How To Get a Home Loan
Home loans can be obtained for buying or constructing your home as well as refinancing the home loan availed from other institutions. Further home loans are also available for extending or improving your existing home or for financing the purchase of land from approved agencies. Some basic information for applying home loans is discussed in this article.
Eligibility for amount of Loans
Eligibility for amount of Loans
Generally the Bank or Housing Finance Companies (HFC’S) determine
the eligible loan amount based on Income, Age, Educational
Qualifications, Number of dependents, Continuity of employment, saving
potential, assets and Liability etc.
Maximum loan amount
One can avail a Maximum of 85% of the cost of the property including the land cost.
Time of applying for the loan
The application for Home Loan can be made anytime after deciding to acquire/construct a property. The application sometimes can be made without identifying/ constructing the property.
Applying for the loan
An application duly filled in with complete details about the applicant and co-applicant (if existing) along with the following supporting papers needs to be
1) Pay slips
2) Bank Statements
3) Age Proof
4) Address Proof
5) Identity Proof
6) Latest Form 16 (for salaried applicants)
7) Passport Photograph
8) Processing Fee
In case of Self-employed persons the following Income papers instead of Payslip is required:
· 3 years IT Returns with Memo of Taxable Income, with P&L A/C B/S with all Schedules
· Brief Profile about the nature of Business
· List of Business Contacts
Fees & Charges
Normally Processing Fee upto 1% of the loan amount applied is payable along with the application. Most of the institutions give discount based on the Profile of the Applicant.
Rate of Interest
The rate varies from 7.50% to 8% in Floating rate and 7.75% to 8.75% in Fixed Rate
Sales & Service
The application picking and other jobs related to Home loan is nowadays done by DSAS of the Bank /HFCs. The service is now done at doorstep unlike earlier days.
Types of mortgages
Different Types of loan namely Fixed Rate, Floating Rate and Combination (2 in 1) are available. Incase of Fixed Rate Loans 2% Prepayment Charges are payable for the Repayment
No such Prepayment charges are payable for Floating Rate Loans. However 2% Prepayment Charges on loan outstanding is payable in case of take over by other Institutions.
Security
Security for the loan is normally the First Mortgage of the property Financed.
Disbursement
Disbursement is normally made after the Property is legally and technically appraised and after the Applicants Contribution is invested in full.
Own contribution is the Total Cost Minus the Loan Amount.
Tax benefit
Certain Tax Benefits on Principal and Interest Components of the loan under IT Act1961 is available.
Repayment
Repayment is made by way of EMIs comprising Interest and Principal.
EMI generally commences from the month succeeding the month in which the disbursement is made.
Pending final disbursement you pay Interest on the portion of Loan Disbursed. This interest is known as Pre-EMI.
Tips For Home Finance - Cheap Home Loans Nowadays, obtaining a home loan is quite easy, thanks to low interest rates, income tax benefits, and competition among the Housing Finance Companies. HFCs, which are competing to attract customers with a number of offers. Most of the customers are not familiar with the basics of home loans, not sure what is the best home loan option. Here, we offer some tips to help you select the best home loan....Home loan is a loan offered by bank, Housing finance company, Lending Institution & Company to fulfil your residential needs. Here, the home itself stands as security (i.e. mortgaged), till you pay back the entire loan amount......
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