A home loan is an amount of money that an individual borrows from a bank or NBFC for acquiring property that can be commercial or personal in nature. The property is taken in as a collateral by the bank or NBFC during the tenure of the Home Loan.
On an average, banks / NBFCs require a 20% margin on home loans i.e. the home loan amount sanctioned will be limited to 80% of the actual cost of the property.
Home Loan needs to be repaid in equated monthly installments (EMIs) every month.
Home Loans can be availed for adjustable or fixed interest rate and payment terms.
Home loans taken by two people or even more. For instance, spouses can apply for joint home loans.
Home loan tenure can go up to 25 years depending upon the age and repaying capacity of the borrower.
As Home Loans are issued against property, when the borrower cannot pay the dues, the lender will possess all the legal rights to recover the outstanding loan amount by sale of the property in question.
Types of Home Loans:
Home Purchase / Construction Loan:This is the loan that one takes for purchasing or self-constructing one’s home. The loan amount disbursement is generally done directly to the agency constructing the home and is linked to construction progress.
Home Improvement Loan: This loan generally is availed to cover expenditure related to repairs or renovation of your home.
Land Purchase Loan:Loan availed when one is wishing to buy a plot of land for constructing his/her own house at a later date.
Home Extension Loan / Top Up Home Loan:This loan helps the borrower to borrow some additional money above the outstanding loan amount in order to make some changes to the home that is being purchased or constructed. Changes could be in the nature of additional room or a garage or an additional bathroom or kitchen improvement etc.
Most banks / NBFCs allow Home Loan Balance Transfer. This is a mechanism to switch the existing outstanding loan amount to a different lender who is offering better terms and conditions and possibly lower interest. Given that there are no Foreclosure charges applicable in case of Home Loans, this is a very attractive proposition for borrowers to reduce their interest burden.
A duly filled application form given by the bank to avail the loan (either offline or online).
Bank account statement or updated passbook.
Salary statement or a salary certificate from the employer for employed and T returns for the past 2 years and computation of income for the last 2 years as certified by a CA for self-employed.
Documents acceptable as proof of identity/address)
Voter's Identity Card
Any one document towards proof of identity and proof of address (either permanent or current) would be required.
Cost plan from builder detailing the cost of property and the completion timelines.