Home / Property Loan

10 May    Uncategorized
May 10

Home / Property Loan

Home / Property Loan

About Home Loan

To make your home loan journey a smooth sail, we will help you to know eligibility criteria, rates of interest, process, necessary documents, comparison and transfer for lowest rates.

Avail home loans up to Rs.10 crore with interest rates starting at 8.55% p.a. with additional benefits such as extended loan terms and flexible repayment options. Simple documentation, quick processing, and an excellent customer service with a response time of 30 – 45 minutes makes loanmrt.com a go-to place for all your housing loan needs.

Shashi Prasad (Manager)

Home Loan Eligibility

Eligibility CriteriaRequirement
AgeMinimum Age: 18 years and Maximum Age: 70 years
Resident TypeThe applicant must be (any one):
  • Resident Indian
  • Non-Resident India (NRI)
  • Person of Indian Origin (PIO)
EmploymentThe applicant can be (any one):
  • Salaried
  • Self-employed
Net Annual IncomeAt least Rs.5-6 lakh depending on the type of employment
ResidenceThe applicant must have (any one):
  • A permanent residence
  • A rented residence where he/she has resided for at least a year prior to applying for a loan
Credit scoreA good credit score of at least 750 or more obtained from a recognised credit bureau

About Home Loan

To make your home loan journey a smooth sail, we will help you to know eligibility criteria, rates of interest, process, necessary documents, comparison and transfer for lowest rates.

Documents required from all applicants

Identity Proof (any one)Residence Proof (any one)Other Documents
Driving LicenseCopy of Electricity Bill/Water Bill/Telephone BillEmployer Identity Card
PANCopy of valid Passport/Aadhar Card/Driving LicenseDuly filled loan application form affixed with 3 passport size photographs
Voter ID Loan account statement for the previous 12 months if the applicant has any other ongoing loan from other banks/financial institutions
Valid Passport Bank account statements for all the bank accounts owned by the applicant for the last six months

Documents related to income proof

For Self-employed Applicant/Co-applicant:For Salaried Applicant/Co-applicant:
Income Tax Returns for the last 3 yearsSalary Slips for the last three months
Certificate of Qualification (for Doctors/C.A. and other professionals)Copy of Form 16 or Income Tax Returns for the last two years
Balance Sheet audited by a certified C.A and Profit and Loss account for the previous 3 years 
Business License Details 
Business address proof 
TDS Certificate 

Documents required from Non-Resident Indians (NRIs):

Documents required from all Non-Resident Indians (NRIs) applicants

Identity Proof (any one)Residence Proof (any one)Other Documents
PANTelephone billAttested copy of the applicant’s/co-applicants’/guarantor’s valid passport and visa
Valid PassportElectricity billProof of residence indicating the applicant’s current overseas address
Driver’s LicenseWater billEmployer Identity Card
Voter ID CardPiped Gas billIf the applicant is employed in the Merchant Navy, the applicant is required to submit a copy of Continuous Discharge Certificate (CDC)
 Valid PassportPIO Card issued by the Government of India in case the applicant/co-applicant is a Person of Indian Origin (PIO).
 Driving LicenseThe completed loan application form duly filled with three passport size photographs of the applicant and co-applicants.
 Aadhar CardThe attestation of the documents can be done by: 1. Indian Embassy/Consulate 2. Overseas Notary Public 3. FOs/Representative Offices 4. Officials of Branch/Sourcing Units based in India

Documents related to income proof for NRI

For Self-employed Applicant/Co-applicantFor Salaried Applicant/Co-applicant
Proof of income if the applicant/co-applicant is a self-employed professional/businessman.Valid work permit
Business address proofEmployment contract (translated in English) attested by the employer/consulate/embassy/Indian foreign office if the contract is in another language.
Balance Sheet and Profit and Loss accounts audited by a certified CA for the last 2 yearsSalary slips for the last 3 months
Individual Tax Return for the last 2 years – Not applicable to NRIs/PIOs located in the Middle East countries.Bank statements indicating salary credit for the last 6 months
Bank statement of the individual’s as well as the business/company’s overseas account for the last 6 months.Copy of the Identity Card issued by the current employer along with the latest salary slip (original).
 Copy of the individual Tax Return for the last assessment year. – Not applicable to employees in the Merchant Navy and NRIs/PIOs located in the Middle East countries.

Property Papers:

  1. Agreement of Sale (any one):
    • Registered Agreement of Sale
    • Stamped Agreement of Sale
    • Allotment Letter
  2. Occupancy Certificate in case the property is a ready-to-move-in property
  3. Copy (blueprint) of the Approved Plan and Registered Development agreement of the builder
  4. Conveyance Deed in case of a new property
  5. Bank account statements indicating all payments made to the seller or builder

Home Loan Fees and Charges

Depending on the type of loan you are applying for, the following charges may be levied:

  • Processing fees: This is a one-time non-refundable fee that is to be paid to the home loan provider after the loan application has been approved. The processing charge varies depending on the bank and the loan scheme you are applying for.
  • Prepayment charges: Prepayment penalty is the fee you will have to pay the lender if you plan on repaying your home loan before the completion of the loan tenure.
  • Conversion fees: Some banks also charge a conversion fee when you decide to switch to a different loan scheme in order to lower the interest rate associated with your current scheme.
  • Cheque dishonour charges: The fee is levied when the loan provider find that a cheque issued by the borrower is found to be dishonoured due to reasons such as insufficient funds in the borrower’s account.
  • Fees on account of external opinion: In some cases, you might want to consult an external expert such as a lawyer or a valuator for his/her opinion on the loan. This fee should be paid directly to the concerned person and not the lending institution.
  • Home insurance: The premium should be paid directly to the concerned company during the term to ensure that the insurance policy is running during the home loan tenure.
  • Default charges: Loan providers also charge a penalty on delayed repayments i.e. if you fail to make your Equated Monthly Instalments (EMIs) or Pre-EMIs on time. The defaulting charges vary from one bank to another.
  • Incidental charges: This charge covers for the expenses incurred by the bank to recover dues from a borrower who has failed to make his monthly instalments on time.
  • Statutory/regulatory charges: The fee includes all charges associated with Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), Memorandum of Entry and Deposit, and stamp duty. You can visit www.cersai.org.in to know more about these charges.
  • Photocopy of documents: The fee is payable to the bank if you require a photocopy of your home loan documents for any personal needs.
  • Change in loan term: Some banks also charge a nominal fee if you wish to change the tenure associated with your loan.

    Quick Link to Other Home Loan Features

     

    Home Loan EMI Calculator

     

    Our EMI calculator helps you calculate the amount you have to pay the bank every month. Input your loan amount, tenure, interest rate, and processing fee to get your EMI and loan amortisation details.

     

    Interest Rates

     

    Interest rates are the charges a lender will levy on you for borrowing a certain amount over a specific period. They directly impact your EMI. These rates will differ from one lender to another.

     

    Processing Fees

     

    This fee is charged by banks for processing your loan application. It is non-refundable and is charged before disbursal. It’s calculated either as a percentage of the loan amount or is a fixed amount.

     

    Check Your Eligibility

     

    Each bank has specific parameters, based on which they approve a property loan for you. These include age, income, employment status, where you work, what builder you’re buying a house from, etc.

     

    Documents Required

     

    For the housing loan to be sanctioned, you’ll have to provide your identity proof and address proof, income documents such as ITR and payslips, bank statements, and proof of house purchase.

     

    Pradhan Mantri Awas Yojana

     

    Pradhan Mantri Awas Yojana (PMAY) is a Government of India initiative under the government provides an interest subsidy of 6.5% on housing loans availed by the beneficiaries.

Types of Home Loans in India

Banks in India provide different types of housing finance options for different purposes. Here’s a list of the prominent types of housing loans in India, based on a study of products offered by some of the top banks:

  1. New Home Loans: New Home Loans are offered to eligible customers who are looking to purchase a house or property for the first time.
  2. Pre-approved Home Loan: Pre-approved home loans are offered by banks to eligible borrowers once his/her creditworthiness, income and financial position are taken into considerable for an in-principal approval of the loan.
  3. Home Purchase Loans: Home purchase loans are specifically given to borrowers looking to purchase a house or flat.
  4. Home Loan for Construction: Home loan for construction is offered to customers who are looking to construct their own house on an existing piece of land.
  5. Plot Loans: Plot loans are loans offered to customers looking to purchase a piece of land or plot for the purpose of constructing a house on it.
  6. Home Loan Top Up: Home Loan Top Up is a facility offered by most banks and NBFCs that allows existing customers to borrow a certain amount above and over the existing home loan.
  7. Home Extension/Renovation Loans: Home loans for extension or renovation of home are offered to borrowers who wish to renovate/extend their existing house/property.
  8. Balance Transfer Home Loan: Individuals can use the balance transfer option to transfer their home loan from one bank to another. Most people choose this option to avail better interest rates.

    Home Loan Rejection

    Do’sDon’t
    Ensure that you have researched on the loan you want to apply forDo not blindly sign the documents before you read every term and condition on it
    Read the fine print before taking the loanDo not forget to compare interest rates offered by different loan providers
    Look out for any charges applicable on prepayments and foreclosureDo not default on your monthly payments
    Make sure you pay the equated monthly instalments (EMIs) on timeDo not apply for a loan just for the sake of it
    Ensure that you have a good credit score before you applyDo not sign the home loan agreement before reading the clauses
    Apply for a loan amount you are eligible forDo not request for a change in tenure unless you have considered all the aspects
    Submit all the necessary documentsDo not submit an incomplete or mismatched loan application
    Ensure that you have stable employmentDo not have too many ongoing loans

    What to do if your home loan application is rejected?

    You can always re-apply for a home loan if your first loan application was rejected by the lender. However, there are a few aspects you must consider before doing so.

    Credit score: Since housing loans are generally long-term retail loans, lenders look into the applicant’s repayment capacity before approving or rejecting a loan application. Your credit score plays a major role in deciding your repayment capacity against a loan.

    If you have a poor credit score on your credit report, chances of your loan application being rejected are high. The unsatisfactory credit score gauges your creditworthiness which banks and financial institutions consider before processing your loan application. Hence, it is advised to go through your credit score and credit report before you apply for a loan.

    In case you have a poor credit score, consider improving your score by making your debt repayments on time before you reapply for a housing loan again. If you do not know what your current score is, you can get your credit score along with the credit report on BankBazaar.

    Loan Amount: Since purchasing/constructing a home is a one-time investment, we often tend to overlook the financial costs involved in it. Banks and financial institutions fix the maximum loan amount you are eligible for by taking your present monthly income. There is a high chance your application was rejected because of the loan amount you have applied for.

    If the loan amount applied for exceeds your eligible loan amount, the lender can decide to reject your application. In such cases, you can consider increasing the down payment on your home loan to bring down the loan amount.

    Other Ongoing Loans: Banks can also choose to reject your home loan application if you have too many other ongoing loans. Since home loan lenders see to it that not more than 50% of your monthly income is being contributed to your loan repayments, any other ongoing long-term loans can result in your application being rejected.

    Having too many ongoing loans will not only impact your personal finances but also your repayment capacity. Hence, it is advised to clear the ongoing loans, if any, before you apply for a housing loan.

    Co-applicant: There can be instances where applications are rejected due to low income. In such cases, you can consider adding a co-applicant such as a member of your immediate family. This will increase the maximum amount you are eligible for as the income and creditworthiness of the co-applicant will also be taken into account while deciding your eligibility.

    Employment: In some cases, the employment of the applicant can act as the deciding factor on whether the loan application is being approved or rejected by the lender. Your application can be rejected if the lender learns that you have been switching between jobs frequently.

    Unstable employment can sometimes prove to have a negative impact on your loan application. On the other hand, stable employment with a recognised institution on your application can have a positive impact.

    In case your housing loan application was rejected, and you have only been working with the current employer for a short period of time. You can consider giving it some more time before re-applying for another one.

    Documentation: Housing loans include a lot of documentation such as identity proof, residential proof, bank account statements, income tax returns, income proofs, property papers, documents approved by concerned authorities, etc. Your loan lender can reject your loan application even if one of the required documents are not submitted.

    You can always consult the banks’ customer relationship executives to assist you with proper loan documentation.

  1. When do I make my home loan application?

    There is no particular right time for making your home loan application. As soon as you have figured out your budget and zeroed down on the property that you want to buy, you should apply for home finance.

  2. Is visiting the lending bank compulsory to avail home finance?

    Yes, mostly. Although a lot of loan processing work has been shifted to online platforms, still a loan applicant is required to visit the lending bank branch at least once to formally close the loan processing formalities. Many private banks have started sending their representatives to borrowers’ place to get documents and forms signed and verified.

  3. Will the lending bank provide the entire cost of the property that I wish to buy?

    No. Generally, banks only lend 80% of the cost of your property. The rest 20% is to be borne by the loan borrower. However, to ease out the process for customers, most banks have broken up this ration into 10-80-10 so that at the time of availing the loan, customers are only required to pay 10% of the total cost and the rest is paid by the bank.

  4. When does the repayment period start?

    Repayment of loan starts after the entire home loan is disbursed to the borrower. In case of under-construction properties banks allow payment of the partially disbursed amount. Towards this partially disbursed loan amount, customers are free to either repay the principal and interest amount both or just the interest amount or none at all.

  5. Can loan repayment be made ahead of schedule?

    Yes. All banks allow pre-payment of home loans. Some banks charge a pre-payment fee for that while others do not.

  6. Do I have the right to choose between base rate and MCLR for my home loan request?

    Current home loan borrowers who have a running home loan account can choose to continue with base rate or switch to MCLR. New home loan borrowers need to avail the new MCLR rates which are subject to change every set interval of time as mandated by the RBI.

  7. How long does it take for home loan to get sanctioned?

    Your home loan will get sanctioned as soon as all the required documents are submitted and verified successfully. This may take anywhere between 10 to 30 days.

  8. Do I get to avail tax benefits on home loan?

    Yes. Home loans are a great instrument to avail tax benefit. This is offered to both the interest and principal components of home finance. Under section 24(1) interest repayment of Rs.1,50,000 is eligible for exemption and on the same housing loan a principal amount of Rs.1,00,000 is eligible for exemption from tax.

  9. What is meant by EMI?

    EMI stands for Equated Monthly Installments. An EMI is made up of two components, principal and interest. Any loan availed by a borrower is repaid in EMIs over the loan tenure.

  10. What collateral do I need to furnish as security?

    Since home loan is a huge loan amount and the tenure also is long, hence, almost all banks ask borrowers to furnish some collateral as security against the loan. This include the papers of property for which loan is being sought, some other property papers, any fixed deposit schemes or insurance schemes etc. that are on the loan borrower’s name.

  11. Can I apply jointly for a home loan with my spouse? Will both our incomes be considered for loan quantum?

    Yes. You can apply jointly in your and your spouse’s name. Both of your incomes will be considered for determination of loan quantum.

  12. What documents do I need to submit to avail home loan in India?

    Generally, all banks ask for proof of address, proof of identity, bank account statements and salary details from home loan borrowers. This list may differ a bit from one bank to another.

  13. How can I make EMI payments against my home loan?

    Home loan EMI payments can be made to the bank either by using offline channels like cheque, demand draft and cash or by availing the net banking facility that all banks offer to their home loan customers. Post dated cheques and Standing Instructions are another popular way to make EMI payments.

  14. If I deposit my property documents as security with the bank, when will I get those back?

    Any property document that you submit as security collateral is returned to you only once the entire home loan amount is repaid and the home loan on your name is closed.

  15. Can I avail home finance for renovation or construction of house?

    Yes. Home loans are offered under various sub-heads. Housing finance for renovation of property or construction of house is also offered by all major banks in the country.

  16. Can I switch from fixed to floating rate of interest and vice versa during the tenure of my home loan?

    Yes. Most banks allow switching between fixed and floating rates. However, customers may be charged a particular fee for the same.

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