1.What is a home loan and how does it work?
A home loan is a financing solution that the customer can avail to buy a home with ease. The properties such as the plot, flat or other property that you are purchasing serves as collateral. However, you can also have option for this loan to renovate, repair or construct a new home. Leading Banks and financial companies offers high-value financing up to Rs.3.5 crores, repayable over a lengthy tenor of up to 30 years, at a nominal interest rate. This makes taking a home loan a cost-effective decision.
2. Is a home loan tax deductible?
Yes, home loan is eligible for tax deduction. Home Loan tax benefits include Section 80c deduction of Rs. 1.5 lakh on the principal repayment and Section 24b deduction of Rs.2 lakh on the interest repayment. The customer can also claim home loan tax deduction for registration fees and stamp duty charges under Section 80c.
3. Can I get 100% home loan?
As per RBI guidelines, no lender is permitted to offer 100% home financing. The customer need to make a down payment amount of 10-20% of the property’s purchase price. The customer can also obtain up to 80% housing loan financing for their property.
4. What are the eligibility criteria to get home loan?
Indian national having a good financial profile can get a home loan. The home loan eligibility terms include:
*Age limit for salaried: 23 to 62 years
*Age limit for self-employed: 25 to 70 years
*Minimum CIBIL score: 750
*Minimum salary: Rs.25,000
*Work experience for salaried: minimum 3 years
*Business continuity: minimum 5 years.
5. What is the minimum salary for home loan?
The bank or finance lending companies requires the customer to have a minimum net monthly income of Rs. 25,000 to Rs. 30,000 in order to get a housing loan.
6. What is the maximum home loan that I can get?
Salaried persons with work experience of 3 years can get a home loan of up to Rs. 3.5 crores and self-employed individuals having a business continuity of 5 years can avail funding up to Rs.5 crores.
7. What are the documents required for home loan?
The documents required for a Home Loan includes:
- KYC Documents
- Address proof
- Identity proof
- Form 16/ latest salary slips
- Bank account statements of the last 6 months
- Proof of business continuity (for businesspersons, self-employed).
8. Which home loan is the best: Fixed or floating interest rate?
Both types of home loans have their own pros and cons. With a fixed rate home loan, the interest rate remains constant through the tenor, which allows you to forecast EMIs. Pick it when home loan interest rates are low. For floating rate home loans, the interest rate alters basis economic changes and RBI policy decisions. Choose this variant when the customers expect rates to reduce in the time to come. Additionally, the RBI mandates that the customers do not need to pay any prepayment or foreclosure charges if the customer is an individual borrower with a floating rate home loan.
9. What are the different types of home loans available in India?
Based on the different requirements for housing loans and varied customer profiles, the types of home loans available in India are –
- Home construction loan
- Loan for plot/land purchase
- Home loan balance transfer
- Top-up loan
- Joint home loan
- Loans under the Pradhan Mantri Awas Yojana scheme
- Home loan for Women
- Home Loan for Government Employees
- Home Loan for Advocates
- Home Loan for Bank Employees
- Home Loan for Private Employees.
10. Which factors affect your home loan eligibility?
Availing a home loan requires an individual to meet eligibility criteria that ensure a borrower’s capacity to repay. The factors that affect eligibility are –
- A person’s credit score
- Monthly income
- Current financial obligations as debt
- Employment status
- Age of the applicant
- Property to be purchased.
11. Can I switch to floating rate from fixed rate during my loan tenure?
Yes, the customer can switch from a floating rate of interest to fixed rate during the repayment tenor of your housing loan. The customer needs to pay a nominal amount as conversion fee to their lender for switching. Switching from a floating to fixed rate is best-suited when the market rates are expected to climb up.
12. Is opting for a home loan worth it?
Opting for a home loan is a smart financial decision for the following reasons –
- It brings additional financing to fund the customer housing dreams without affecting the savings.
- The customers can choose from several housing loan options as per their requirements.
- The interest rates are affordable and make loan repayment more convenient.
- Long tenor allows for repayment towards the loan in easy EMIs.
13. Can I take 2 home loans at a time?
No, availing two housing loans at a time for the same property is restricted as per the CERSAI. However, individuals can opt for a home loan balance transfer to refinance their existing housing credit at lower rates of interest. The facility comes with the top-up loan facility, an additional loan over and above the existing loan amount. Avail the funds to meet diverse financial necessities with ease.
14. How to get a home loan with ease?
Proceed with the following steps to avail a home loan with ease.
- Check your credit reports and rectify errors, if any.
- Estimate EMIs with a house loan calculator and decide on the loan amount as per repayment capacity.
- Keep all the necessary documents handy.
- Compare the available offers for the best housing loan option.
- Ensure to meet all eligibility before applying.
15. When does the loan repayment period start?
The repayment period for loans begins immediately after the lender has disbursed the entire home loan amount. However, in cases of partial disbursal, the interest accrued on such disbursed amount is required to be paid as pre-EMI. Full EMI payment including the principal and interest amount starts after full disbursal of the loan.
16. Is home loan insurance mandatory?
No, it is not mandatory that the customer take home loan insurance along with their loan. However, the customer may consider getting an insurance to take care of any liability at a marginal increase in their EMIs.
17. When do home loan EMIs start?
The customer can pay their home loan EMI when the disbursement cheque is created. Once the customer received the loan amount, the customer begins to pay EMIs as per the EMI cycle. This means if the customer has chosen date for EMI repayment is 5th of a month and the customer receive the loan on the 28th of the month. Then for the first month the customer has to pay EMI calculated from the day the customer home loan was sanctioned to their first EMI date. Next month onwards, they would pay regular EMIs on the designated day.
18. How to apply for a home loan Online?
To avail a Home Loan through online, the process is as follows
- Access the online application form.
- Enter personal, financial and employment-related details.
- You will get your pre-approved offer.
- Choose the loan amount with the home loan eligibility calculator.
- Provide property details.
- Pay the online secure fee.
- Upload scanned copies of documents.