Home Loan is a Secured Loan. Home Finance is offered against the security of a house / property which is funded by the bank's loan, the property could be a personal property or belonging to a firm. In this type of loan the borrower gives the banker a conditional ownership over the property i.e. if the borrower fails to repay the loan, the banker can retrieve the lent money by selling the property.
A person with stable monthly income is eligible for Home loan
- Salaried person.
- Business Person with stable income & business.
- A partnership or a Pvt. Ltd. company.
- Professionals with stable income & business.
- Recent Photographs
- Two identity Proofs ( Pan card Mandatory )
- Company Id card
- Residence proof
- Self owned residence – Latest Electricity Bill / Landline Phone Bill / Credit Card Bill.
- Rented residence – Current rent agreement with latest electricity of the flat, with a permanent residence proof.
- Latest CTC
- Latest Salary slip – for last 3 months
- Till Date salary account statement bank statement for last 6 months
- Form No.16 - Latest.
- Loan Repayment Track Records (if any)
- Recent Photographs
- Two identity Proofs ( Pan card Mandatory )
- Residence Proof - [ options provided ]
- Latest Electricity Bill
- Latest Phone Bill
- Passport [valid]
- Office Proof:
- Shop & Establishment Certificat.
- Latest Electricity Bill
- Latest Landline Phone Bill
- If the premises is RENTED then: Registered rent agreement with the shop / officer owner electricity bill.
- Financials : Last 3 yrs Income Tax Returns
- Bank statements :
- Till date updated Bank Statement for last 1 year from all current & savings account mentioned in the balance sheet
- Also 1 year bank statement from where the loan EMI is going (if any)
- If you are applying as a Partnership Firm or in the capacity of partner then we would need:
- Partnership Deed.
- Firms Pan Card.
- If you are applying as a Private Limited Company or Director in it then we would
need companies :
- Form 32
- Annual Reports
- List of Directors
- Share Holding Pattern
- Company Pan Card
Home Loan Charges
- Processing Fees
- Fees are the prerogative of the banks it is usually collected from the customer by cheque.
- This fee is charged on the sanctioned loan amount.
- Fee normally ranges from 0.5% to 1% + applicable service tax on the fee.
- As of now the service tax is 10.30% to 12.36%
- This charge needs to be checked with the respective bank.
Part Payment Charges:
- In Home Loans most of the banks allow part payment at NIL charges.
- There may be a lock in period for part payment.
- This condition needs to be clarified with the respective banks.
- These are the charges paid to the lender on the outstanding loan amount to close the loan prior to expiry of tenure.
- Most of the banks charge foreclosure penalty if not paid from own funds.
- This condition needs to be clarified with the respective banks.
Late Payment Penalties:
- When there is a delay in paying monthly EMIs of your loan, the banks charges a late payment fee with your EMIs.
- Late payment penalties normally range from 2% to 3% of the EMI.
Cheque Bounce Charges:
- Banks charges between Rs. 250-1000 for every bounced cheque / ECS given for the repayment of the loan amount owing to the insufficient funds in your account.
Equitable Mortgage Charges:
- Equitable Mortgage Charges are applicable on disbursement of home loan as directed by the Maharashtra State Government.
- Current Equitable Mortgage Charges according to Maharashtra Tax Laws (Levy, Amendment
& Validation) Act, 2009 are :
- 0.1% of the loan amt for loan till Rs. 5 Lacs &
- 0.2% of the loan amt for loan above Rs.5 Lacs
1. What is the difference between Home Loan & Loan against Property?
- The loan availed to purchase a new residential property (builder purchase or resale) is called Home Loan.
- Loan taken by hypothecation of property (residential / commercial) is known as Loan against Property.
- The funds procured by Loan against Property can be used for various purposes.
- Any one qualifying the parameters of income & property can avail Home Loan or Loan Against Property.
2. How do I apply for a loan?
The procedure to avail a Home Loan is quite simple –
You need to call us or fill up the form with us, We will call you & take the essential
financial & personal details required for the loan like Age, Net salary, Designation,
Employer details, Total experience, Current experience, Period of stay in the city,
the Current Residence & Details of all obligations being serviced. Also we would
need the Property details like Type of Purchase, Location of the property, Built-up
area, Rate per square feet, Agreement Value, Occupation certificate & so on. We
will then revert you with the quotation of the lenders who would sanction the loan
& also suggest the best lender suiting your needs, the final decision for which
lender to go with lies with you.
We would then inform you the List of Documents needed to apply for the loan, once the said documents are ready same would be picked up, the form signed & filled up, then the case would be logged in with the bank.
3. How do I know about my eligibility for a home loan?
The Thumb rule for calculating eligibility:
Net salary per month is calculated after tax deductions then 40% to 65% of that
amount is taken as loan servicing capability [appraised income].
If one has additional income like Incentives, Overtime, LTA, Medical Reimbursements,
Car Allowance etc. then it is averaged out to per month’s income & only 25% to 50%
of the same is considered for eligibility. If you have any ongoing obligation then
it is deducted from the appraised income, this amount is then divided by EMI per
lacs for the considered term, and the arrived figure is the eligibility in lacs.
Example shown below
- Net Salary pm after tax deduction = 80,000/-
- Averaged out incentive pm = 20,000/-
- Averaged out LTA pm = 2,000/-
- Current Personal Loan EMI = 5,500/-
- Loan Calculation based on the above information:
- 50% of Net salary = 40,000/-
- 25% of Incentive = 5,000/-
- 25% of LTA = 500/-
- Appraised Income = 45,500/-
- Appraised Income [-] less] ongoing EMI = Final Income to be considered.
- 45,500 [-] 5,500 = 40,000/-
- Suppose the loan is @ 10% for 20 years; then EMI per lac @ 10% for 20 years is Rs.965/-
- The eligibility would be Final Income / EMI per lac for the tenor.
- 40,000 / 965 = 41.45 lacs
Hence, the eligibility is Rs. 41.45 lacs @ 10% for 20 years. Every banks has its own method for calculating eligibility. It is advisable to check the eligibility with the concerned person.
4. Can the co-applicant's income get included when banks calculate my eligibility?
Yes! The banks also include the co-applicants income to determine the eligibility.
The eligibility is based on the years remaining for retirement & the income.
The banks readily include Spouse & parents income.
Some financers also add the income of brothers & other closed relatives. This has to be categorically clarified with the lender as this is not a norm.
It would also be advisable to clarify if the daughters [married / unmarried] income is clubbed with their parents as this is also an exception.
5. How long will it take for the financial institution to approve my loan?
6. Is Tax benefit applicable on the processing fee paid for the Home Loan ?
- 1. Section 80 (c)
- 2. Section 24(b)
- 3. Section 2(28A)
1. Section 80(c) - In this section the EMI component paid towards
repayment of principal amount of the loan can be deducted from income.
The borrower is eligible for a tax deduction for a maximum amount of Rs. 1L
each year under section 80(c) irrespective of the tax bracket.
To avail this deduction the property needs to be self occupied.
2. Section 24(b) - The interest paid towards home loan is treated
as an 'expense' under 'Income from house property' and is deductible under Section
24(b) from the total income.
The maximum deduction permitted under this section is Rs.1.5L per annum.
3. Section 2(28A) - Processing fee can be treated as interest and
a deduction can be claimed according to Section 2(28A) of the I-Tax
7. What is EMI?
"EMI" is Equated Monthly Installment.
The installment paid while servicing the loan is equal for the whole tenure.
The composition of EMI = Principal Amt + Interest.
8. What is Flat interest rate?
9. What is Reducing interest rate?
10. What is floating interest rate?
11. What is fixed interest rate?
12. Can the amount of loan be increased or decreased even after it has been sanctioned?
Can the loan amount be decreased after sanction? Yes!! The bank would disburse only the amount needed if it is lower than the sanction amount. Lower amount will be disbursed if sanctioned amount exceeds the property LTV norms
Can the loan amount be increased after sanction? No! To increase the loan amount one needs to submit latest financial documents. Enhanced Fresh eligibility is then decided based on the increased income. This is called a revalidation.
13. What does "Pre-Approved Property" mean?
Pre Approved property is also called APF [Approved for Financing] property. This
means that the developer had got the legal aspect of the property approved from
To approve a property the builder submits all the legal documents, such as Development Agreement; Government Permission & Clearances, IOD, Title Deeds, Commencement Certificates & Approved Plans, Sale Deed and so on.
As the Legal aspect of the property is now clear the lenders will easily finance the property, only the valuation of the property takes place.
14. What is Carpet area?
15. What is built up area?
16. What is super Built -Up area?
Super Built Up Area is the built up area plus proportionate area of common facilities such as the lobby, lifts, shaft, stairs, etc. The plinth areas along with a share of all common areas are proportionately divided amongst all unit owners, this makes up the Super Built-up area.
Sometimes it may also include the common areas such, swimming pool, garden, clubhouse, etc.
This term is therefore only applicable in the case of multi-dwelling units.
17. What is approved plan?
18. What is the Full form of CC?
19.What is the Full form of OC?
20. What dose conveyance deed mean?
21. What is share certificate of society?
22. What is a stamp duty?
23. Where is the registration done?
24. What is Chain of Agreements?
25. Minimum area needed for a residential property to be mortgaged.
26. What is legal report & who does it?
27. What is technical valuation report & who does it?
28. What is Full form of OCR?
29. What is Full form of NOC & who issues it?
NOC means No Objection Certificate. It is asked by the lenders from the builder
/ society. In this letter the builder / society mentions that they have noted in
their books the charge of the lending bank/ FI on the said property.
Society NOC: Almost all banks ask for society NOC in their formats. To obtain this all the dues & transfer charges of the society need to be cleared. It is mandatory to the committee to issue the NOC in the prescribed banks format under Maharashtra Co-operative Society Act, 1960 u/s 79(2) (a)
30.Things to be checked in an agreement
In Registration receipt: Customer name, Registration amount, Date, Bazaar Mulya, Mobadla.
In the Agreement
Names of the seller & the purchaser
Property details (Area & schedules)
Agreement value & payment schedule
Signatures of the seller & the purchaser
Commencement certificate / Occupation certificate
Dast Goshwara Part I & II
In the Share Certificate: Front Side
First owner’s name
Share certificate issue date
Society Stamp with the sign of the Chairman, Secretary & Member
Share Certificate: Back Side -
Names of the entire previous owners mentioned in the chain agreement & their date of transfer.
31. What is Full form of MV?
32. What is Full form of COP? What is its other name?
COP - Cost Of Property.
It is the Total of Agreement Value + Stamp Duty + Registration.
It is also called ASR - Agreement, Stamp Duty, and Registration.
33. What is Full form of LTV / LCR?
LTV - Loan to Value Ratio
LCR - Loan to Cost Ratio.
It is the percentage of Loan amount that can be provided with respect to the Value of the property.
34. When is the case disbursed & cheque given?
35. Equitable mortgage
36. Registered mortgage
37. Can a fixed rate loan be converted to a floating rate loan and vice versa?
38. Is it necessary to get property insurance, while availing a home loan?
Though insuring the property on which the loan is being taken is advisable, some financiers may insist to insure the property against which the loan is being availed.
It is always advisable to insure the property as it gives you & the lender cover against unfortunate events like Fire & earthquake.
The premium charged is mostly for the whole tenor as that of the loan.
39. What are the charges that are levied by banks till disbursement?
- 1. Processing Fee
- 2. Stamp Duty for the MOE [Memorandum of Entry]
- 3. Miscellaneous Franking & Notary.
1. Processing Charges: These charges are levied on the sanction amount. They are generally 0.5% to 1% of the loan amount. For salaried customers most banks generally charge a lump some fee. Service tax is also applicable on the processing fee.
2. MOE [Memorandum of Entry] : In the state of Maharashtra according to Maharashtra ACT NO.XVII of 2009 for the deposit of title deeds made by the way of security for the repayment of money, stamp duty need to be paid. If the loan is under Rs. 5 lacs
the stamp duty would be 0.1% of the loan amount & 0.2% for loan mount over Rs. 5 lacs.
3. Miscellaneous Franking & Notary: Most of the banks have some of their own Affidavits, POA, and Undertakings which needs to be franked & notarized.
40. What are the charges levied by banks after disbursement?
- 1. Late Payment charges
- 2. Cheque bounce Charges
- 3. Part prepayment charges
- 4. Foreclosure charges
- 5. Switching Charges
- 6. Cheque / Instrument swap charges
- 7. Duplicate Statement Charges
- 8. Charges of photocopy of property documents.
Can I pre pay some amount of my outstanding loan? Will it attract any penalty?
Yes absolutely! One can repay part loan amount. Most of the banks do not charge pre-payment penalties.
Every bank have their own policies for repayment.
They may have lock-in periods; Part payment may be allowed in one financial year or one Loan year. Only certain amount may be allowed to be pre-paid without any penalty & so on.
One needs to clarify exist clause with the banks before submitting the loan application to them.
Such awareness will give peace of mind later as this is a long term commitment.
Can I prematurely close my loan?
Closing loan prematurely is called foreclosure of the loan. This is very much possible.
One closes the loan If they have funds, they want to transfer the loan to another financier or are selling off the property.
Most of the banks do not charge penalty if the loan is closed by one's own funds or else penalty might be applicable.
This exit clause is always mentioned in the Loan Agreement signed with the bank.
Can I get a home loan for purchasing a home overseas?
Can I avail of a home loan in India if I am an NRI (Non Resident Indian)?
There are also minimum salary criteria for applicants working in these countries.
What happens to processing or administrative fees if I don't avail of the disbursement?
Even if one does not avail disbursement banks rarely return to charges taken earlier.
Does it matter if I am late in repayment?
Of course it matters if the repayment is delayed. It adversely affect your credit rating & same is notified to the rating agencies.
A bad repayment history lower one's credit score & jeopardizes chances of availing further loan, also one have to pay bounce charges & late payment fees.
Can the property be sold, even when the home loan is outstanding?
What is Home Loan Balance Transfer? What is it's procedure?
Collect all the normal documents necessary for login.
- List of Documents (LOD) deposited with the existing bank in the banks format.
- Foreclosure letter of the loan to be taken over
After the sanction of Loan, the disbursement process begins The agreement is signed & the cheque is made favoring the existing bank. This cheque is then given to the existing bank which closes the loan account & hands over the property documents to the new lender as per its timelines.
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