HOME LOAN
Home loans are one of the preferred financial tools that allows an individual to purchase a plot or a residential property on loan. These loans are offered by banks and Housing Finance Companies (HFCs) at attractive interest rates. Special home loan schemes are offered as well.
What is a Home Loan?
A home loan is offered by lenders to individuals to residential property. A significant portion of the cost of the property is covered by a home loan. Borrowers will have to make a down payment and the remaining amount can be cleared in Equated Monthly Instalments (EMIs). The tenure of a home loan ranges between 5 years and 30 years.
Why Choose Us?
- Low Interest Rates.
- Extended Loan Tenure.
- Swift and Smooth Disbursal.
- Higher Loan Disbursal Amount.
- Simplified Documentation Process.
Process to Apply for a Home Loan
The process that must be followed to apply for a home loan is mentioned below:
- Check Eligibility – Ensure that meet the eligibility criteria to avail a home loan. You can check on the lender’s official website about the eligibility criteria. Basic details such as your name, date of birth, employment details, income details, etc., will need to be provided to check the eligibility criteria.
- Choose the Tenure and Loan Amount – Next, the amount of loan that you are availing must be selected. The repayment tenure must be chosen as well.
- Submit the Application – Next, the completely filled out application must be submitted.
- Documents – Next, the relevant documents must be submitted.
- Loan Sanction – Once the verification process has been completed, the loan will be sanctioned. The sanction letter will be provided and the loan amount will be deposited in the bank account.
Benefits of Availing a Home Loan
Some of the main benefits of availing a home loan are mentioned below:
- Rent need not be Paid – Since the rent in many cities is high, availing a home loan will ensure that no rent needs to be paid.
- Capital Appreciation – Over time, the value of the property will increase.
- Long Repayment Tenure – Lenders may offer home loans with a repayment tenure of up to 30 years. This will ensure that the EMIs will be low.
- Easier to Buy a Home – Since the down payment is low and the remaining amount can be paid in EMIs, it is earlier to purchase a house.
- Balance Transfer – You can transfer the balance to another lender in case they offer home loans at lower interest rates.
- Prepayment Charges – No prepayment charges will be levied in the case of a home loan.
- Tax Benefits – Tax benefits can be availed in case you opt for a home loan.
Home Loan Eligibility
| Eligibility Criteria | Requirement |
| Age | Minimum Age: 18 years and Maximum Age: 70 years |
| Resident Type | Resident Indian |
| Employment | Salaried Or Self-employed |
| Net Annual Income | At least Rs.5-6 lakh depending on the type of employment |
| Residence | * permanent residence * A rented residence where he/she has resided for at least a year prior to applying for a loan |
| Credit score | A good credit score of at least 700 to 750 or more obtained from a recognised credit bureau. |
Documents Required for Home Loan
| KYC Documents | For Self-employed Applicant/Co-applicant | For Salaried Applicant/Co-applicant |
| PAN CARD | Income Tax Returns for the last 3 years | Salary Slips for the last three months |
| AADHAR CARD | Certificate of Qualification (for Doctors/CA and other professionals) | Copy of Form 16 or Income Tax Returns for the last two years |
| VOTER CARD | Balance Sheet audited by a certified CA and Profit and Loss account for the previous 3 year. | |
| PASSPORT | Business License Details | |
| DRIVING LICENSE | Business address proof | |
| TDS Certificate |
FAQs on Home Loans
What is a home loan?
A home loan is a secured loan from a financial institution to buy a residential property. You can avail a home loan to buy a ready-to-move-in house, apartment, or one under construction. Home loans can be availed from both banks and Non-Banking Financial Companies (NBFCs).
Which is the best bank for home loan?
Before signing up for a home loan product, it’s best that you compare loans offered by different banks and lending institutions. While comparing, consider the interest rate, Loan-to-Value (LTV) ratio, processing fees, and tenure offered by the bank. Use a home loan EMI calculator and calculate your EMI based on these factors. Compare multiple home loan products by various banks by using this method. Also, certain lenders roll out home loan offers with reduced interest rates from time to time. Keep an eye on that too while looking for a loan. Also, know your requirements first before applying. You can go through the above list to get an idea regarding which bank’s home loan would suit your requirement.
How long it takes to get a home loan sanctioned?
Usually, it takes 3 to 4 weeks to get a home loan sanctioned. However, you need to keep a few factors in mind for a better understanding. First of all, you need a pre-approval of your home loan from the concerned lender to get your loan sanctioned. However, pre-approval doesn’t always mean that your loan will be disbursed immediately and depends on certain external as well internal factors. For instance, your loan sanction can be delayed if there’s delay in submission of property or income-related documents.
Which factors determine my home loan eligibility?
Banks/financial institutions consider the following factors such as your age, annual income, occupational stability, resident type, number of co-applicants, credit score, ongoing loans if any, etc.when determining your loan eligibility.
What is the difference between a fixed-rate and a floating-rate home loan?
The rate of interest associated with fixed-rate loans remains unchanged during the entire tenure of the loan. On the other hand, the interest rates applicable on floating rate loans can be revised from time to time depending on the RBI key policy rates. The equated monthly instalments can increase or decrease depending on the prevailing RBI rates in the case of floating rate type loans.
Can I prepay my outstanding home loan amount?
Yes, partial or full prepayment is possible. Floating-rate loans usually have no prepayment fee, but fixed-rate loans may incur a penalty of up to 2%.
Can I avail tax deductions on my home loan?
Yes, you can avail tax benefits on both the interest and principal component paid against your home loan. As per Section 80C of the Income Tax Act, you can avail deductions up to Rs.1.50 lakh on the principal amount repaid annually. Under Section 24 of the IT Act, taxpayers are also eligible for benefits up to Rs.2 lakh on the interest repaid against a home loan annually.
Who can be a co-applicant?
The co-applicant can be an immediate family member such as your spouse, your parents or even your major children. It is also mandatory for all co-owners of the property to be co-applicants while applying for a loan. However, the co-applicant need not be a co-owner.
Can I switch from a fixed rate to a floating rate during my home loan tenure?
Yes, you can switch from a fixed to floating rate of interest on your home loan during the repayment tenure. However, you will be charged a conversion fee by the lender in such cases.
When does my loan repayment period begin?
The loan repayment period begins only after the loan provider has disbursed the entire home loan amount. However, you will be required to pay the interest i.e. pre-EMI on the partially disbursed loan on a monthly basis, in most cases.
Can I take 2 home loans at the same time?
Yes, you can take 2 home loans at the same time provided that your lender approves your eligibility to manage 2 Equated Monthly Instalments (EMIs) at the same time. However, the tax benefits on the second house will be different and you will be required to establish the property as self-occupied or let-out property.
Can I get 100% financing on a home loan?
No. Banks/financial institution do not grant 100% of the property value as home loan. Home loan lenders establish a margin on their loan i.e. the percentage of the cost that the lending institution will be covering. For example, if the margin on the loan is set at 10%, the bank will cover 90% of property value. In such cases, you will be required to a make a down payment of the balance amount, i.e. 10% in order to cover for the rest of the cost.
Does having a personal loan affect home loan eligibility?
When determining your home loan eligibility, the lender makes sure that your monthly repayments are not being affected by any other ongoing loans such as personal loan, two-wheeler loan, etc. However, other ongoing loans ultimately tend to affect your eligibility as your overall spending power is reduced. If your other loan commitments exceed 50%-60% of your monthly income, your home loan application may be rejected.
Can I buy a house with two loans?
No, availing two home loans for the same property is considered fraudulent and prevented by authorities.
How do joint home loans work?
A joint home loan can be availed by adding a co-applicant such as your spouse, parents, or an immediate family member on your application. Adding a co-applicant will increase your home loan eligibility as the lending institution will also be considering the co-applicant’s income and credit score when determining your loan eligibility. All co-owners of the property are required to be the co-applicant for a loan. However, the co-applicants need not necessarily be the co-owner of the concerned property.