Can NRI buy a residential property without loan in India? Property is in Karnataka






Most buyers can’t afford to buy a residential property without loan. Because of that buyers take loan to fund the purchase. But you are not required to take a loan if you don’t need one. Perhaps you are buying a home at inexpensive market or having a fund to outright the purchase.

Buying a residential property without home loan has many advantage:

Advantage 1: The main advantage is that overall cost of property is less

For Example:

  • Property value : Rs. 80 lakh.
  • Down Payment : Rs. 10 lakh
  • Loan amount is Rs 70,00,000
  • Tenure 20 years
  • Interest rate 9.5%

Refer to below SBI loan calculator:

https://qph.cf2.quoracdn.net/main-qimg-58e47aa081356be4fdd1fdd08dba87d8

The total payment including principal and interest is Rs.1,57,14,698, which is almost double the property value of Rs. 80 Lakh

We can avoid over payment if we self-finance the purchase. If we can’t self-finance the purchase, at least we can increase the down payment, deduce the loan amount & tenure to bring down the overall cost.

Advantage 2: We can avoid the cost of home loan opening, closing and insurance

For Example:

  • Home loan opening stamp duty and registration cost 0.3% of loan amount
  • Home loan insurance cost around Rs. 25,000
  • Home loan closing cost around Rs. 700

Advantage 3: In an average, bank take around 1 to 3 months to process home loan. Without home loan, we can close the deal faster within couple of days and give an edge over competing buyers

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Let me share my experience of purchasing a residential property without home loan.

Context:

  • My client, husband and wife jointly purchasing the property. Both are OCI status holder in California and living in California.
  • 2BHK flat in Bangalore, India. Funding the purchase from NRI saving account
  • The buying price is Rs. 77,25,000
  • Though the buyers living in California, they immediate family members are already in possession of schedule property since 2 years as tenant.

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Document Verification:

We collected the following documents from seller for verification:

  • Sale Deed (of how the seller acquired the property)
  • Tax receipt
  • Khata
  • PAN and Aadhaar

We extracted the latest encumbrance certificate and sale deed certificate copy in Kaveri Online Services. Based on the sale deed certified copy, we verified all the linking documents.

Our advocate team gave the verification report. As per the report, the title documents are legible.

Sale Agreement:

Sale agreement is the most important document in whole chain of buying a property because sale agreement covers terms & conditions of the sale. Even the sale deed is drafted based on the terms covered in sale agreement.

The Sale Agreement consist of following information:

  • Date and place of sale agreement execution
  • Seller name and buyer name, age, address and PAN number
  • Property Description
  • Sale consideration
  • Payment terms, mode of payment and date of payment
  • Tentative date of sale deed registration
  • liquidated clause if any of the party withdraw deal
  • Indemnity clause
  • Dispute resolution

Since we are not opting for home loan, we skipped the sale agreement to expedite the process and time. Please note that buyer’s family is already in possession of schedule property since 2 years as tenant, this gave us more confident and trust in seller to skip sale agreement.

In order to avoid difference between seller and buyer, we need to layout terms and conditions of the sale. Our advocate drafted the sale deed in word document and verified the draft at multiple layers internally before we share to our client.

In our case, the parties are living in different places:

  • Seller is living in Mysore
  • Buyer is living in California
  • I am living in Bangalore

Due to such geographical constrain, we exchanged sale deed draft through email for mutual confirmation. Also we created WhatsApp group for instant communication, this helped us to send remainders to parties if we shared any important documents in email.

Up on the confirmation of sale deed draft from parties, the buyer initiated the payment of Rs.50,000 to seller as token advance (token advance is an assurance to purchase)

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General Power of Attorney (GPA):

Buyers weren’t able to come to India for sale deed registration. The buyers granted GPA to their family member to sign sale deed in sub-registrar office. We followed below procedure to execute GPA

  • We draft the GPA in word document and emailed to buyer
  • Buyer took the printout of GPA draft
  • Signed the GPA in-front of notary. Notary attested the GPA
  • Two witnesses signed the GPA (witnesses were not present in-front of notary. Buyer got the witnesses sign in office)
  • Buyer sent the GPA to India through courier
  • We got the GPA adjudication in District registrar office. The adjudication fee is Rs. 200

Refer to below GPA image (In the image, we shared only 1st and last page, not all pages)

https://qph.cf2.quoracdn.net/main-qimg-b516cdacc66d02e9762e4c908c131437https://qph.cf2.quoracdn.net/main-qimg-7200ea0bac3a6cb2917105766b837a51

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Tax Deducted at Source (TDS):

As mentioned in the context, the buying price is Rs. 77,25,000/- which is more than Rs. 50 Lakhs and seller is an Indian citizen, we need to pay 1% TDS. The TDS is Rs. 77,25,000 * 1% = 77,250/-

We should pay the TDS in Income Tax Department website under 26 QB (TDS on Sale of Property). The buyer deducted Rs. 77,250 from buying price and deposited the same in Income tax department website.

Buyer was not aware of how to pay the TDS. We connected with buyer through google meet which has features like audio, chat and screen sharing. We guided the buyer for TDS payment in google meet.

Refer to below TDS challan:

https://qph.cf2.quoracdn.net/main-qimg-b75f936a0f7c724b6e38853585a155aehttps://qph.cf2.quoracdn.net/main-qimg-6ce9bf4f00a463da784abd47e99a8acb

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Appointment for Registration:

In Kaveri Online Services, we should submit an application + make the payment + book an appointment for registration of sale deed in sub-registrar office.

We need softcopy of following documents for application submission

  • Sale Deed (of how seller acquired the property)
  • Tax receipt
  • Khata
  • Seller and buyer PAN
  • TDS Challan
  • Sale Deed draft in PDF (to be registered)

Through google meet, we connected with buyer for filing the application in Kaveri Online Service. The buyer in California cannot able to open Kaveri Online Services website. In India, I can able to open the website but at same time not able to access in California. We tried multiple actions to access the website in California, listed below

  • Cleared the cookies and browsing history
  • We tried in different browsers of Safari, chrome and firefox.
  • We tried in different devices of Macbook, iphone and Dell laptop

We had almost 2 hours of troubleshoot, it was mid-night for buyer in California, so we decided to retry tomorrow.

On next day, again we cleared the cookies and browsing history before we retry, still the same issue that site was not opening. Refer to below screen image

https://qph.cf2.quoracdn.net/main-qimg-d0f7e7ef784006993f60e2200c4b1e33https://qph.cf2.quoracdn.net/main-qimg-fb492f5042f0d85d85ee04720b13da92

To move forward, we came-up with an idea of REMOTE ACCESS. Let me explain the same below:

In India, I submitted the application in Kaveri Online Service on behalf of buyer. In two days, our application was verified and received the payment request. Refer to the payment request in below image

https://qph.cf2.quoracdn.net/main-qimg-55aec4fc009c5885bfa68d357d22a5d8

We scheduled a zoom call with buyer and we gave remote access of my laptop screen, keyboard and mouse to buyer. The buyer paid the government fee using my device remotely from California.

Below is the photo of my device while accessing remotely from California.

https://qph.cf2.quoracdn.net/main-qimg-483961aac8d00765d588feaba54fc265

Through remote access, we paid the government fee. Refer to below transaction receipt

https://qph.cf2.quoracdn.net/main-qimg-aefc257dfb01907d69afe1854b72f86b

Immediately after the above payment, we got request for slot booking. We booked slot very next day. Refer to below slot confirmation

https://qph.cf2.quoracdn.net/main-qimg-68b848600ba4d828bd0dee1bb6e35ffb

As per our sale deed draft, the buyer should complete the payment before sale deed registration. As soon as slot is confirmed, the seller demanded the full and final payment. Accordingly, the buyer completed the payment through online account transfer

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Sale Deed Registration:

On the day of registration, the seller carried the following documents to sub-registrar office

  • Original sale deed (of how seller acquired the property)
  • Khata
  • Tax receipt
  • Car parking allotment letter issued by builder
  • PAN

The GPA holder carried the following documents

  • Original GPA
  • PAN

We carried following documents

  • Printout of summary report downloaded from Kaveri Online Services
  • Printout of Sale Deed (to be registered)

The seller and GPA holder brought one witness each

In span of 30 minutes, we completed the registration including thumb, photo, sale deed signing and scanning. Refer to below registered sale deed