Due to the increased competition in the market, banks have started to offer better terms and conditions on home loans. Normally people pay a certain amount as down payment and the rest of the amount for the house is financed by a bank. However, home loans are provided only when you meet a certain criteria fixed by a bank. The criteria depend on a particular bank as well as on your income, marital condition, number of dependents, etc.
Various banks fix their own criteria for providing a home loan. The amount of the home loans is decided by various factors like your income, spouse's income, number of dependents, age, qualifications, work experience and assets, liabilities, etc.
Your eligibility for acquiring a home loan can be augmented by combining income of your relative like father, spouse, mother or son. You can take home loan around 3 to 4 times of your annual income. Your EMI should not exceed more than 40% of your gross monthly income. The age of a home loan applicant should be between 21 years to 65 years.
To obtain a home loan you need to fulfill some eligibility criteria. Due to increased competition getting a home loan has become easier now. Banks provide loans based on the income proof as well as on other criteria. Other criteria include age, work experience, number of dependents, spouse's income, and your assets and liabilities.
To obtain a home loan you need to provide the following documents to the bank:
Proof of income
Proof of age
Proof of identity and residence. You can provide either passport, PAN card, ration card or voter ID card
Salary slip of last 3 months along with salary certificate.
Proof of continuity in the job for last two years or Form 16.
Sale agreement and title documents in favor of the seller n case of an old house
Sale agreement or construction agreement with builder in case of new flat
Total cost break-up on builder's letterhead in case of a new flat or apartment
While signing the documents for a home loan make sure you read the documents properly. Also make sure you understand all the details of the agreement along with terms and conditions. Also make sure you have all the important terms written on paper to avoid any confusion later on.
Can I get a home loan for an old house?
Yes. You can apply for a home loan for a new or even old house.
Can I get a home loan for purchasing a property overseas?
No.Indian banks do not offer home loans for buying houses overseas.
Can I get a loan for purchasing a land?
Yes. You can get loan for purchasing land, but it should be only for residential purposes.
Can I get home loan in India if I am a Non Resident Indian (NRI)?
Yes. Some banks have started to offer home loan facility to NRIs.
How do I know about my eligibility for a home loan?
Various banks fix their own criteria for providing a home loan. The amount of the home loans is decided by various factors like your income, spouse's income, number of dependents, age, qualifications, work experience and assets, liabilities, etc. Normally banks give up to 3-4 times the annual gross income as a home loan.
Does the co-applicant’s source of income influence my eligibility?
Yes. You can purchase a house along with a co-applicant. However, that co-applicant can be only your immediate family member. The relationships suitable for this thing include father-son and husband-wife combinations.
What is the meaning of a “pre-approved property”?
When a real estate builder has got his housing project pre-approved by specific home loan provider then it is called pre approved property. Normally when home loan provider pre-approves a project it looks at legal documents of the project, the stage of construction as well as the track record of the builder in completing a project.
What is a fixed rate home loan?
When a bank charges interest rates at a fixed rate then it is it is called a fixed rate home loan. In this type of loan the interest on the loan about remain fixed and constant. You should opt of this only when you are sure that the interest rates have been at the bottom and can only go up.
What is a floating rate home loan?
When the interest rate charged on a home loan keeps changing with respect to the prevailing rates in the market over the tenure of the loan, then it is called a floating rate home loan. This type of interest rates change periodically, and accordingly the tenure increases or decreases and also the EMI amount increases or decreases.
Can I convert a fixed rate loan to a floating rate loan and vice versa?
Yes. A floating rate home loan can be changed into a fixed rate one with no charges. However, banks charge a small fee for converting a fixed rate product to a floating rate product. Interestingly you can swap the rates any number of times at any point of time.
What charges I have to pay besides the interest rates charged by banks?
Banks charge administrative or processing fees apart from interest for providing a home loan. These include legal fees, technical fees, stamp duty and prepayment charges.
What happens to processing fees if the disbursement is not availed of?
Many private banks do not refund the processing fees f you cancel the loan after taking the offer letter from them. However, some Govt undertaking banks do refund the fee partially or fully.
What are the tax benefits in repayment of a home loan?
Both interest and principal components of the repayment can be claimed at time of filing for income tax during the year. Interest amount can be claimed as a deduction under Section 24. You can also claim up to Rs. 150,000 or the actual interest repaid whichever is lower. Tax benefits for principal up to the maximum of Rs. 100,000 can also be claimed under Section 80C.
If the value of the property fluctuates does it affect the EMI amount or tenure of the loan?
Any change in the value of the property does not affect the EMI or home loan liability.
Is it mandatory to get property insurance while going for a home loan?
It is not mandatory to buy property insurance while going for a home loan. However, it may be recommended due to it worth.
Can I sell my house even if the home loan is outstanding?
With the consent of the bank you can sell house even if the loan amount is outstanding. The consent letter by the bank usually mentions the amount at which the home loan can be considered fully paid off. The amount mentioned by the bank is inclusive of prepayment charges as applicable. The amount if also calculated at a future date to give you enough time to find a buyer.
Can I ask for a bigger or smaller amount of loan even after it has been sanctioned?
Yes. You can request for a bigger or a smaller amount of loan amount even if the loan amount has been sanctioned. However, it can be done only before the disbursement. Banks may agree to give you a bigger amount of loan only if they feel satisfied about your eligibility. The bank may ask for excess fees for requesting an increase in the loan amount, although they are not obliged to return excess fees paid in case you are requesting for a reduction in the loan amount.
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