Maharashtra Housing and Development Authority (MHADA) is a government organization that was established in 1977 by the government of Maharashtra to undertake activities related to housing in the state of Maharashtra.
Home loans for MHADA flats are available for buying flat on second sale basis as well as for buying flat directly from MHADA.
What are MHADA flats?
These flats are constructed by MHADA. The land on which the flats are constructed is owned by MHADA but the conveyance of the land is not done in favor of the buyer/housing society. Instead, an agreement is executed for granting a lease for a very long period, generally for 99 years. MHADA periodically comes out with a scheme to allot the flats in different areas through a lottery for different categories of people based on their income levels
Home loan for MHADA flats for buying directly from MHADA
In respect of the MHADA flats allotted through the lottery, one can avail of home loans from banks and housing finance companies. For being eligible for the home loan for MHADA flat which is allotted to you through lottery one also has to also satisfy the eligibility criteria for a home loan based on income. In case the income of the allottee of the flat is not sufficient, one can add earning spouse, children as co-borrower to the home loan. Lenders generally do not allow the siblings as co-borrower, but few lenders allow siblings as co-applicants for the home loan on a case-to-case basis.
Home loan for MHADA flats under the second sale
You can get a home loan not only for the new flats constructed by MHADA and sold through the lottery but you can also get a home loan for buying it from a person other than MHADA for old flats constructed by MHADA.
The process for availing a home loan for MHADA flat under the second sale is simpler if the society has been formed for obtaining the No Objection Certificate (NOC) for pledging the flat with the lender as you need to approach the concerned society only who can issue the NOC.
In cases where a housing society has not been formed for MHADA flats, you may face an egg or chicken problem. If you approach the MHADA official in charge of the area, he generally flatly refuses to recognize and entertain the buyer as the buyer is not registered as a tenant in the records of MHADA. The allottees of MHADA flats are called tenants in the terminology used by MHADA. So one course of action available to you in such a case is to take the lender in confidence and pay to the seller first and get yourself registered as a tenant in the records of MHADA. You can then approach MHADA for the issue of NOC for pledging the flat with the lender. In the case of the second sale of MHADA flats, since MHADA is the registering authority, the lender may ignore any missing link in the chain of documents about previous transactions in respect of the property.
The second option available in respect of the old flats is that you can request the seller to approach the office of MHADA to issue an NOC in favour of the buyer. The second option seems difficult as the bureaucratic MHADA official will again insist that the buyer is not present their tenant.
People generally are under the impression that the Home loans are generally not available for MHADA flats specially in case of old buildings of MHADA. This is not so. Housing Finance Companies like HDFC limited and banks like ICICI bank give home loan for MHADA flats as old as 40 years provided you satisfy other eligibility criteria.
Documents needed for the home loan for MHADA flats
In addition to the basic Know Your Customer (KYC) documents like identity proof and proof for residential address, the buyer has to submit documents in support of his income and property. Salary slips and form no. 16 issued by the employer or copy of ITR filed are considered as sufficient income proof for salaried borrowers. However self employed borrowers whether professional or business person people, have to submit elaborate set of documents as income proof. The self employed borrowers have to submit copies of ITR with profits and loss with balance sheet of the business duly certified. Professionally qualified borrowers have to submit the documents evidencing their membership of the professional body like medical council, bar council or Institute of Chartered Accountants India etc.
In addition to the KYC and income documents, you have to submit documents in respect of the property proposed to by bought for availing the home loan for MHADA flats. In case of second sale of the MHDA flats, you will have to submit a copy of the agreement with NOC from the society/MHADA
The applicants who have won the lottery under the Mhada Lottery Scheme can approach Housing and Urban Development Corporation (HUDCO) for the home loan in respect of MHADA flats allotted. This will ease the process of documentation as well as the subsidy available on the home loan under PMAY.
The application form for a home loan for Mhada flats has also to be accompanied by a cheque for the processing fee. The photograph of the applicant/s is also needed to be attached/pasted on the application form.