It’s a fact that every individual dreams of owning his own abode oneday, someday. However, it’s also a fact that with rising inflation & slowing economy, the process of buying a home can get intimidating, especially from a financial point of view. However, with careful financial planning and Home loan, it can definitely be conquered.
Nevertheless, the process of securing a mortgage to purchase a home can be elaborate & complicated. You need to check the eligibility criteria required to actually do so.
So, without further ado, here’s all you need to know about the factors, which needs to be considered before applying for Home Loans:
Be aware of the extra charges that come with opting for a home loan. The lender’s processing fees, service fees and administrative expenses – there are lots of miscellaneous expenses involved. Also, when the EMI rolls in, exchanging post-dated cheques, modifying monthly instalments or other such changes would be charged. So avoid making modifications and make sure you keep the lender’s schedule of charges in check.
Before the loan amount is sanctioned, a thorough verification of your income, credit card bills and other such dues are made. Home loan lenders generally provide 80% of the value of the property as the loan amount, subject to your income. While assessing the income criteria, the lender would consider only the income that can be used to repay your loan.
Make sure you read your loan agreement carefully, despite how difficult the bulky Concord seem. No matter what promises your lender makes verbally, it’s all worthless unless mentioned on the agreement.
Never sign a blank loan document, even if the marketing personnel tell you to do so. Check the details filled in your loan document to ensure that the terms are the same as what you agreed.
In terms of the interest rate models in the market, there are mainly two:
Fixed interest rate: The rate of interest and EMI remains same for the complete tenure of the loan or till the time loan account is closed whichever is earlier. It’s beneficial when the interest rates are expected to rise in the near future
Floating interest rate: The interest rate and tenure of EMI are dependent on the base rate of the lender. As the base rate changes the home loan interest rate and tenure also changes. It’s beneficial when interest rates are expected to fall in near future
The tenure for home loans ranges from 5 years to 30 years typically. While deciding on the loan tenure, do keep a few factors in mind. You would have to serve the EMI every month after the deductions like PF, ESI, Gratuity and Taxes, from your salary.
Remember, a loan with a shorter tenure would require lesser interest, but with higher EMI.
On the whole, be aware of all the tax implications and tax benefits you are entitled to receive while servicing your home loan. Buy your dream home quickly but safely!
The standard list of documents required of all loan applicants is as follows:
• Photographs
• Proof of age
• Identity papers
• Proof of residence
For salaried individuals:
• Photographs
• Proof of age
• Bank statements reflecting salary credits for the previous six months
For self-employed individuals:
• Photographs
• Profit and loss statement
• Tax challans / tax returns for the previous 3 years
The Articles of Association
• The Articles of Association
• Partnership deed and details about the firm
For NRIs
• Latest salary certificate specifying, name (as it appears in the passport)
• Date of joining
• Passport number
• Designation
• Perquisites and salary
• Photocopy of labour card/identity card
• Photocopy of valid resident visa stamped on the passport
• Photocopy of monthly statement of local bank account
• Property related documents
Various varieties of housing loans are offered by different financial institutions. Prominent among these are:
• Home Loans This is the basic housing loan for the purchase of a new home, which covers the cost of the flat, deposits and charges, stamp duty and registration charges.
• Home Improvement / Extension Loans These are for the purpose of undertaking repair works and renovations in a home that is already owned by you.
• Bridge Loans Bridge loans are for people who wish to sell their existing house and purchase another one and need finance for the new house until a buyer is found for the old one.
• Balance Transfer A balance transfer indicates the paying off of an existing housing loan and availing of a loan with a lower rate of interest.
• Refinance Loans Refinance loans are taken to pay off the debt incurred from private sources such as relatives and friends, for the purchase of your present house.
• Loans To NRIs These loans are designed as per the requirements of NRIs who want to buy a house in India.
Any Indian citizen, including Non Resident Indians, with a steady source of income can borrow funds for financing the cost of a flat from housing finance companies and banks.
Loans are generally disbursed between 70%-80% of the cost of the property. The balance money is to be funded by the purchaser from his own contribution. The percentage of loan would vary from bank to bank.
Equated Monthly Installment ("EMI") is the amount comprising a portion of the interest and the principal loan amount, which is payable by a borrower to the lender every month.
Interest rates vary from time to time and from institution to institution. The interest is calculated either on a daily or monthly reducing or yearly reducing balances.
A fixed-rate housing loan is a loan where the rate of interest is constant through the entire term of the loan period.
A floating interest rate loan is a loan where the interest rate payable is linked to the bank's internal prime lending rate (PLR) such as the base rate which rises and falls as per banks policy.
Repayment period options range generally from 5 to 20 years. Some of the banks may give loans up to 25 years also.
Processing Fees are payable to the lender on applying for a loan and can either be a fixed amount not linked to the loan or may also be a percentage of the loan amount.
Prepayment Penalty between 1% and 2% of the amount being prepaid is charged by some institutions when a loan is paid back before the end of the agreed duration. Many banks now don't levy penalty on partial prepayment.
Franking Charges as per prevailing rate of Government Authority.
The property purchased is the primary security and is mortgaged to the lending institution till the entire loan is repaid. Additional security such as life insurance policies, shares, bonds, fixed deposit receipts, national per the requirements of the institution.
Yes. Many lending companies require 1 guarantor or a co-applicant.
Varies from bank to bank but usually it is 15 - 20 days for a salaried person and 20 - 30 days for a self employed person depending on the applicant's documents.
Usually loans are disbursed within 10 - 15 days after completion of verification by the institution, documentation (original agreement for sale / lodging receipt) and completion of all relevant procedures. Submission of proof that the borrower's own contribution has been paid by him to the vendor / builder / developer is also an important aspect.
Yes, but this policy varies from bank to bank.
Gem Builders And Developers.
H.No 8-2-672, Flat No 101,
Shaheen Enclave, Road No 13,
Banjara Hills, Hyderabad,
Telangana, 500034.
info@gemhyd.com
Phone: +91 788 782 7879