Home-loan

Home purchase loan – It is the most common type of home loan. All banks and housing finance companies offer loan for residential properties at different rates coupled with discounts and rebates. It can be availed for both resale properties and builder allocated units.

Land/Plot loan – Banks offer such type of loan to buyers intending to purchase land parcels for constructing their residential units. About 70 percent of the total cost of the land can be availed.

Construction loan – Most common type of home loan availed by a major share of semi-urban population to build a home meeting their requirements on a land parcel you already own. All housing finance companies and banks provide home construction loan.

Home extension/improvement loan – You can also avail loan for any sort of extension or improvement in your house, be it a new room or a new floor. The housing finance companies and banks offer loan for home improvement/renovation purposes such as painting, plumbing, electrical system, interior designing and waterproofing.

Home conversion loan – Such home loan is taken by people who have bought a house on a home loan but would now intend to buy and move to new house. With these loans, applicants can fund the purchase of the new house by shifting the running loan to the new unit.

Balance transfer loan – It can be availed when an applicant wishes to transfer home loan from one bank to another. It is usually adopted to repay the remaining amount at lower interest rates.

NRI home loan – It is designed for NRIs who wish to construct or buy a home in India.

Taking home loan on a fixed interest rate implies that your EMI will not be impacted during the loan tenure irrespective of any market conditions. The interest rate will be pre-determined and remain unchanged. On the flip side, home loan EMIs vary periodically over the loan tenure, if taken on floating interest rate.

Calculating the monthly interest levied on your home loan is easy. Follow these steps –

1. Divide interest rate by the number of payments. If you are making monthly payments, divide by 12.
2. Multiply it by the loan amount.

Doing this will give you the amount of interest.

The process of getting a home loan is simple. But you need to be aware of all documents required before applying for the loan.

• Fill loan application form with all required documents
• Pay processing fee
• Discussion with the bank
• Valuation of the submitted documents
• Loan approval process
• Processing of the offer letter
• Legal check
• Final loan deal, signing the agreement, and disbursal

Home loans comes with a minimum tenure of five years and goes up to a maximum tenure of 30 years. The tenure offered to you is dependent on the loan amount. Note: Not all banks offer 30 years tenure. It is advised to check the maximum tenure before applying for a home loan.

If you are applying for a home loan, you need to furnish the following documents –
Proof of Identity – PAN Card, Driving license, Voter ID, Aadhar Card
Proof of Income – All salaried applicants are required to submit their latest 3 months’ salary slip with all deductions and Form 16 for the last three years. In case of self-employed applicants, IT returns for the past two years is mandatory. The computation of income must be certified by a professional Chartered Accountant.

Any applicant needs to meet the eligibility criteria to get home loan. A house wife can too avail the home loan if she is found eligible for it. As house wives do not have a steady source of income, it is advised to get a co-applicant on board.

For taking home loan, an applicant must secure a CIBIL score of 750 or above to qualify. Higher the score, better are your chances of getting loan approved.

Yes, you can take home loan on your wife’s property. But, to get tax benefits, you need to be a co-owner or owner of the property. You can get home loan by submitting requisite documents.

Banks do not reject your home loan for a property which is in your father’s name. But, you won’t be able to get the income tax benefit if you are not a co-owner or owner of the property. You can get home loan by submitting requisite documents.

Yes, a home loan can be pre-approved. A pre-approved home loan is granted after scrutinising your income, credit score and financial position. It is valid for a limited period.

Your salary is the first criteria considered by the lender (banks and other home loan financing companies) while sanctioning the loan amount. The home loan amount is calculated on 65 percent of your gross income. However, you can increase your loan amount by bringing in a co-applicant.

Yes, you can easily apply for a joint home loan. Joint home loans can be availed by an applicant with his/her spouse, parents or own siblings. Such a home loan cannot be taken with just any person. Yes, incomes of both the applicants will be considered while disbursing the loan amount. It is always recommended to get a joint home loan as it enables you to get a higher loan amount.

Usually, a loan amount is disbursed within 3-10 days after completing all requisite procedures and verifying submitted documents.

Yes, you can get an in-principal approval and can avail the home loan later. An in-principle approval (pre-approved loan) is calculated on your gross income and financial position.

Home insurance policies cover any structural damage caused by natural and man-made calamities including fires, earthquakes and floods. It secures all contents/assets from any mis-happening.

Yes, a power of attorney (POA) is mandatory while applying for a home loan by an NRI. POA must be an Indian resident. Your spouse cannot be a POA holder

CIBIL, Equifax, CRIF High Mark and Experian are four authorized credit bureaus in India. Your credit score affects your eligibility of getting a loan. To have a positive impact on your credit score:

• Firstly, check your report and ensure it is free of any administrative errors. Any such errors can negatively affect your credit score. Getting this corrected can immediately correct your credit score.
• Your repayment behavior also affects your score. It is important to do all your payments on time. Late payments have an adverse effect on your credit score. Hence, ensure you make all the payments on time.
• Avoid using your credit card to its full limit. Using it for less than 50% of your limit has a strong positive impact on the credit score.
• Avoid having multiple loans in a short time span.

It usually takes 4-5 months to repair your credit score.

Your eligibility to claim interest on the home loan as a deduction begins only upon completion of construction or immediately if you buy a fully constructed property. You are allowed separate deductions on principal and interest amount of the home loan. The interest part of the EMI paid for a single financial year can be claimed as a deduction from your total income up to a maximum of Rs 2 lakh under Section 24. The Principal part of the EMI paid for the financial year is allowed as deduction under Section 80C.You can claim up to Rs 1.5 lakh. But, to claim this deduction, the bought house should not be sold within 5 years of possession. In such a case, the deduction claimed earlier will be added back to your income in the year of sale. Additional deduction under Section 80EE is allowed for first time home buyers for maximum up to Rs 50,000. To claim this deduction, the amount of loan taken should be INR 35 lakhs or less and the value of the property does not exceed INR 50 lakhs. The amount of stamp duty and registration is also eligible for tax deduction, subject to certain conditions.

A down payment is a type of initial payment usually done in cash when buying an expensive good or service. Many homebuyers pay down payments ranging from 5% to 25% leaving the remainder cost on the mortgage loan through a bank or financial institution.

In the process of home loans, the tenure is one of the most important decision making factor. It has a direct impact on the amount of the loan you borrow and the EMI you pay. Home loan with long tenure would have a lower EMI but costs you more. So depending upon your current financial conditions, ability to pay EMIs and you long term financial goals, you can pick your home loan tenure. A bank or a financial institution pushes push you for a long home loan tenure as it is beneficial for them.

Yes. The home loan tenure has an effect on the loan cost. Longer home loan tenure increase the cost of borrowing as you end up paying more interest.