Home Loan
Choosing the Right Loan Tenure: Short vs. Long Term
Monthly
- Down Payment
- Loan Amount
- Monthly Mortgage Payment
- Property Tax
1. Eligibility Criteria
- Age Limit: Most banks offer loans to individuals between 21 and 65 years.
- Income Stability: A steady income source increases chances of approval.
- Credit Score: A score of 700+ makes you more likely to get better interest rates.
- Employment Type: Salaried individuals usually get easier approvals, but self-employed people can qualify too, with proper documentation.
2. Loan Tenure
- Home loan tenures can vary from 5 to 30 years. A longer tenure means lower EMIs but higher overall interest paid.
3. Interest Rates
- Fixed Rate: Same rate throughout the loan tenure. Ideal if you prefer stability.
- Floating Rate: Rate changes based on market conditions. It may start low but can fluctuat
4. Loan-to-Value Ratio (LTV)
- Lenders typically provide 75-90% of the property’s value as a loan. You’ll need to arrange the remaining 10-25% as a down payment.
5. Processing Fees and Hidden Costs
- Banks may charge 1-2% of the loan amount as processing fees. Watch out for additional charges like legal fees, technical valuation, and stamp duty.
6. Prepayment Options
- Some banks allow partial or full prepayment of the loan without penalties, while others may charge a fee. Prepaying reduces the loan’s interest burden.
7. Tax Benefits
- You can claim deductions under Section 80C for principal repayment (up to ₹1.5 lakh).
- Under Section 24(b), you can claim interest paid (up to ₹2 lakh) as a deduction.
8. Home Loan Insurance
- Some lenders offer home loan protection plans, which ensure the loan is paid off in case of death or disability. It’s optional but worth considering.
9. Balance Transfer
- If your current lender’s rates are high, you can opt for a home loan balance transfer to another bank offering better rates. This can help you save on interest.
- Adding these details will help your readers understand the home loan process better when buying real estate!
1. Research & Shortlisting Banks
- Compare Interest Rates: Check different banks and NBFCs (Non-Banking Financial Companies) for interest rates, loan tenure, processing fees, etc.
- Eligibility Check: Make sure you meet basic eligibility (age, income, credit score).
- Documents Required: Research the list of documents needed, like identity proof, address proof, income proof, property documents, etc.
2. Application Submission
- Fill the Application Form: Go to the bank’s website or branch to submit a filled form.
- Submit Documents: Provide all necessary documents (ID proof, income proof, property details).
- Pay Processing Fee: Usually ranges from 0.5% to 1% of the loan amount.
3. Bank Verification Process
- Creditworthiness Check: The bank evaluates your credit score, income, existing liabilities, and repayment capability.
- Property Valuation: A legal team assesses the property’s market value and ownership authenticity.
- Technical Verification: They check property’s structural integrity and construction progress (if under construction).
4. Loan Approval
- Sanction Letter: If everything checks out, you’ll receive a sanction letter with loan details (amount, interest rate, tenure).
- Loan Agreement: After approval, you’ll need to sign the loan agreement.
5. Disbursement of Loan
- For Under-Construction Property: The loan is disbursed in stages as the construction progresses.
- For Ready-to-Move Property: The loan amount is fully disbursed after the registration process.
6. Repayment
- EMI (Equated Monthly Installments): Start paying EMIs (which cover principal and interest) after loan disbursement. You can choose different modes of repayment like ECS (Electronic Clearing Service) or post-dated cheques.