Home Loan

What is Home Loan?

When you take a loan from a bank for buying a house or property, it is termed as home loan. You can either apply for home loan online or offline. While applying online you can check the interest rates from various websites and can then apply accordingly. You can also avail the home credit loan apply online option by either downloading their app or visiting their website. Home credit loan apply option allows you to upload all the documents online on their website. If you take a home loan then you need to pay it back every month through EMI.

As a security you need to give papers of the property owned by you to the bank.
If due to any reason you are unable to pay back the loan then the bank will have all the legal rights on the property and can sell it.

Features and benefits of home loan

Deduction for Interest paid on Home Loan

Low Rate of Interest

Deduction on Principle Repayment

Capital Appreciation

The following are the features of the home loan:

Redraw Facility: You can take some amount of money from the extra repayments on the home loan.
Low interest rates: Some banks offer very low interest rates for the home loan taken by you. You should do your research properly before applying for the loan online.
Pay the interest only: You have the option of only paying the amount of interest for a period of seven years.
Home Loan Top up: You can borrow more money from the lender if the mortgage has a home loan top up feature.
Repayment holiday: Repayment holidays may vary from a month to about 6 months during which you do not have to pay. You can avail this feature only if you have made extra repayments on the home loan.

Additional Benefits of Home Loan:

You can avail the home loan insurance
You can increase the time period for claiming the decrease in the interest
You can have an easy transfer of balance
You have affordable ownership with the home loan
It can easily be approved due to collateral
You can get benefit of up to 2 lac on the principal and the interest amount

Different Types of Home Loan Home Loan for Construction:

People who want to construct a property can avail this type of home loan.
If you want the cost of the land to be counted as a part of the loan then you should have bought the land a year before availing the loan.
If the land was bought earlier than a year then the cost of the land will not be counted as a part of the loan.
The formalities are different for construction loan as compared to other home loans.

Bridged Loans:

If you are already a home owner and you want to buy a new house then you can avail the bridged loan.
The tenure of this loan is below 2 years.

Plot Loans:

You can avail this loan if you want to buy a plot or land.

Home Purchase Loans:

This type of loan is given if you want to buy any flat or house.
This is one of the most popular forms of loan and almost all banks provide it.

Home Conversion Loan:

If you want to shift to a different house from a house for which you have taken the loan then you can avail the home conversion loan.

NRI Home Loan

This type of loan can be availed by people who do not stay in India but wish to purchase a property in India.
They have a different rate of interest as compared to the people of India who wish to purchase a house.

Stamp Duty Loans:

This type of loan is given by banks in order to cover the stamp duty charges. The stamp duty charges are levied while purchasing a property.

Home Extension/Renovation Loans:

If you want the further construction or renovation of your house then you can avail the home extension loan.

Balance Transfer Home Loan:

If you wish to transfer the loan from a bank to another loan then you can avail the balance transfer home loan.
The home loan balance transfer procedure transfers your home loan from one bank to the other bank.

Why Choose Home Loan?

The repayment period is longer for home loan as compared to any type of loan.
You can avail the joint loan application with the home loan.
You have good tax benefits with the home loan option.
Tenures for home loan can vary from 5 to 30 years
You can prepay the home loan. This advantage is offered by all banks.
The pre payments reduce the liability.
The repayment of the loan can be done in equal installments monthly.
The repayments of the loan are made by EMIs.
You can avail the home loan from any bank of your choice.
You can get better sum of money in home loan as compared to any other form of loan.
The amount of money sanctioned is up to 85 % of the value of the property.
You can give advance money to fund the property for residential purposes.
The rates of interest are very flexible.
Existing property can be put as a security for home loan.

Home Loan Interest Rates The housing loan interest rate of different banks are given below:

Axis Bank: 90% onwards
HDFC Bank: 65% onwards
Yes Bank: 85% onwards
IDFC Bank: 90% onwards
ICICI Bank: 80% onwards
Tata Capital: 25% onwards
Bank of India: 70% onwards
Punjab National Bank: 05% onwards
United Bank of India: 60% onwards
IDBI bank: 75% onwards

Apart from this the NRI home loan interest rate may vary from 8.35% to 9 %. Documents Required for Home Loan Different documents are requested according to the eligibility criteria. The following documents are however similar:

Identity proof
Address proof
Personal Assets and liability statements
Signature identification from the present bankers
Pass book of the last six months
Proof of business for people who do not work as salaried individuals
Application form signed and affixed with specified number and passport sized photographs.
Bill or property tax receipt

Requested documents by the Guarantor:

2 passport sized photographs
Business proof
Address and identity proof
Personal Assets and Liability statement
Signature identification from present bankers

Additional documents by the Salaried Individuals: The documents required for home loan for salaried person are as follows:

Photocopy of ITR or Form 16 for the previous 2 years.
Salary certificate from the employer

Additional documents by Non-Salaried Individuals:

Challan copies showing the advance income tax paid.
Photocopy of ITR or Assessment Orders of the last three years

Home Loan Eligibility

Income: The income of the person should vary somewhere between 5 to 7 lakhs.
Parallel debt channels: In this the bank looks into the current credit standing of the person who wants the loan.
Age: The person who takes the loan should be at least 21 years old. The person has to repay back the loan before he turns 60 or 65 years old.
Residence: You need to stay for a year at the current residence to show stability with respect of the employment.
Employment:

The person who takes the loan should be a salaried person, a self employed person.
Home loan eligibility for businessmen wants the business to have existed for at least 3 years.

Income: The income should be between 5 to 7 lacs.
Credit Rating: a credit rating between 750 to 900 is required.

Fees and Charges applicable to Home Loan

Late payment charges: This charge is levied when the person is late in paying the loan.
Processing Fee: There is some amount of money levied for processing the home loan. The fee may be different according to the type of bank.
Legal Fee: This fee is paid to the lawyer who verifies the property bought with the loan amount.
Administration Fee: This fee pays for the administrative cost.
Statement of Account: The bank provides one statement of account for free and charges money for other statements. It varies from bank to bank.
Prepayment Charges: You need to pay some amount of money to the bank as a prepayment charge.
Conversion Charges: This charge is levied when the rate is switched from fixed interest rate to floating interest rate.

FAQ’S regarding Home Loan

When do I make my home loan application?

You can apply for the home loan application as soon as you make your mind for buying the budget.

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

It takes 10 to 30 days for the home loan to get sanctioned after all the documents have been verified.

How can I make EMI payments against my home loan?

You can either pay the EMI through offline channels or through net banking.

When can I get back the documents that I deposit as a security with the bank?

When you pay back the entire home loan the collateral submitted can be taken from the bank.

Can I apply for joint home loan with my spouse?

Yes you can apply for joint home loan with your spouse.

Can I get the tax benefits from the Home Loan?

Yes you can avail the tax benefits with the home loan. The tax benefit under section 80 C allows the maximum tax deduction of up to one lakh fifty thousand.

Can I switch from fixed to floating rate of interest during the tenure of my home loan?

Yes most banks allow this.

How to reduce the home loan tenure?

You can reduce the home loan tenure by increasing the EMI or reducing the interest rate or by prepaying a part of the loan. You can also have a combination of all the three.

What is a home loan co applicant?

A home loan co applicant is a person who shares the same responsibility as the borrower in repaying back the loan. A co applicant should be a blood relative or an immediate family member.