Buying a Flat on Home Loan: The Complete Checklist (Eligibility, Legal, Registration & Tax)

Buying a flat is probably the biggest single purchase most people make. It also involves the most paperwork, the most acronyms, and the most room for an expensive mistake.

This guide walks through the four things to check, in the order to check them: your own eligibility, the property itself, the registration cost, and the loan you finally sign up for.

Why Trust This Guide

This guide is written by Deepak Gokul — a NISM Certified Mutual Fund Distributor and NISM-Series-XVII: Retirement Adviser Certified professional, who also holds the Chartered Wealth Manager (CWM®) certification.

His firm, Deepak Wealth Framework Pvt Ltd, is an AMFI Registered Mutual Fund Distributor (ARN-328771). The firm helps Chennai-based and NRI families fit big decisions like a home purchase into their overall financial plan — alongside their SIPs, insurance, and retirement goals.

This article covers general guidance and Tamil Nadu-specific figures where noted. Stamp duty, registration, and MODT rates vary by state and change periodically — always confirm current rates on your state’s registration department website (TNREGINET for Tamil Nadu) before budgeting.

1. Check Your Own Eligibility First

Before you fall in love with a flat, find out how much a bank will actually lend you. Eligibility works differently depending on how you earn.

a. Salaried applicants

• Most banks want at least 1–2 years of continuous work experience.
• Minimum monthly income requirements vary by lender, commonly starting around ₹25,000.
• Documents needed: salary slips (usually last 3 months), Form 16 or ITR, bank statements (6 months), and employment proof.

b. Self-employed applicants

• Banks typically want 3–5 years of stable business income, not just 1–2 years.
• Documents needed: ITRs for the last 2–3 years, profit & loss statements, business bank statements, and business registration proof.
• Because income isn’t a fixed monthly figure, self-employed applicants are scrutinised more closely on bank statements and ITR consistency than salaried applicants.

c. Your CIBIL score matters more than most people realise

A CIBIL score of 750 or above is generally what gets you both approval and the better interest rate slab. Below that, you may still get a loan, but at a higher rate or a smaller sanctioned amount. For self-employed applicants, a strong CIBIL score matters even more — income proof is less standardised, so lenders lean on your score harder.

d. Know the loan-to-value (LTV) limit before you plan your budget

RBI’s LTV rules set the maximum a bank can lend as a percentage of the property’s value:

This down payment is separate from stamp duty, registration, and MODT charges — all of which come out of your own pocket, not the loan. These LTV slabs are per RBI’s Master Circular – Housing Finance, last updated 1 April 2025 (consolidating instructions issued up to 31 March 2025); banks must also exclude stamp duty, registration, and other charges from the property cost when calculating LTV, except for loans of ₹10 lakh or less, where these can be included.

2. Property Valuation and Legal Due Diligence

Once your own eligibility is clear, the property itself needs its own checks — and this is where the bank’s process actually helps protect you too.

a. The bank’s valuation may not match the seller’s asking price

The bank sends its own valuer to assess the property before sanctioning a loan. If the bank’s valuation comes in lower than the agreed sale price, the bank will only lend against the lower figure — you’ll need to fund the difference yourself. Always ask for the valuation report before finalising your budget.

b. Legal opinion and title verification

The bank’s empanelled lawyer checks the seller’s title — whether they legally own the property and can sell it free of disputes. As the buyer, don’t rely on the bank’s check alone. Get your own independent legal opinion too, especially for resale flats or older buildings. It should cover:

• Chain of title (ownership history, ideally traced back 13–30 years)
• Encumbrance Certificate (EC) — confirms the property is free of existing loans, mortgages, or legal disputes
• Approved building plan and occupancy certificate
• Property tax receipts up to date, no pending dues
• No pending litigation on the property or the builder/society

3. Guideline Value vs Market Value — Stop Confusing the Two

This is one of the most common points of confusion for first-time buyers, so it’s worth explaining plainly.

• Guideline value is the minimum value the government sets for a locality, used only to calculate the minimum stamp duty and registration payable. You cannot register a property below this value.
• Market value is what a buyer and seller actually agree to pay — based on demand, amenities, floor, view, and negotiation. In most metro localities, market value runs meaningfully higher than the guideline value, though the gap varies by area.

Stamp duty and registration charges in Tamil Nadu are calculated on whichever is higher: your actual sale price or the government guideline value for that locality. If your agreed price is below the guideline value, you’ll still pay duty on the guideline value — not your lower price. You can check the current guideline value for any locality on the TNREGINET portal before finalising a deal.

4. Stamp Duty, Registration Charges, and MODT — What You Actually Pay

These are three separate costs, and buyers frequently mix them up. There’s also a gap between the statutory rate and the percentage you actually end up paying — this is exactly where “9% vs 11%” confusion comes from, on both old and new flats.

a. The statutory rate: 11%, on the assessable value

The important word is assessable value — the higher of your declared sale price or the government guideline value. It is not automatically your full purchase price.

b. Why your real percentage can come out lower than 11%

The rule only forces the higher figure when the guideline value exceeds your sale price. It doesn’t work the other way. So if the guideline value for your specific property is lower than what you actually paid, the government still charges duty and registration on that lower guideline value.

Now divide what you paid in duty and registration by your actual purchase price, not the guideline value. The resulting percentage can land meaningfully below 11%, commonly in the 8–10% range. This applies to both old (resale) and new flats. It’s the most common reason two buyers who each paid the “same 11% rate” report two different percentages of their purchase price.

Take an ₹80 lakh flat with a guideline value of ₹65 lakh. Stamp duty and registration land on ₹65 lakh, so 11% works out to ₹7.15 lakh — only about 8.9% of the ₹80 lakh you actually paid.

c. A second factor for new/builder flats specifically

For a first-sale (new, under-construction or newly completed) flat, builders sometimes structure the transaction as two separate documents — a UDS sale deed (Undivided Share of land) plus a separate construction agreement for the building value, which can be stamped differently from a single composite deed. Where this applies, it’s an additional factor on top of the guideline-value effect above, and can push the effective percentage down further. This mechanism does not apply to a straightforward resale transaction, which is registered as one deed.

The practical takeaway: don’t budget off a flat “9%” or “11%” rule of thumb from someone else’s purchase. Get the exact guideline value for your specific property from TNREGINET, compare it to your actual price, and calculate 11% of whichever is higher — that is your real number.

d. MODT — a separate charge, only if you take a loan

MODT applies on top of stamp duty and registration, whether you bought an old or a new flat.

Rate check, August 2026: the ₹30,000/₹6,000 caps above are the figures most commonly published as of this writing. Government notifications revise MODT caps from time to time, and it’s plausible these moved recently. Before you budget, confirm the current MODT stamp duty rate and cap directly on TNREGINET, or ask your bank’s loan officer. Don’t rely on this figure, or any blog’s figure including this one, if it’s more than a few months old. Did your own MODT charge come out higher than ₹36,000? That’s a sign the cap moved up since this article was last checked — flag it to Saravana for a source-verified update.

Always verify current rates on TNREGINET before budgeting, since both the resale and new-flat rules are revised periodically, and a small concession exists for properties registered solely in a woman’s name.

MODT deadline: if you take a home loan, the mortgage must be registered (MODT) within a set window after disbursement. Check your loan agreement for the exact deadline. Don’t let it lapse — it can affect the bank’s legal claim on the property.

5. Sale Agreement to Sale Deed — The Correct Order

A common mistake is treating the sale agreement and sale deed as the same thing, or skipping steps. The correct sequence is:

1. Token advance — a small amount paid to signal serious intent, usually with a simple receipt.
2. Sale agreement — a legal contract stating the price, timeline, and conditions of sale. This is not the same as ownership transfer, but it is legally binding and typically involves a larger advance payment (often 10–20% of the price).
3. Loan sanction and disbursement — your lender reviews the property and your eligibility, then sanctions the loan based on the sale agreement and valuation.
4. Sale deed execution and registration — the actual transfer of ownership, signed by both parties and registered at the Sub-Registrar Office. This is the document that legally makes you the owner.
5. MODT registration — if you took a loan, the mortgage gets registered separately, usually soon after the sale deed.

Never pay the full amount or hand over possession before the sale deed is registered. And never register a sale deed without first confirming the Encumbrance Certificate is clean, right up to the date of registration.

6. Comparing Home Loan Offers — Don’t Just Look at Day-One Interest

This is where many buyers lose the most money over the life of the loan, and it’s avoidable.

a. Look at the lender’s rate-revision history, not just today’s number

Two lenders can quote the same rate today and still behave very differently over the next five years. Check how a lender’s home loan rates have moved historically — ask directly, or check online forums and RBI data. Some lenders pass on repo rate cuts quickly and in full. Others are slower to cut but quick to raise. A slightly higher rate today from a lender with a consistent, borrower-friendly repricing history can cost you less over 15–20 years than a lower “introductory” rate that resets upward later.

b. Banks vs NBFCs/Housing Finance Companies

NBFCs and HFCs generally price home loans higher than scheduled banks for a comparable borrower, partly because their own cost of funds runs higher. They can offer more flexibility on documentation for self-employed or non-standard income profiles — a real trade-off, but one that usually comes at a rate premium. Compare the effective rate, not just approval speed.

c. Other things to compare beyond the headline rate

• Whether the rate is repo-linked (RLLR) or MCLR-linked, and how quickly each responds to rate changes
• Processing fees and whether they’re refundable if the loan doesn’t go through
• Prepayment/foreclosure charges — the RBI (Pre-payment Charges on Loans) Directions, 2025, take effect from 1 January 2026. From that date, lenders cannot levy foreclosure or prepayment charges on floating-rate loans to individuals for non-business purposes. This covers loans sanctioned or renewed on or after 1 January 2026. If your loan was sanctioned earlier and hasn’t been renewed since, check whether it’s actually covered, and get your lender to confirm in writing either way.
• Whether the loan has a lock-in period before you can refinance elsewhere

7. Other Bank Charges to Budget For (Beyond the Interest Rate)

The interest rate is just one line item. Several other charges add to your real cost, and vary meaningfully from bank to bank — always ask for the full fee schedule in writing before you sign.

Ask your bank for these as a single, itemised list before sanction — not scattered across the loan agreement’s fine print. Two lenders quoting the “same” interest rate can have a meaningfully different total cost once these fees are added up.

Don’t forget the MODT cancellation step after loan closure

Once your loan is fully repaid, the mortgage doesn’t disappear automatically. You (or the bank, depending on the process) must formally cancel/release the MODT at the Sub-Registrar office. Skipping this leaves your property showing as mortgaged in official records, which can cause problems if you try to sell or take another loan against it later. Collect your original title documents and a loan closure/no-dues certificate from the bank, and confirm the MODT cancellation is actually completed — don’t just assume it happens by default.

8. Should You Add Property, Term, or Disability Insurance to Your Loan?

Banks often bring up insurance at the same time as loan paperwork, and it’s worth knowing what’s actually required versus what’s being offered.

a. Property (fire/structure) insurance

Neither RBI nor IRDAI mandates property insurance as a condition for a home loan, but many banks strongly encourage it, and some effectively make it a practical condition of sanction for their own risk comfort. This covers physical damage to the structure — fire, natural calamity — and is usually reasonable in cost relative to the protection it gives. It’s worth having regardless of what the bank requires, since it protects your own asset.

b. Credit life / loan protection insurance

This is different from property insurance. It pays off your outstanding loan balance if you die during the loan term, and sometimes on critical illness or permanent disability too, depending on the policy. Banks frequently bundle this into your loan amount — which means you effectively pay interest on the insurance premium itself, for the whole loan tenure.

Important: this is not mandatory, today or going forward. Current RBI and IRDAI guidance already bars banks and lenders from forcing a customer into a specific insurance product or linking it to loan approval; they must clearly disclose that buying home loan insurance is voluntary. RBI has gone further too. New RBI directions on responsible lending conduct, effective 1 January 2027, explicitly prohibit lenders from making insurance or other third-party financial products a condition for a loan, with tighter safeguards against mis-selling and forced bundling.

Compare the bundled credit life premium against a standalone term insurance policy for equivalent or higher cover. A standalone term plan usually costs less, stays fully portable if you switch lenders or prepay the loan, and pays your family a lump sum they can use for anything — not just the outstanding loan.

c. Disability / critical illness cover

Some lenders bundle a disability or critical illness rider along with the credit life cover, again added to the loan amount. The same logic applies: check whether a standalone rider on your existing term or health insurance covers this more cheaply, before accepting a bundled version that increases your EMI and adds interest cost on the premium.

A general rule worth applying to all three: evaluate insurance bundled into a home loan the same way you’d evaluate any insurance purchase — on its own merits, cost, and whether it fits a gap in your existing cover — not because the loan officer presented it as part of the paperwork.

9. Tax Benefits You Can Claim (and One That Has Expired)

Under the old tax regime, a home loan on a self-occupied property gives you two main deductions.

a. Section 24(b) and Section 80C

• Section 24(b): claim up to ₹2 lakh per year on home loan interest for a self-occupied property. If you let the property out, there’s no upper limit on the interest deduction. But you can only set off a loss against other income up to ₹2 lakh in one year; you carry the balance forward.
• Section 80C: claim up to ₹1.5 lakh per year on principal repayment. This limit also covers stamp duty and registration charges paid in the year of purchase.

b. Section 80EEA has expired — don’t plan around it

Section 80EEA offered first-time buyers an additional ₹1.5 lakh interest deduction. But it only applied to loans sanctioned between 1 April 2019 and 31 March 2022. If you’re taking a loan today, you cannot claim this benefit — leave it out of your tax planning entirely.

c. Check which tax regime actually saves you more

Under the new tax regime, which is now the default, you lose most of these home loan deductions for a self-occupied property. The regime that saves you more depends on your full income and deduction picture. Review this with your CA, or as part of your broader financial plan, before you assume the old regime automatically wins.

10. Old Flat (Resale) vs New Flat — Full Comparison

Bringing together everything above, here’s the side-by-side difference between buying resale and buying new in Tamil Nadu:

Extra checks specific to resale flats

• Ask for the original sale deed chain from the current owner, not just their own purchase deed — verify it goes back cleanly.
• Check the existing owner has no pending loan on the property; if they do, their bank’s No Objection Certificate (NOC) and loan closure must be sorted before or as part of your registration.
• Confirm society/association maintenance dues and property tax are fully paid up by the seller before registration.
• Get a fresh Encumbrance Certificate right before registration — not one that’s several months old.

If the seller had their own home loan on this flat, check these documents specifically

This is one of the most common resale complications. It directly affects whether your new loan gets disbursed on time. If the seller took a home loan to buy or build this flat, their lender holds the original title documents and has registered an MODT (mortgage) against the property. Get the following from the seller, in writing, before you or your bank proceed further.

Documents to collect from the seller’s bank

• Loan closure/foreclosure statement — confirms the seller’s outstanding loan is fully repaid, with a zero balance. If the loan isn’t closed yet, the seller’s payoff (using part of your payment) and the closure need to happen before or exactly at registration, coordinated between both banks. Don’t take the seller’s word that “it’s basically closed.”
• No Objection Certificate (NOC) — confirms the bank has no further claim on the property and consents to the sale.
• Original title deed and property documents — the seller’s bank held these as security for the whole loan tenure. Confirm the bank actually handed back the complete original set, not photocopies, and cross-check it against what your own lender’s lawyer expects to see.
• MODT cancellation/release document — the seller’s bank must formally cancel the original mortgage at the Sub-Registrar office. This is a separate legal step; a loan closure letter alone does not cancel the MODT entry in government records. Ask for the registered cancellation document itself, not just a bank letter.
• Updated Encumbrance Certificate, dated after the MODT cancellation is registered — this is what actually proves the property is free of the seller’s old mortgage. An EC pulled before the cancellation is registered will still show the old loan as an open encumbrance.

Why this matters for your own loan

Your new bank will hold back disbursement until it can confirm the property is free of the seller’s prior mortgage. Many resale-with-existing-loan deals follow the same pattern: your bank pays part of your loan amount directly to the seller’s bank to close their loan, MODT cancellation follows, and only then does your own sale deed and MODT get registered. Ask both banks — the seller’s existing lender and your new lender — to confirm this sequencing in writing before you commit to a registration date. This single step causes most resale delays.

Extra checks specific to new/under-construction flats

• Confirm the project is RERA-registered, and check the RERA portal for the promised completion date and any complaints.
• Get the exact stamp duty and registration break-up (UDS value vs construction value) from the builder in writing before you budget — don’t assume a percentage you heard elsewhere applies to your project.
• Check the builder’s title to the land itself, not just your flat’s share of it.
• Confirm the occupancy certificate (OC) and completion certificate timeline, since these affect when you can legally occupy the flat and what stamp duty structure applies.

Frequently Asked Questions

What documents do I need for a home loan if I’m salaried?

Salary slips (usually last 3 months), Form 16 or ITR, 6 months of bank statements, and employment proof. Most banks want at least 1–2 years of continuous work history.

What documents do I need for a home loan if I’m self-employed?

ITRs for the last 2–3 years, profit and loss statements, business bank statements, and business registration proof. Banks generally want 3–5 years of stable business income.

What is the difference between guideline value and market value?

Guideline value is the government’s minimum value for a locality, used to calculate stamp duty and registration. Market value is the actual negotiated price between buyer and seller, which is usually higher.

How much are stamp duty and registration charges in Tamil Nadu?

The statutory rate is 7% stamp duty + 4% registration = 11%, on whichever is higher between your sale price and the government guideline value. This applies to both old and new flats — the 11% is charged on the “assessable value,” not automatically on your full purchase price.

Why did my registration come to about 9% instead of 11%, even on a resale flat?

This happens when the guideline value for your property is lower than what you actually paid. Duty and registration are calculated on that lower guideline value, so when you divide the amount you paid by your real purchase price, the result comes out below the 11% statutory rate — commonly around 8–10% in practice. This can happen on old (resale) flats just as easily as new ones.

What is MODT and do I have to pay it?

MODT (Memorandum of Deposit of Title Deed) registers your lender’s mortgage on the property. It applies only if you take a home loan, and in Tamil Nadu costs 0.5% of the loan amount (capped ₹30,000) plus 1% registration (capped ₹6,000).

Is Section 80EEA still available for home loan tax deduction?

No. Section 80EEA only applied to loans sanctioned between April 2019 and March 2022. It is not available for loans taken now.

Should I choose a bank or an NBFC for my home loan?

Banks generally offer lower interest rates than NBFCs/HFCs for comparable borrowers, though NBFCs may be more flexible on documentation. Compare the effective rate and rate-revision history, not just approval speed.

What other charges do banks add on top of the interest rate?

Processing fee (0.25%–1% of loan amount plus GST), legal fee, technical/valuation fee, MODT drafting charges, CERSAI registration, and MODT cancellation charges when you close the loan. Ask for an itemised fee list before sanction.

Is it mandatory to buy insurance with a home loan?

No. Neither RBI nor IRDAI mandates property, credit life, or disability insurance as a condition for a home loan. Banks can suggest it, but cannot reject or delay your loan solely because you decline. Compare bundled premiums against standalone term insurance before accepting.

What if the resale flat I’m buying still has the seller’s home loan running on it?

Get the seller’s loan closure/foreclosure statement, their bank’s NOC, and the original title documents released by that bank. Most importantly, confirm the MODT (mortgage) registered in the seller’s bank’s favour has been formally cancelled at the Sub-Registrar office — a loan closure letter alone does not cancel this. Your new bank will require proof of this MODT cancellation, usually along with an updated Encumbrance Certificate, before it will process or disburse your own loan.