Basic Home Loan – FAQ on House Loan
The Modern way of getting a House Loan for Working Professionals like you.
Basic Home Loan – FAQ
Which bank is best for house loan ?
Different lenders have different offerings. A comparison of the various offers made by all the banks and NBFCs should be done to understand which lender is most suitable for you. Detailed research of the interest rates offered, processing fees charged, for different tenures and further understanding the Loan-to-Value ratios of each lender is a must.
Also, keep a lookout for any special campaign going on with the lenders. You can also get your eligibility check across banks to know the house loan amount which can be offered to you. This helps you find the best house loan as per your requirements.
What are the types of house loans available?
house Loan – The most common type of loan availed to purchase a house. Depending on your financial institution you can get up to 80%-90% of the house’s market price in the form of financing.
house Loan Balance Transfer – Stabilise your finances by opting for transferring of home loan. Whether you’re looking to lower your EMIs or consolidate your debts, refinancing your current house loan is easier than you think.
Loan against property – If you are looking to use your commercial or residential property as collateral against the funding, then Loan against the property is just what you need.
Plot + Construction Loan – Build a house that fulfils all your needs with our customised options of house Loans.
Renovation + Extension Loan – With the help of a house Improvement Loan, you can repair or renovate your house into a modern living space for you and your family.
Home Loans Top Up – If you already have a home loans and requires more funding, can opt for House Top-up loans. The interest rates are much lower than usual personal loan interest rates.
How long it takes to get house loan sanctioned ?
A typical house loan process is completed within a month. However, there are factors like timely submission of required property documents or income related reports and any such important document sought by the evaluating bank which determines the time taken for the sanction of your house loan. The best way to reduce your processing time is to seek a pre-approval of your house loan from the bank and then look for your dream home.
How is my home loan eligibility obtained ?
The following factors are taken into consideration for evaluating your loan eligibility:
- Age
- Residential status
- Annual Income
- Financial health
- Co-applicants’ age
- Co-applicants’ income
- Credit score
- Other existing liabilities or loans, if any
What should I pick, fixed rate or floating rate house loan ?
You should opt for a floating rate house loan if –
- You expect interest rates to fall
- You are unsure about interest rate movements
- You want some savings on your interest cost in the near term
And you should opt for a fixed rate house loan if –
- You are comfortable with the EMI you are committing to pay
- You expect interest rates to rise
- If interest rates have come down and you wish to lock in at that rate
Is there a pre-payment option available for my outstanding house loan amount?
Yes, a prepayment penalty is a fee that some lenders charge when you pay off all or part of your house loan early. While banks do not charge any prepayment fee on floating rate loans, fixed rate house loans attract a penalty up to 2% of the loan amount if prepaid through refinance. Please check such stipulations while availing the loan.
What are the rules for a co-applicant ?
A co-applicant is a person who applies with the primary applicant for a joint home loan. A co-applicant need not be a co-owner; however, it is mandatory for all co-owners to be co-applicants for the home loan. The co-applicant can be an immediate family member such as spouse, parents or major children.
How is a joint house loan beneficial for me ?
There are various benefits of availing a joint home loan, such as:
- An immediate family member (like, spouse, parents or major children) can be a co-applicant.
- A co-applicant helps increase your loan eligibility
- A co-applicant need not be co-owner of the property; however, co-owner has to be co-applican
- Women co-owners could enjoy a lower rate
What is Pre-EMI ?
Pre-EMI refers to monthly payments that include only the interest component that is to be paid to the loan provider of your home loan. With pre-EMI, no repayment towards the principal amount is made. An option to pay pre-EMIs is offered only when the property is under construction.
What is MCLR ?
MCLR is Marginal Cost of funds-based Lending Rate. It is a reference rate or internal benchmark rate set by a lender and below which it cannot provide loans to its customers. This process is used to determine the minimum home loan rate of interest for any bank/NBFC.
Is a switch from a fixed rate to a floating rate during my house loans tenure allowed ?
Yes, a switch from fixed rate to a floating rate or vice-verse is allowed during the home loans tenure, however, there are charges to make the same. Conversion fee of up to 2% of the total loan amount is charged by lenders for the switch.
When does the housing loan repayment start ?
Repayment of the loan in monthly instalments comprising both principal and interest starts from the month following the month in which full disbursement is taken. In case of partially disbursed loan, a pre-EMI, which comprises of only interest, may be required to pay on a monthly basis.
Do I get tax benefits on House Loan ?
Yes. According to sections 80C, 24(b), and 80EEA of the Income Tax Act of 1961, you may be eligible for tax benefits on repayment of the principal and interest components of your Home Loan. Since the benefits may vary each year, please consult your chartered accountant/tax expert for the most up-to-date information.
Can more than one housing loan be availed simultaneously ?
One can avail as many home loans as required. There is no restriction on the number. However, the lender will grant loan after assessing your repayment capacity and eligibility.
Can I borrow from two lenders for my home ?
No, one cannot avail more than one loan for a single property. This is considered as a fraudulent action and is a punishable offence.
What is the maximum percentage of house loan I can get ?
Home Loan lenders maintain a margin to cover its cost and hence do not grant 100% of the property value as housing loan. A maximum of 90% of the property value can be extended as a loans to the home buyer by the lender. A down payment of the balance amount would be required to pay by the buyer.
Does having a personal loan affect house loan eligibility ?
When determining your home loan eligibility, the lender makes sure that your monthly repayments are not being affected by any other ongoing loans such as personal loan, two-wheeler loan, etc. However, other ongoing loans ultimately tend to affect your eligibility as your overall spending power is reduced. If your other loans commitments exceed 50%-60% of your monthly income, your housing loan application may be rejected.
