The need for a house of your own can can now be fulfilled by availing of various types of house loans to suit your individual needs at the lowest rates and easy financing. Take a look at the various Banks/Financial Housing Companies that offer you all alternatives for a quick Home Loan.
What are the security needs for a home loan?
Security for the loan is a first mortgage of the property to be financed, normally by way of deposit of title deeds (a clear and marketable title). Some lenders may also require collateral security like the assignment of life insurance policies, pledge of shares, national savings certificates, units of mutual funds, bank deposits or other investments.
When to apply for a home loan?
Once you have decided to acquire or construct a property, you can apply anytime thereafter, even if the property has not been selected or the construction has not commenced. Besides, loans are also available for home improvements, renovation or extension of your home
You must be at least 21 years of age when the loan is sanctioned.
The loan must terminate before or when you turn 65 years of age or before retirement, whichever is earlier.
You must be employed or self-employed with a regular source of income
What are the types of home loans available?
There are a variety of home loans available:
Home Purchase Loans: This is the basic home loan for the purchase of a new home.
Home Improvement Loans: These loans are given for implementing repair works and renovations in a home that has already been purchased by you.
Home Construction Loans: This loan is available for the construction of a new home.
Home Extension Loans: This is given for expanding or extending an existing home. For example addition of an extra room etc.
Home Conversion Loans: This is available for those who have financed the present home with a home loan and wish to purchase and move to another home for which some extra funds are required. Through a home conversion loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need for pre-payment of the previous loan.
Land Purchase Loans : This loan is available for purchase of land for both home construction or investment purposes
Bridge Loans: Bridge Loans are designed for people who wish to sell the existing home and purchase another. The bridge loans helps finance the new home, until a buyer is found for the old home.
Balance Transfer Loans: Balance transfer loans help you to pay off an existing home loan and avail the option of a loan with a lower rate of interest.
Refinance Loans: This loan helps you pay off the debt you have incurred from private sources such as relatives and friends, for the purchase of your present home.
Stamp Duty Loans: This loan is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of property.
Loans to NRIs: This is tailored for the requirements of NRIs who wish to build or buy a home in India. EMI is the Equated Monthly Installment payable till the loan is paid back in full. It consists of a portion of the interest as well as the principal. Some of the incentives offered by lending institutions are :
i) Some companies sanction the loan without requiring you to identify property as a pre-requisite for eligibility
ii) Free accident insurance
iv) Waiving of pre-payment penalty
v) Waiving of processing fee
vi) Free property insurance
How much time is required for the application processing and loan approval?
It takes around fifteen days for processing of one's application if the documented are in order. It takes another week for the company to check out the property papers and make the disbursement.
What is the maximum amount that can be borrowed?
Home loans are generally provided for in the range of 75%-85% of the asset value. The amount of loan varies from institution to institution and it may vary from Rs.1 lakh to Rs.1 crore. The maximum amount, which one can borrow, is a function of many factors, which includes primarily the purpose of the loan. In addition, ones residential status whether resident in India or non-resident will also have a bearing on the maximum amount of loan that one can borrow. Generally, if one is a resident Indian, then he can borrow upto 85% of the cost of the property.
What are the repayment period options?
Repayment period options range generally from 1 to 20 years. A few lenders also offer a 30-year repayment period, usually at a higher interest rate. As a non-resident, you can avail of a loan for a maximum period of 15 years.
What are the various interest rates available?
The interest rates may vary from institutions to institutions and generally range from about 7.5% to around 16%.
What is fixed and floating rate of interest?
Some HFC's have fixed rate of interest, which means that the interest rates remain unchanged for the entire duration the loan. This basically means that you do not benefit, even if the rates of interest drop in the market.This is the fixed rate of interest.
Floating rate of interest is the rate of interest that fluctuates according to the market lending rate.
What are the documents required at the time of application?
The common documents that the financiers require at the pre-approval stage are:
Proof of Age
Copy of Bank A/C statements for the last 6 months
Copy of latest credit card statement
Passport size photograph
Signature verification from your banker
If you are salaried, you need to produce:
Salary and TDS certificate
Latest pay slip
Letter from employer
If you are self-employed you require:
Your business track record
Copy of audited financial statements for the last 2 years
At the disbursal stage (for property already located), you need to submit:
Photocopies of title deeds
Agreement to sell
For self-construction: Approved plans and clearance certificates along with estimates
What are the tax benefits available?
Tax benefits available are as under :
(a) Exemption under Sec 88 of Income Tax Act (Rebate) for repayment of principal upto Rs.10,000/-.
(b) Deduction under Sec 24 of IT Act for interest payment on housing loans upto Rs. 75,000/- (in respect of self-occupied house property acquired or constructed with capital borrowed on or after 1.4.99, and acquisition or construction whereof is completed before 1.4.2001. Tax benefits vary in case of rental.