Home Loans » FAQs

FAQs

1. What is the minimum loan amount that I can apply for?

The repayment capability of a borrower decides the loan amount that can be borrowed. The upper limit of the loan amount is 85% of the cost of the property or the cost of the construction as is applicable.
A person's repayment capability depends on various factors like income, age, qualification, income of spouse, liabilities, stability, dependants, savings history, continuity of occupation, amongst a host of other aspects.


2. What is the loan period?

The tenure of the loan can be selected by the borrower and the bank usually offers a loan tenure that the borrower is comfortable with. This could range up to a period of twenty five years, provided the borrower is not going to reach 65 years of age or the retirement age, whichever is earlier. The loan term cannot be extended beyond this period.


3. What are the prevailing home loan interest rates?

Most banks have similar home loan rates and it's advisable to get in touch with them to have detailed information about their lending rates and if there are any options or schemes therein.


4. How does the calculation of the interest rates take place?

All banks offer prospective borrowers an option to choose from two types of interest rates with regards to home loans - Fixed Rate Home Loans and Adjustable Rate Home Loans. As the name suggests, fixed rate home loans are those in which the rate of interest remains fixed for the entire duration of the loan. Under the aegis of the Adjustable Rate Home Loan, a floating reference rate determines the interest rate. This means the interest rate will vary with market fluctuations.


5. Are there any additional charges with regards to Home Loans?

Yes, there are additional charges like processing fees amongst others. To get a detailed idea for the same, you must contact the various banks that you are looking at in terms of home loan selection.


6. What is the documentation process for getting a home loan?

The Following are some the documents that are a pre-requisite for the home loan process to go ahead:

Document for Sanction

Complete Application Form
Photograph/s
Check for Fees
Proof of Age
Photo Identity Proof
Signature Verification Proof
Residence Proof

Specific Documentation

Form 16
Last 3 Months Salary Slip
Bank Statement for last 6 months from Salaried Account
If any other loan has been taken, then the repayment track record or Closure Letter for the Loan
..And many more


7. How do I approach a bank for a home loan?

Most banks offer an option to apply online. Moreover, you can also call them up at their 24 hour customer center or for that matter walk into any other their branches or call their direct sales agents.


8. What is the loan Approval Process time frame?

Once all the necessary documents have been submitted by the borrower and checked by the bank, the loan can be sanctioned in as little as 2 days.


9. Can there be co-applicants for the home loan?

Banks will allow one to include a person's spouse as a co-applicant for the loan. In such cases, the inclusion of the income of the spouse will go a long way in the enhancement of the loan amount. If there are any other co-owners of the house, then they automatically become the co-applicants for the home loan.


10. Should there be a personal guarantor for the home loan?

More often than not, banks do not ask for a personal guarantor. However, to get specific details of this aspect, you must check with your home loan counselor.


11. What is the kind of collateral or security that is asked for, by the banks?

Most banks seek to take exclusive charge of the property to be financed, as the security for the loan. A borrower will be asked to deposit the title of the deed or some such collateral or security that might be necessitated by the bank. Moreover, it must be understood that the title to the property must be encumbrance free, clear, and marketable.


12. What is the Re-payment process of the home loan?

Typically there is no change in the repayment process of the home loan compared to any other loan. For any specific information please check with the specific bank.


13. Is there an option for prepaying the loan?

Most banks will offer you an option to prepay the loan either in part or full. There are charges leveled for the process of pre-payment and usually this charge is around 2% of the principal outstanding loan amount at the time you foreclose and is also levied on the amounts that have been prepaid, if any, in the previous one year.


14. Is it necessary that I have an account with the bank that I want to take the home loan from?

We would say that it's not necessary that you have an account, but it's always better to take a home loan from a bank with which you have an already established banking relationship. The process of documentation gets easier, and the approval is faster. Having said that, you must always look for the best deals when it comes to home loans! Choose a bank that offers you great lending rates.


15. What are the various stages of the loan process?

There are three mains stages involved in taking loans. The first stage is the application stage, wherein, you submit a completely filled application, attached with the necessary documents. The second stage is the sanction of the loan, wherein, a particular loan amount is sanctioned. This amount is based on the valuation of the collateral that you have offered to the bank and also your repayment capabilities. The third and final stage is the disbursement of the loan amount, wherein, the amount is transferred to the borrower.


16. What are the different types of Home Loans offered by the various banks in India?

Home Loans
Property Loans
Home Renovation Loans
Commercial Property Loans
NRI Home Loans
Loans for Under-Construction Homes
..And many more


17. When can I apply for a loan?

You can either apply for a loan before you find the ideal property for you needs and even before the selection of the property has been done by you. On the other hand, you can first choose the home of your choice and then go for a home loan.


18. Will banks help me search for the right home?

A number of banks have a home search division, which provides assistance to borrowers to search for a home. Banks have a huge database of properties, through which they can offer their clients something that suits their needs and requirements best. If you take a home loan from the banks offering such facilities then these banks usually don't charge any fees for the search process.


19. Are home loans also offered for purchase of offices etc?

Yes, banks offer loans for the purchase of commercial property, as well.


20. When does the disbursement of the loan take place?

The disbursement of the loan usually takes place after you select a particular property and only after all the legal documents have been submitted and the collateral has been deposited by you. Moreover, it is only after the legal and technical clearance of the property that the loan amount will be disbursed.


21. Are there any tax benefits with regards to home loans?

Yes, you can avail of tax benefits and for specific information on the same, please ask for the requisite information from the banks or your accountant.


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