Bank.

But regarding the Amort Schedule, note that there will be multiple amortization schedules in this case, because the loan account has been re-priced, probably several times. I think it would be impossible for the bank even to provide all these schedules.

However, for the convenience of all here, I am uploading an xl sheet wherein you can easily generate your own Amortization Schedule - it's as simple as that. No need to depend on Banks for that.

Cheers,
R_S

PS: @ NetfreakBombay -
Quote:
Originally Posted by NetfreakBombay View Post
That is bundling of two products, Loan and Insurance. This is illegal.Banks can "Offer" insurance but it can not "Mandate" it.

In this case, quick resolution would come from Insurance ombudsman.
Sorry, it seems you misunderstood me.

The "insurance" per se, i.e. the property being insured against perils like fire and earthquake - is Mandatory.

But, "purchasing the insurance" from the bank itself - is not mandatory. You, as a customer, can procure any insurance policy you like from any approved insurer, so long as it fits within the bank's norms of collateral insurance - which in turn is derived from RBI guidelines on the subject.

It is very exciting to suggest running to ombudsmen at every small irritation - but we need to give a thought to how difficult and time-consuming it is going to be for the ones who are going to be following up on our suggestions. The banks don't care about these things - they are in that very business, and they have people to take care of these things. Do we?

Cheers,
R_S
Attached Files
File Type: xls Amort Chart.xls (134.0 KB, 234 views)

Last edited by roadie_swift : 6th January 2011 at 19:43.
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Old 6th January 2011, 20:13   #179
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Quote:
Originally Posted by roadie_swift View Post
But regarding the Amort Schedule, note that there will be multiple amortization schedules in this case, because the loan account has been re-priced, probably several times
This is done via an automated system and schedule is updated each time floating interest rate fluctuates, pre-payment is made or other charges are applied on account.

The same system generates "Provisional" interest certificate for accounts based on current schedule.

Quote:
Originally Posted by roadie_swift View Post
The "insurance" per se, i.e. the property being insured against perils like fire and earthquake - is Mandatory.
Agree with that. Banks go one step further:

1. Force user to purchase personal insurance for duration of loan
2. Force user to purchase property insurance from the Bank itself. (Bank gets commission from Insurance Company, and this helps sales targets of staff)

Regarding Ombudsman, yes it does take significant efforts. And its up to a person to decide he has energy for that or not.

BTW: I got SBI to work properly for a colleague. SBI ended up sanctioning the loan without these two insurances. He bought better home insurance that covered house as well as electronic items for breakdown. Cost was lesser than what bank was charging.
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Old 6th January 2011, 21:52   #180
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Originally Posted by NetfreakBombay View Post
This is done via an automated system and schedule is updated each time floating interest rate fluctuates, pre-payment is made or other charges are applied on account.
Of course it is an automated system!

But that automated system is not going to be able to give you the earlier amort schedules, so you cannot exactly get (from the system) how much of your which EMI went to which section of repayment. That is what I was talking about. Like you say, once a schedule is updated (refreshed), the old one becomes unavailable.

Quote:
Originally Posted by NetfreakBombay View Post
Agree with that. Banks go one step further:

1. Force user to purchase personal insurance for duration of loan
2. Force user to purchase property insurance from the Bank itself. (Bank gets commission from Insurance Company, and this helps sales targets of staff)
Sure, there is a lot of mis-selling that takes place. Unfortunately, it's upto the customers to guard themselves, and that can only happen when we as customers become knowledgeable about how the system works.

Cheers,
R_S
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