Wondering What a Home Loan is? – An Overview:
Home or housing loans are advances made to borrowers who require funds to purchase houses/flats/land. They can also be availed of for construction, extension and renovation of houses. Lenders can be banking or non-banking financial institutions.
Features of Home Loan:
The salient features are outlined below:
- They are secured advances.
- Collateral is usually the property that is being funded. Existing property can also be put up as security.
- Interest rates are flexible being either Fixed, Floating or a combination of fixed and floating.
- Home loan interest rates are lower when compared to unsecured personal advances.
- The advance can be used to fund property for residential or investment purposes.
- Amounts offered are higher than under other types of loans; up to 85% of the property value.
- Repayments are made in EMIs (Equated Monthly Instalments).
- Pre-payments are allowed, to reduce liability.
- They are long-term in nature; tenors usually vary between 5 - 30 years
- Non-interest charges include processing fees, pre-payment charges, inspection fees, documentation fees etc.
- Co-applicants/joint-applicants are allowed.
- They qualify for tax benefits as per provisions of the IT Act, 1961 (subject to changes).
Home Loan Eligibility - Getting In On the Deal:
Every lender assesses a customer differently but, by and large, the basic criteria a borrower should satisfy to be eligible for a home loan are outlined below:
- Age: The minimum age at the time of application should be 21 years. Repayments have to be completed before the age of 60 or 65.
- Employment: Ability to service interest charges, as reflected in the borrower’s earning capacity, is important. Borrowers should:
- Be salaried employees or self-employed persons (professional/non-professional)
- Have been in employment/business for at least 3 years of which current employment should account for at least 1 year.
- Income: A minimum income varying between Rs.5 - 7 lakhs would be required. This depends on the nature of employment i.e. salaried or self-employed.
- Residence: At least one year of stay at the current residence is required to display stability.
- Credit Rating: A good credit score is required (a score of 750-900 from CIBIL is considered good). Besides this, a healthy financial background is vital for approval and to determine the interest rate and loan amount.
Documents Required for Home Loan - For the file!
Documents to be submitted differ according to the eligibility requirements. The following, however, are commonly requested for:
- The application form which has to be signed and affixed with the specified number and size of photographs.
- Proof of identity, address, employment, income and tax paid as per KYC requirements. This usually includes:
- Passport/Voter ID//Driving License/Ration Card/Utility Bills/Lease Agreements/Property Deeds/Salary Slips (3 most recent months)/Salary Certificate/Bank Statements (3-6 most recent months)/Audited financial statements/Form 16/ITR/Business deeds e.g. MOA, Partnership Agreement etc./Appointment Letter
- Documentary evidence of the property to be funded.
- Cheques for payment of fees charged to process the application.
In case of a joint application, the co-applicant will also be required to furnish similar paperwork.
Beat the Heat - Apply Online:
The trials and tribulations one has to go through in order to figure out where to get the best offer from can be truly taxing to the mind, body and spirit.
Performing the age-old task of going to each financier, finding out what offers are available, collating the information, calculating EMIs, submitting the required documents and following up on applications can take a toll on any potential borrower.
The best way to save on time, money and effort is to go online.
Applying for home loans online is gaining popularity in India and fast becoming the mode of choice for many borrowers.
Why BankBazaar? Check it out!
BankBazaar is India’s leading portal for financial services where different home loan offers can be compared at one place and applied for without having to visit any lending institution.
Here’s what users can do:
- Define loan parameters to receive free quotes, instantaneously, in an easy-to-understand manner.
- Compare offers to identify the right lender to deal with.
- Make real-time home loan comparisons to find the lowest rates in the market. At BankBazaar, interest rates are constantly monitored and updated to reflect the latest changes made by financiers.
- Avail exclusive discounts and deals for huge savings through BankBazaar’s active collaboration with leading financial institutions.
- Check eligibility online using BankBazaar’s home loan eligibility calculator and get immediate e-approvals.
- Determine repayments using BankBazaar’s home loan EMI calculator which also provides amortization tables.
- Browse user reviews to gain insights on service provided by various institutions.
- Apply online for the chosen product directly through the site.
- Receive end to end guidance from a dedicated customer care team for smoother processing leading to quick disbursal of money.
- Get regular status updates.
Obtaining the right home loan is crucial to proper financial planning. It all begins with a successful search process that facilitates quick receipt of funds and guarantees peace of mind.