What are the mistakes that can ruin your home loan?

Availing a home loan is a tedious process which involves a huge sum of money. Before applying for a home loan, the applicant should do his or her research carefully and one can never be too careful. Mistakes while availing a home loan can prove to be fatal. Some of them are:

• Not having enough money to repay back the principal loan amount: This is the most fatal mistake a borrower can make when availing a home loan. The maximum loan amount that is approved by a financial institution is 80% of the total property value. While providing the loan, the financial institution will also check the CIBIL score of the applicant. Before the borrower applies for a home loan, he or she must make the down payment first. For instance, if the value of the property in question is Rs.1 crore, the maximum loan amount that can be availed by the borrower is Rs. 80 Lakh. The difference between the loan amount and the principal amount is the down payment value. The down payment amount should be deposited by the borrower at the time of availing the loan.
• Availing a loan with the principal loan amount that is not affordable: Before you apply for a home loan, consider the EMI amount that is to be paid every month. Ideally, the EMI amount should not be greater than 30 to 40% of the total monthly income of the borrower. Determining the EMI amount on a future increment is ill-advised. 
• Opting for the wrong home loan option: With so many home loan options available in the market, it is not easy to select the right home loan. Home loans are structured in different ways with some financial institutions offering floating rates, others offering semi fixed rates and overdraft benefits. It is the responsibility of the borrower to identify his or her requirements and select the home loan depending on that. Often, the applicant ends up paying more money than he or she probably should. 
• Opting for a loan with the incorrect tenure: Selecting the loan tenure is also very important for the borrower. It depends on the financial capability of the borrower. If the loaned amount can be paid back in the determined loan tenure, the borrower should opt for a short-term loan as the rate of interest is usually low. If the principal loan amount is high, it is better to opt for a long-term loan. Defaulting on EMI payment will result in fines to be paid by the borrower. 
• Not doing proper research in the market: With various websites now available for aspiring home loan applicants to check home loan, research should be done thoroughly in order to pick the best home loan option as per the requirements and financial capability of the borrower. 
• Applying for a home loan with a poor credit score: Applying for a home loan with a poor credit score will harm the applicant’s chances of getting the approval for a home loan and if the application is rejected, chances are that the credit score will go down even further. Hence, it is advisable to maintain a healthy credit score. 
• Not applying for insurance when availing a home loan: This is a common mistake made by applicants when applying for a home loan. In situations of financial distress, the applicant can use the insurance to protect himself or herself and the family as well. 
• Studying the loan agreement thoroughly: It is essential for the applicant to study the terms and conditions of the home loan carefully before signing off on the agreement. If as the applicant or the borrower, you do not agree with any terms and conditions in the agreement, it is better to dispute it with the lender.       

Steps to choose the right lender for your home loan

A home loan is a pretty expensive affair and the repayment often goes on for more than 10 years - reaching 30 years in some cases too. Also, the minimum sum on a home loan can easily range in the lakh. So, it’s absolutely essential to approach the right lender so that you don’t have to pay too much interest or fees that you already need to. Here, we will talk about how to choose the right lender for your home loan.

1. Choose an NBFC: If you have tried applying for a loan, you will have come across a number of Non-Banking Financial Companies (NBFCs) that have risen in number over the last decade or so. As the name suggests, these aren’t your typical banks and they lend money just the same irrespective of what loan you’re looking for. Before they arrived, banks had the monopoly on deciding the lending structure and the interest on a home loan. However, NBFCs have vastly changed the way the market works. For starters, they have given rise to healthy competition in the sector and have slowly taken a fair share of the market, threatening the power previously wielded by banks. If you feel a bank may or may not entertain your requests for a lower interest rate, you should consider applying for a NBFC as they often try to go toe-to-toe with some of the leading banks and provided loans at competitive rates.
2. Compare between different offerings: When you decide to go for a home loan, you need to look at all the offerings that are available to you. For starters, you can use comparison as a tool and compare the loans provided by 3 or 4 different lenders. Go and have a sit down with each of these banks and ask for the best rate they can offer. Sometimes, a discussion such as this can get you an interest rate that is way below the market rate, so that’s worth your consideration. Also, talk about all the other aspects of the loan such as the processing fees, stamp duty charges, and basically other charges involved with a home loan. Basically, if you are getting a lesser rate home loan, it means that you are likely paying more than most on one or more of these charges.
3. Figure out what you want: A home loan for a new property and a resale property is slightly different and should be approached slightly differently. Know what you are looking for exactly, what type of interest rate you are looking at (fixed or floating), how much down payment you have ready, and if the lender will ask for more in your case, and also think of how you service the EMIs on a month-on-month basis. Answering all these factors satisfactorily is highly important when availing a home loan because repaying it takes more than a decade and even more in some cases.
4. Check the lender out: If you have done enough research and have already decided to take a loan from a particular lender, stop and think: Does the lender have a good track record? Are they going to make your life difficult by adding unexpected charges to your loan? You need to have a clear idea on where your lender stands in the market, if the lender has a reputation of strong arming their borrowers, there’s a likely chance they might do so with you. So, it’s always better to read reviews, talk to known acquaintances who have a loan from the same lender, and then decide on whether or not you should take a loan with them. 
5. Know that lowest rate isn’t always the best: There’s something called clickbait - and if you’ve been on the internet long enough, you will have come across it several times. These make tall and practically unreachable claims with the content they offer and offer underdeliver at all times. Somer lenders too are guilty of using such a tactic. To begin with, they will put up a loan for the lowest interest rate - a few basis points lower than the prevailing market rate just to catch the prospective borrower’s attention. Once they have reeled you in, they will give you a list of all the charges you may have to pay to get the loan. So, make sure to not fall for such ploys and go with reputed lenders that have been in the business for long.
6. Have a higher down payment ready: A down payment is often the first hurdle facing a home loan borrower. Typically, a lender will only give you 80% of the loan amount; 85% in some cases while the remaining 15% - 20% should be taken care of by the borrower. The higher the down payment you have, the better it is for you as you can get a loan at slightly improved rates and have chances of getting your loan approved at a much faster rate than anybody else. Having a higher amount ready tell the banks that you are confident and serious about what you are doing, which will help them make the decision faster.

 A home loan can be a massive burden for a borrower as they need to be repaid over a period of 10 - 25 years, while maintaining all your other financial responsibilities. Following the steps mentioned above will help you get the best home loan for your circumstances possible.

Go the online way for hassle-free, faster home loan approvals

The credit landscape in India is witnessing a revolution of a new kind. As innovative technologies are developing, the FinTech industry is tying together lenders and borrowers in a new way. Loans can be availed without having to wait for long hours at the bank. For example, if you are planning to apply for a home loan, there is no need to run around from bank to bank with a heavy file in hand. Thanks to the digital revolution, there are several platforms through which you can get your housing loan approved in a much more secure and faster manner. Read on to learn more about the advantages of taking the online route.

Better access
There are a lot of processes involved in applying for a home loan. Traditionally, you would have to approach the bank physically to seek out information on offers, interest rates, etc. Now, all the important information can be found online. Even sourcing the loan application form becomes much easier as it can be downloaded online.

Constant status updatesProspective borrowers are regularly updated about the status of their home loan application. From the time they login to their online profile to the time of the reimbursement of the loan, the customer is privileged enough to get constant updates.

Better reach
The digital revolution in finance is making it easier for all sections of the society to have access to credit. This means that people from remote and rural areas also have a high chance of getting access to information and apply for loans. Even if there are no banks in such areas, banking services can be availed online.

Turnaround time reduces
There is no need to wait in endless lines and run around trying to get your paperwork in order. You can compare home loan interest rates offered by various lenders online and apply for a home loan at the click of a button. Loan approvals also happen at a much quicker pace. This way, the end customer receives better services and the bank saves a lot of time.


Tailor-made products
One of the other main advantages of this type of loan application method is the fact that customers can customise their loans as per their personal financial requirements. This will help a lot of people get access to better credit facilities in time of need.


Paperless process
The entire process involved in applying for a home loan is paperless. All you have to do is to scan and upload documents. Also, have in place an e-KYC system. This is probably one of the main advantages of the online application process.

Things to know before applying for a home loan in India

1. Understand eligibility: You will not get the loan approval unless you meet the eligibility criteria. This simply means that the lender will assess if you will be able to make EMI payments based on the salary that you take home. Ideally, you should not be spending more than 50% of your salary on an EMI. This is one of the most important factors that will be taken into account before a bank approves your loan. Remember that any additional perks or reimbursements that you get will not be considered to be a part of your salary. Another thing to keep in mind is the liability aspect. If you have other loans in hand, this also plays a role.
2. Decide on tenure and EMI carefully: The longer the tenure for your home loan, the more interest you will end up paying. This means the total cost of your loan increases. This is why it is important to choose a tenure wisely. Do not go for a longer tenure just because you want to pay a lesser EMI. For example, if you are taking a loan of Rs.10 lakh for 20 years at the rate of 9.55% per annum, the EMI you will be paying will work out to be Rs.9,353.99 per month. However, the total interest paid will be Rs.12,444,956. On the other hand, if you take a loan for the same amount and the interest rate for a lesser tenure, let’s say 15 years, the EMI per month will be Rs.10, 472.44. Though the EMI is slightly higher, the interest paid on the whole loan will come down to Rs.8,85,038. 
3. Choose the type of loan: There are two types of loans offered based on the type of interest rate that is charged. One is a fixed rate, where the interest rate remains fixed throughout the tenure of the loan. On the other hand, if you have a floating rate, the rate of interest fluctuates based on various market conditions. Fixed rates are higher than floating rates in most cases. So, if you go for a floating rate, the EMI you pay can increase or decrease based on the changes in market conditions. 
4. Compare interest rates: The first and most important thing to do before you apply for a home loan is to look around for interest rates. Under no circumstance should you go for the first lender that approaches you. Do some thorough research and shop around for the best rate. However, do not make this your only parameter. It is also wise to read up on the bank that is granting you the loan or speak to some existing lenders.
5. Read all the documents: A home loan approval application is a legal document that comes with certain important terms and conditions that you must be aware of. Be mindful of how your bank defines a ‘default in payment’. Scrutinise all the clauses that are offered and it also makes sense to consult a lawyer before signing any agreement in this regard.

Final words
If you are an old customer and have a long relationship with the bank, it is important to make  sure that you negotiate for a better interest rate. This especially holds true if you have all documents in place and a good credit score to add to it.

What is internal home loan balance transfer?

Home loan balance transfer is a process where the home loan of a particular borrower is transferred from one bank to another, usually for a lower rate of interest. The new bank will pay off the loan in entirety to the existing bank, and all future home loan payments will have to be paid towards the new bank after the home loan transfer.

In case of an internal home loan balance transfer, it is a process where the home loan is transferred to another individual within the same bank. Let’s say that you have an existing home loan with a particular bank and would like to sell your house. At the same time, the buyer of the property would like to avail a loan to make the purchase. Instead of having to close your existing loan, and the buyer having to apply for another loan, the buyer simply takes over the existing loan. This is known as internal home loan balance transfer.

Requirements to internally transfer your home loan

• A letter of consent from the existing borrower to foreclose his loan in lieu of the property being sold 
• A loan application form that is duly filled by the new owner of the property
• The processing fee for the loan must be provided to the bank
• No objection certificate from the developer
• Any prepayment charges will have to be borne by the new owner

The Property Inspection Checklist

Purchasing a property in India take a lot of time and effort. Due to this, there are instances where home buyers settle a house, which may cause them regret in future. It is of utmost importance, therefore, that you inspect the property thoroughly before purchasing it. Mentioned below is a checklist to follow before you purchase property.

• Foundation – A visual inspection of the pillars, walls, etc. can tell you a lot about a house. You do not need to be an expert to determine if the foundation of the house is solid or not.
• Exterior – As it is with visually evaluating the foundation, it is also equally important to inspect the exterior. This will also give you an idea of the quality of the exterior and also if the building requires any repair or reconstruction.
• Low lying area and poor drainage – In the event that the property is located in low-lying area, there are chances of water logging during the rainy season. It is best to avoid making investments in properties in low-lying areas. Water logging is not very sanitary as it can cause diseases an seepage in your house.
• Sunlight and ventilation – Every house must have adequate sunlight and ventilation for in order to lead a healthy lifestyle. The lack of these two essential elements, there are high chances of germs and diseases accumulating in the house. This is arguably one of the most important factors to look into before making an investment in a property.
• Size of the rooms – It’s a good idea to measure the sizes of the rooms just to understand if your furniture would fit easily into the room. It could be quite a setback if you cannot accommodate your furniture and end up spending additional money to purchase new furniture as well. This can also tell you the actual carpet area of the house.
• Water seepage and leaks – leaks and water seepages can cause huge burdens if not corrected in time. A water seepage can also spread throughout the house, making it an uncomfortable environment to live in. Apart from just weakening the walls and ceilings, water seepage is a very good habitat for termites and other such germs. A quick scan of the house can help you ascertain if there are water leakages or seepage. A quick point to keep in mind is that the top most floor of a house or apartment and the ground floor are more susceptible to these water damages. Although minor seepages can be corrected, houses with major water issues should be avoided at all costs.
• Cracks – Cracks and damages on walls can be an indication of poor construction. Check the house for any cracks on the walls or ceilings. This is a quick and easy way to determine the quality of the property. Generally, the more cracks you notice in a house, the more likely that it was poorly constructed.
• Doors and windows – Although damages on doors and windows may be easily corrected, it must be brought to the owner’s attention before purchase. Make sure the owner rectifies the issue before making a purchase.
• Electrical issues – As it is with doors and windows, electrical issues are usually easy to rectify. Check all electrical outlets, loose boards, etc., and bring it to the owner’s attention before making a purchase. Request for these issues to be rectified before investing in the property.
• Plumbing issues – A good plumbing system will ensure that there is no water leakage or seepage. Understanding if the plumbing system in the property is up to the mark will help you saves a lot of money and hardship in future. Unfortunately, not everyone can ascertain this, and therefore, you would need to hire a professional to do this for you. To review the plumbing system at a basic level, you can check for any leaks in the taps or valves. If you happen to notice any leaks, the property may have bad plumbing.
• Termites and bugs – Scanning the house for termites and bugs is a very good idea. This can definitely save you from suffering in future. If you happen to find bugs or termites, the best thing to do is to refrain from investing in the property. The second option you have is to request the owner to terminate these pests before you can make a purchase.
• Odour – If you sense any odour from the house, this can be an indication of water seepage or the presence of germs. This is a tricky situation to assess as bad odour can be caused by other factors that can be dealt with easily. Therefore, it is important to not make impetuous decisions with the odour of the house.
• Basement – Often, homebuyers tend to scan the entire house but oversee the basement. Basements can be a good indicator of the house’s overall situation. Check for cracks, ventilation, etc. to assess the quality of the basement. This is usually an indicator of the entire house’s health.
• Ventilating system – In case the house possesses a heating or cooling system, it is important to evaluate the condition of the duct, the age of the system, the maintenance, etc. In case the system doesn’t work, not only is it going to be a costly affair to rectify this, but you are also not going to be able to live in the ideal conditions.
• Security situation – Ensure the gated community has adequate CCTV cameras, security guards etc., if you are looking to purchase a property here. In case it is not a gated community, enquire with the neighbours about how secure the neighbourhood is. You may also consider hooking up some CCTV cameras yourself too.
• Maintenance – One of the major issues that home buyers fail to look up is the maintenance payable in apartments or gated communities. It is only after they have moved in that they realise that the maintenance charges are expensive. By now, it is too late to back out of the deal. It is important to understand the maintenance fee before making a purchase. If the fee is too high for you, do not invest in the house. However, make sure you take into consideration the proximity of hospitals, airports, schools, offices, markets, etc., before making this decision. There are cases where the convenience if these amenities outweigh the maintenance fee payable on the property.

Follow the checklist mentioned in this article before purchasing a property. It can be a strenuous task, but can help you save on a lot of time and money in future. After all, properties are long-term investments and you will be living here for a while. Therefore, it is important to look at the investment in a long-term standpoint.

Check :  Commercial property loan

How To Manage Home Loan EMIs

Home loans have become easier to obtain in the last few years, and this has also caused a lot of financial burden on borrowers. The expanding home loan market has increased defaulters as well. Being unable to pay off the EMIs efficiently has been a problem that needs to be addressed. Mentioned below are tips that can be followed to manage your home loan EMI better.

• Reduce the EMIs – The easiest way to reduce the burden of EMI is to negotiate with the bank to reduce the EMI you need to pay towards the loan. I many cases the bank will oblige due to the immense competition in the home loan market.
• Refinance your home loan – In case the bank doesn’t reduce the EMI, consider refinancing your home loan. Refinancing is a procedure that involves transferring your home loan balance from one bank to another. This may help you reduce the EMI on your home loan.
• Try to postpone your EMI – If you feel that your financial issue is only temporary, approach the bank to postpone the EMI payment. If you have been making the payments promptly, the bank is likely to oblige to your request.
• Make use of any additional income – Use any additional income that may receive, like bonuses, etc., to pay off your home loan. This will help reduce your EMI burden and also help you close your housing loan faster.
• Make use of EMI calculators – Before you avail a housing loan, understand the financial outflow you would need to incur on a monthly basis to pay it off. If you think that a loan would be too expensive for you, it would be a wise decision to not take it up. Make use of EMI calculators to help understand the monthly commitment you need to incur. Remember, the EMIs payable towards a home loan should not affect your lifestyle.
• Reassess your investments – If your ROI (Return on Investments) is lesser than the interest that you pay on your housing loan, it is advisable to withdraw these investments and prepay your home loan.

A home loan is a long term commitment, therefore, it is important to make sure that you are financially capably of repaying this loan before even applying for it. Use online platforms that will help you assess the financial outflow you would have to incur to pay back the loan, and proceed cautiously. In case you are burdened by an existing home loan, follow the steps mentioned in this article and maintain financial discipline for a while. This will help you ease the EMI burden and also will help you pay off the home loan faster. Also consider refinancing your home loan to reduce the EMI you have to pay. However, this should be considered only after negotiating with your existing bank first.

Knowing More About Home Loan Tax Benefits

Purchasing a house for yourself and your loved ones is one of the biggest investments that you will probably make in your entire lifetime. It is a very big decision to buy a house because not only you spend a lot of money, but also it becomes an asset to you. Everyone wants to own a house and in today’s world, buying a house is more of a necessity than a luxury.

Buying a home requires lots of funding. You may go ahead and shell out your savings on buying your dream home. However, if you do not wish to buy the house using your savings or don’t have enough saved up, you may choose to go for a home loan. A home loan offers you the lump sum money that you need to buy your house. You must understand that the loan will not cover the entire value of the property. Around 80-85% of the property value will be taken care of by the loan and the remaining 15-20% must be paid by you as down payment.

If you choose to opt for a home loan, you will have to ensure that you make the monthly payments on time towards the debt. Ensure that you have enough cash flow every month so that you can manage your finances well.

In order to avail a loan from a bank or an NBFC, you must meet the eligibility criteria set by them. You must have a steady source of income, a good credit score, etc. If you meet the criteria and all your documents are in place, you can easily avail the home loan.

A home loan not only helps you buy a house, but it also comes with several other perks.  One such perk is called Home Loan Income Tax Benefit. Let us talk about the tax benefits that can be availed under the prevailing Income Tax laws.

Tax Benefits On Housing Loans:

Tax Benefits for home loans can be availed under Section 80C, Section 80EE and Section 24 of the Income Tax Laws.

Tax Benefits For Home Loan Under Section 80c:

Under Section 80C of the Income Tax Act, the borrower of the housing loan is allowed to claim tax deduction on the principal amount. Rs.1.5 lakh is the maximum amount that can be claimed under this Section as tax deduction. You must understand that this deduction is the sum total of all the deductions under Section 80C and includes sums invested in fixed deposits, PPFs, Senior Citizens Savings Scheme, National Savings Certificate, etc.

Tax Benefits For Home Loan Under Section 24:

Section 24 of the IT Act allows the borrower of the home loan to claim tax deduction on the interest that is paid towards the housing loan. According to the clauses mentioned under this Section, income from the borrower’s property is reduced by the figure of the interest paid on the housing loan. However, there is a condition for claiming this tax deduction. The home loan must have been taken for the purpose of purchasing a property, construction of the house, repair of the house, reconstruction or remodelling, etc.

Tax Benefits For Home Loan Under Section 80ee:

This Section under the Income Tax Act was reintroduced in the 2016 Union Budget. It has a provision of claiming an additional amount of Rs.50,000 as tax benefit when you take a home loan. This claim can be made on the interest that is paid towards the loan amount. This additional claim is over and above the claim of Rs.1.5 lakh and Rs.2 lakh under Section 80C and Section 24 on the Income Tax Act, respectively.

When Is A Claim Under Section 80ee Valid?

 The claim under Section 80EE is allowed if the cost of the property purchased by you is less than Rs.50 lakh and the total value of the property does not exceed an amount of Rs.35 lakh. The deduction benefit can be availed till the time the home loan’s repayment is done.

How To Claim Home Loan Tax Benefits?

In order to claim tax benefits on home loans, you will need to submit the lender’s statement that states the payable amount towards the interest and principal. If the claim is valid, the borrower only has to pay tax on the remaining amount that does not fall under the tax deduction bracket.

Bottom Line:
Choosing a home loan for buying your home can prove to be a great option as it helps you buy the house easily and allows you to save more by claiming tax benefits. Ensure that you do thorough research before investing in a property.
 

 

 

 

What ‘NOT’ To Do When You Apply For A Home Loan

While there are a list of guidelines and rules that you might have followed before and during your home loan application process, it is also important to keep in mind the list of ‘don'ts’. It matters that you be very careful during this crucial period of your life when you are very close to making your home dream come true. It is necessary to keep these pointers in mind because you do not want to loose your chance of getting a home loan. Not only will being careless reduce your chances but will have an impact on the interest rates offered and other perks that you would have otherwise been eligible for. For example, it is better to avoid getting into more debt or abusing your credit card during this time period. Read on further to read more about the list of things that you should avoid during, before and after the home loan application process.

• Do not accumulate debt: Remember, when you are preparing to file your home loan application, it is wise not to accumulate any type of new debt in the form of personal loans, car loans or other types of outstanding credit. This will definitely have a huge impact on your eligibility criteria. Not just this, this will also have an impact on your credit score and put you in the category of a ‘high risk borrower’. So, keep in mind that before, during and even after the home loan application process, do not take any other type of debt.
• Do not become a co-borrower or a offer guarantee: Though you may want to help someone in need of debt, remember, this is not the best time to become a co-borrower or offer a guarantee on another loan that your friend or relative might be applying for. It may be hard to say a no, but explain to them politely why you cannot help them at this point in your life. Do not be under the misconception that you can co-sign once the home loan application is approved. You need to be very careful till you finally settle the loan.
• Do not lose track of your credit score: Even, before you apply for a home loan, you have to make sure you build a good credit score, based on which the lender will be confident enough to give you a home loan. Start building your credit score well in advance and do not wait till the last minute. Also make sure that you do not do anything that will have your credit score drastically even after you have applied for a home loan. Make sure you are paying all bills on time and if it is not possible to keep all deadlines in mid, set up automatic payments or even payment reminders.
• Do not close a credit card account: Think that closing your credit card account is the best idea? No. It may probably be the worst idea because your credit card is one of the main factors that are used to access your eligibility criteria. And, if you suddenly close a credit card account, it may lead to unnecessary suspicion and may also have a negative impact on your overall credit score even if you have made all payments on time and do not have an undue credit on the card that you may be holding.
• Do not switch jobs or make other career moves: This is definitely not a good time to change a job. Ideally, you should have a stable and secure job to be able to take a home loan and also pay it back. Also, if you are planning to go for higher education, this may not be a great time. A home loan is a long-term commitment and thus you have to be fully prepared for this move. Do not change a job suddenly before you apply for a housing loan. Though it is okay to switch jobs, make sure you do not look like you are a job hopper to the lender.
• Do not make any expensive purchases: If you make a very expensive purchase just a few weeks before you apply for a home loan, it will send across a very wrong message to the lender. Also, it is important to save some money and have some liquid cash in hand during this process. Another thing to remember is that if you have made this purchase on your credit card, it is even more worrisome as it will hit your credit score in a big way and potentially cause irreversible damage.
• Do not go overboard with your expenses after taking a home loan: It's an occasion to celebrate once your home loan application has been approved but do not go overboard. Remember that you are being constantly watched and it not the right time for you to splurge on your expenses. Focus more on paying back the loan and less on other aspects.
• Keep your personal information safe: One of the other most important factors to keep in mind is to keep your personal information safe and secure. Do not reveal any personal financial information to anyone else at any point of time and be very cautious.
• Do not go overboard: Before you apply for a home loan check and see if you will be able to pay a monthly installment and can actually afford it. Do not choose an EMI that you will not be able to commit to pay just because you want get a home loan. Do not forget that even banks will not approve your home loan application if you make unrealistic commitments. 

Some Takeaways
Be cautious at very step when you are preparing to apply for a home loan. It is nearly impossible to buy a house without applying for a loan in today’s world, so be prepared to take the risk and at the same time also be able to commit to the same in a responsible manner.

Top Banks Home Loan Details

Buying a house in India is a matter of great joy and pride. When you buy a house you can live there with your loved ones and give them the luxury and peace of mind that they deserve. When you invest in buying a house, it is probably the biggest investment of your life. No ones stopping you if you plan to buy your new house using your savings. However, going for a home loan will not affect your savings to a great extent.

A home loan offers you the upfront money you require to buy a house. However, you must understand that a home loan will only cover 85% of the property value. The remaining 15% has to come from your savings. Before applying for a home loan, it is imperative that you read the details and understand the complete process of applying.

There are several home loans offered by different banks in India. The NBFCs also offer housing loans that are associated with attractive rates of interest.

Let us know about the details of home loans offered by some of the top banks in India.

DBS Home Loan Details

• Pre-closure Chargest: Varies with bank
• Partial pre-payment Charges: Varies with bank
• Loan tenure: 1 Year to 30 Years
• Processing fees: Varies with bank
• Interest Rate (Monthly reducing balance): 8.35% to 18%

SBI Home Loan Details

• Pre-closure Chargest: Nil
• Loan tenure: 30 Years
• Processing fees: 0.35% of Loan Amount, min of Rs.2,000 to max of Rs.10,000 (plus applicable tax)
• Interest Rate (Monthly reducing balance): For women - 8.30% to 8.6%, For General Customers - 8.35% to 8.65% 

ICICI Home Loan Details

• Pre-closure Chargest: Nil
• Partial pre-payment Charges: Nil
• Loan tenure: 3 Years to 30 Years
• Processing fees: 0.50% of Loan Amount (Maximum of Rs.11,800)
• Interest Rate (Monthly reducing balance): For women - 8.45% to 8.80%, For General Customers - 8.50% to 8.85%
• Guarantor requirement: Not require

HDFC Home Loan Details

• Pre-closure Chargest: Nil
• Partial pre-payment Charges: Nil
• Loan tenure: 1 Year to 30 Years
• Processing fees: 0.50% of Loan Amount (Maximum of Rs.11,800)
• Interest Rate (Monthly reducing balance): 8.35% to 8.85%
• Guarantor requirement: Not required 

Axis Bank Home Loan Details

• Pre-closure Chargest: Nil
• Partial pre-payment Charges: Nil
• Loan tenure: 1 Year to 30 Years, Super Saver Scheme - 1 year to 20 years
• Processing fees: 0.50% of Loan Amount (Minimum of Rs.10,000)
• Interest Rate (Monthly reducing balance): 8.35% to 11.75%, Super Saver Scheme – 9.25%
• Guarantor requirement: Not required 

PNB Housing Home Loan Details

• Pre-closure Chargest: Nil
• Partial pre-payment Charges: Nil
• Loan tenure: 1 Year to 30 Years
• Processing fees: 0.50% of Loan Amount (Minimum of Rs.5,900)
• Interest Rate (Monthly reducing balance): 8.35% to 10.25%
• Guarantor requirement: Not required 

Bank of Baroda Home Loan Details

• Pre-closure Chargest: Nil
• Loan tenure: 30 Years
• Processing fees: 0.50% to 0.25% of Loan Amount (Min of Rs.7500 to Max of Rs.20,000)
• Interest Rate (Monthly reducing balance): 8.30% to 9.35% 

IDBI Home Loan Details

• Pre-closure Chargest: Nil
• Loan tenure: 30 Years
• Interest Rate (Monthly reducing balance): 8.35% to 8.65%

Documents Required For Loan Against Property

A loan against property is a loan that is disbursed to a borrower with his property used as collateral by the lender. These types of loans are easier to obtain as these are secured loans, making it safer for a lender to approve them. The loan amount for these types of loans usually corresponds with the value of the property and lenders usually do not put that much of a weight-age on an applicant’s income.
The documents required in order to avail a loan against property are mentioned below:

For salaried individuals

• Photo ID proof (Applicant must produce any one of the following)

1.  Applicant’s driving license
2.  Applicant’s PAN card
3.  Applicant’s passport
4.  Applicant’s voter ID

• Address proof of residence (Applicant must produce any one of the following) 

1. Applicant’s ration card
2. Applicant’ electricity bill
3. Applicant’s phone bill
4. Any utility bill of applicant
5. Applicant’s passport

• Ownership of residence proof (Applicant must produce any one of the following) 

1. Applicant’s maintenance bill
2. Applicant’s electricity bill
3. Applicant’s property documents

• Income proof 

1. Pay slip from current employer for the last three months
2. Form 16

• Continuity of job proof (Applicant must produce any one of the following) 

1. Certificate of employment from current employer
2. Job appointment letter from current employer
3. All relevant experience certificates

• Salary proof 

1. One year’s bank statement of the account in which your salary is credited

• Property documentation 

1. Sale deed of the property
2. Maintenance bill of the latest month
3. Share certificate
4. Sanction letter that is provided by the existing banker

• Processing cheque that is required to process the loan 
• Any proof of investment, if any (Assets, fixed deposits, mutual funds, etc.)
• Passport size photograph

For self-employed individuals 

• Photo ID proof (Applicant must produce any one of the following)

1. Applicant’s driving license
2. Applicant’s PAN card
3. Applicant’s passport
4. Applicant’s voter ID 

• Address proof of residence (Applicant must produce any one of the following) 

1. Applicant’s ration card
2. Applicant’ electricity bill
3. Applicant’s phone bill
4. Any utility bill of applicant
5. Applicant’s passport

•  Ownership of residence proof (Applicant must produce any one of the following)

1. Applicant’s maintenance bill
2. Applicant’s electricity bill
3. Applicant’s property documents

• Proof of business 

1. Saral copy of the last 3 years
2. Copy of tax registration, if any
3. License of company registration
4. Shop establishment act

• Income proof

1. Income tax returns for the last three years
2. Copy of audit report, profit and loss statement, balance sheet, etc.

• Copy of bank statement for the last year of both current and savings account
• Property documentation

1. Sale deed of the property
2. Maintenance bill of the latest month
3. Share certificate
4. Sanction letter that is provided by the existing banker

• Processing cheque that is required to process the loan
• Any proof of investment, if any (Assets, fixed deposits, mutual funds, etc.)
• Passport size photograph

 

Things to Remember When You Buy a Second Home

It is a great feeling to own a home when you already have one. This means you have earned and saved substantially to afford two houses, which is indeed a matter of great pride and joy. However, when you are buying a second home, your reason or purpose of making that huge investment should be clear to you. You must pick a location for buying the property as per your need of the property.

If you already have a house and are buying another property as your weekend home, it suggests that the avenue will be treated as a recreational place. So, when you have a house in the city, you will most likely want to buy your weekend home away from the hustle and bustle of your everyday life. This is the place where you would go to take a break and pursue your habits like playing, reading, or doing something for which you do not find time in your daily schedule.

There are 2 reasons for which you can invest in buying a second house:

• To rent out the property or use it for your own requirements.
• As an add-on investment for the long run.

Why do you need a second house?

Many people think that you must only buy a second property if you can make use of it properly by staying in there for a substantial amount of time. Some think that a second house can be treated as a vacation spot where you can stay with your family and enjoy in peace, away from the noisy city-life. However, another group of buyers think a second house can be purchased for generation of income.

Return of Investment prospects of the second house:

The Return of Investment prospects of a second house depends on certain factors mentioned here:

• The location where the second house is situated.
• Rental demand in that particular area.
• Overhead costs like car parking charges, maintenance costs, etc.
• Physical and social infrastructure of the area.
• Frequency of public transport availability.

How to pick a second home that meets your requirements:

When you plan to purchase a second house, one of the key factors that must be remembered is the location of the property. The second home should not be extremely far from your primary home as it might be difficult for you to commute from one house to another. Another thing that plays a major role when you buy the second property is the cost of the second house.

As a buyer, you must understand the supply and demand in the neighbourhood where you intend to buy the property. If rental income is your primary objective after buying the second house, you should purchase the property in an area where a lot of people choose to stay on rent like close to technology parks, office areas, schools, etc.

Bottom line:

It is a great feeling to buy a house once, but to buy another one is a matter of sheer pride and honour. Do a good amount of research before you choose your second home and buy the property that meets your needs and requirements of investing in another house.

Know home loan process.

Tips for purchasing a house in Pune

When you invest in buying a house in Pune, the investment is multi-dimensional. Your house offers you security, satisfaction, and the joy of owning a property. Buying a house is probably the biggest investment that you are going to make and a house will always remain as an asset to you. Thus, buying your house can be considered as a major milestone in your life.

Sometimes, your hard earned money might not be sufficient for purchasing your dream house. This is where home loans come in to play. On an average, a home can stretches over a period of 15 years to 20 years. If you are staying in a rented apartment, buying a house and paying for home loan installments instead of rent makes more sense. The maximum tenure that you can avail for the repayment of a housing loan is 30 years.

It is advisable that you set aside a substantial chunk of your savings for your emergency purposes. Don’t churn out everything for buying a house.

Things to remember when you buy a house on home loan in Pune:

• Location – The location where your property is situated plays an important role when you apply for a home loan. Depending in where your property is in Pune, the home loan eligibility may change. There are areas blacklisted by banks and if your property lies in a blacklisted area, you might not stand eligible for the loan.
• Affordability – Various people in Pune, buying houses for the first time fail to understand the expenses that come after buying the house. Firstly, buying a house does not mean just paying for the property. The legal work, registration charges must be factored in while calculating your affordability towards the flat. After you buy the flat, you will have to pay for the interiors, electrical fittings, painting, etc. All of these will cost a substantial amount of money and you must estimate your total expense accordingly.
• Learn to deal with the builders – Understand what you are signing up for before you pick a property. It is always advisable to go for a background check of the promoter you are signing the deal with. Check if he and the property that he’s building are registered under RERA. Only invest your money when you know that it is completely safe.
• Documentation – Generally, you would be signing a stereotypical agreement when you buy the house. Speak to your lawyer and understand the agreement better. You can recommend specific changes to the agreement and customise to a certain extent, depending upon your needs.
• Understanding the concept of carpet area – The carpet area is the final area that can be utilised for residing inside your property. The built up area is the carpet area plus the area in the balcony, walls, etc. The super built up area includes everything that is a part of the built up area and the garage, lobby, lift, etc.
• Tax benefits – You can avail tax benefits if you invest in a house under the prevalent tax laws.

Bottom line – It is a matter of joy and honour to buy a house. But understand what you are investing in. A well-done research is advised before you pick a property and invest in it.

Are you eligible to book a home under PMAY?

The Pradhan Mantri Awas Yojana (PMAY) is a government initiative intended to provide low-cost housing to the economically weaker sections of society. Its objective is to provide affordable housing to individuals below a certain income group by providing a subsidy on home loans.

Subsidy classification of PMAY

CLSS	Max. area	Max. loan amount	Subsidy on interest	Maximum subsidy	Loan tenure	Max. household income
MIG - II	110 sq. meter	Rs.12 lakh	3% p.a.	Rs.2.30 lakh	20 years	Rs.12 – 18 lakh
MIG	90 sq. meter	Rs.9 lakh	4% p.a.	Rs.2.35 lakh	20 years	Rs.6 – 12 lakh
LIG	60 sq. meter	Rs.6 lakh	6.5% p.a.	Rs.2.67 lakh	20 years	Rs.3 – 6 lakh
EWS	30 sq. meter	Rs.6 lakh	6.5% p.a.	Rs.2.67 lakh	20 years	Rs.0 – 3 lakh

PMAY eligibility

Mentioned below are the eligibility criteria to avail a PMAY subsidy:

• Any individual who is a first-time homebuyer that doesn’t have any property in his/her name
• In case of an unmarried applicant, his/her parents must not own a property in any part of India
• In case of a married applicant, his/her spouse or kids must not own a property in any part of India
• For applicants under LIG or EWS, a woman co-applicant is mandatory to avail the benefits of PMAY
• The applicant and his family should not have availed any housing scheme, including PMAY, previously
• The beneficiary can obtain the home loan only for construction/improvement/purchase of a home

Documents required to obtain the benefits of PMAY

• Aadhaar card
• Sanction letter for the loan
• PAN card
• Buyer builder agreement or ATS copy
• Stamp paper / affidavit

How long does it take to obtain a subsidy under PMAY?

On an average, it may take anywhere between 3 – 4 months to get your application approved.

The PMAY scheme has already helped homebuyers obtain home loans at a subsidised rate, causing a boom in the real estate market. The PMAY scheme is also causing home loan interest rates in banks to drop, indirectly making homes affordable to everybody.

Pradhan Mantri Awas Yojana - Everything there is to know about CLSS

Pradhan Mantri Awas Yojana - Housing for all, is an initiative launched by the Government of India wherein, affordable housing will be provided to the urban poor of the country. The scheme itself has various components of which, the Credit Linked Subsidy Scheme is the most popular. Under this scheme, beneficiaries can avail a subsidy on the interest component of a home loan of up to Rs.2.67 lakh.

However, before you get too excited, there are a few things that you need to consider first. For instance, the scheme is directed primarily towards the people belonging to the Lower Income Groups (LIG), Middle Income Groups (MIG), and Economically Weaker Sections (EWS).

Furthermore, there are three prerequisites that have to be fulfilled before you commence your application to avail the benefits of the CLSS. They are:

1. You or your family should not own an all-weather house in any part of the country.
2. You or your family should not have taken assistance from the Central Government for any housing scheme or applied for the benefits under the PMAY.
3. In case you are married, you and your spouse will be eligible for a single subsidy, irrespective of the ownership status of the house.

After fulfilling these three conditions, the next thing that you need to consider is the income criteria. The maximum interest subsidy that can be availed depends on the annual income of the applicant and the category to which they belong.

• The cap on annual income for those belonging to the EWS and LIG is Rs.6 lakh.
• For the MIG 1 category, the maximum household income should not be more than Rs.12 lakh.
• For the MIG 2 category, the maximum household income should not exceed Rs.18 lakh.

In addition to these, factors like maximum loan amount, maximum carpet area, et cetera, are also taken into consideration when it comes to Credit Linked Subsidy Scheme. This has been explained in the table mentioned below:

Category	Maximum Carpet Area (in Square Metres)	Interest Subsidy (%)	Maximum Loan Amount Considered for Subsidy Calculation, in Rupees	Maximum Subsidy, in Rupees
EWS and LIG	60 sq. mt.	6.50%	Rs.6 lakh	Rs.2.67 lakh
MIG 1	120 sq. mt.	4.00%	Rs.9 lakh	Rs.2.35 lakh
MIG 2	150 sq. mt.	3.00%	Rs.12 lakh	Rs.2.30 lakh

Under the scheme, all the Statutory Towns are covered as per the 2011 Census, along with subsequently notified towns. Regardless of where you live in India, you will be able to avail the benefits of the Credit Linked Subsidy Scheme, provided you meet the aforementioned criteria.

The home loan under the CLSS can be taken for any housing purpose - purchase, construction or enhancement of an existing house. The interest subsidy is calculated only on the maximum home loan amount mentioned for the specific categories and is valid for the duration of your entire tenure. For any home loan taken beyond the specified limits, non-subsidised interest rates will be levied.

More details about the PMAY and the CLSS can be found on the official website of the scheme.