Home Loan

The home loan is the money provided by a bank or financial institution to help you buy, construct, renovate and extend your house. You repay the loan money gradually within the time period agreed between you and the institution which provides the fund. If you fail to repay the loan amount, then the lender can use the property to settle the debt.

Who qualifies for Home Loan?

A home loan can be given to an applicant based on their income, proof of income, property value and property documents, and credit history. The loan amount is calculated based on the aforesaid factors. As much as your track record with credit card repayments are regular and if you have uninterrupted payment obligation on other loans, you qualify for a home loan.

Eligibility Criteria for Home Loans

The eligibility for obtaining a home loan depends on age, income, property value, credit score, and property location, etc. The desired age group is expected to be between 21 and 60 years for all salaried persons. It is 21-65 years for all self-employed individuals. The salaried applicant is more or less expected to have stayed in the current job for at least 2-3 years. The self-employed applicant is expected to have 3 years of current business stability.

As far as the income is concerned, both salaried and self-employed applicants are expected to have a minimum income of Rs.1,80,000 per annum. Both salaried and self-employed applicants’ CIBIL score is expected to be more than 720.

Features of Home Loan

  • The maximum loan amount gives on the property value of 50% – 80%
  • The interest rates can be in the range of 8.5% – 16%
  • The loan term ranges from 5 to 15 years

The Merits of Home Loan

  • You can avail this loan for all your home-related expenditures
  • The credit eligibility is much better
  • Since it is a secured loan, the interest rates are lower

What are the types of Home Loan?

  1. Home purchase loan
  2. Property purchase loan
  3. Construction loan
  4. Home improvement loan
  5. Conversion loan
  6. Extension loan
  7. Land purchase loan

About Home Loan EMI

EMI is a fixed amount you will agree to pay to the financial institution on a monthly basis, till the loan is paid fully. If the loan tenure is longer, then the EMI is lower. If the loan amount is bigger, then the EMI is higher. In India, the tenure of home loan ranges from 5 years to 18 years maximum, and the EMI would calculate according to your capacity to repay the fund.

For Salaried applicants:

  • Duly filled application form for a home loan
  • Passport size photograph/s
  •  Income Proof – Latest 3 months’ Salary Slips and Form 16
  • Identification Proof – Aadhaar Card/ Passport /PAN Card/ Voter ID Card /Driving License
  • Address Proof – Passport/Aadhaar Card /Utility Bill
  • Residence Ownership Proof – Property Documents/Maintenance Bill/Electricity Bill
  • Bank Statements – Latest 1-year statement where your salary is getting credit
  • Property Documents – Copy of agreement executed / Sale Deed, Share Certificate, Latest Maintenance Bill,
  • List of documents & sanction letter given by Existing Banker (If applicable)
  • Advance Processing Cheque
  • Investment Proof – Fixed Deposit/Shares/Fixed Assets, etc., (if any)
  • Payslip of last 2 or 3 months

For Self-Employed (Professionals and Non-Professionals) applicants:

  • Filled application form
  • Passport size photograph/s
  • Business License Details (or any other equivalent document)
  • The license of Professional Practice (For Doctors, Consultants, etc.)
  • Registration Certificate of Establishment (For Shops, Factories & Other Establishments)
  • Income Tax Returns (ITR) of the last 3 years
  • Identity Proof – Aadhaar Card/ Passport /PAN Card/ Voter ID Card /Driving License
  • Address Proof – Passport/Aadhaar Card /Utility Bill
  • Bank Statement – Latest 1-year bank statement for both current and savings.
  • Advance processing cheque
  • Proof of Investment – Fixed Deposit/Shares/Fixed Assets, etc.

Common Property Documents

Copy of agreement executed / Sale deed, share certificate, Latest maintenance bill, list of documents & sanction letter given by existing banker (If applicable). Residence Ownership Proof – Property Documents/Maintenance Bill/Electricity Bill. Income proof is the most essential document requires to obtain loan approval.

Is there a difference between a home loan and property loan?

Yes, there is. It obtains to buy a new property, whereas a property loan is taken for the property you already own. A  loan is taken for the property and mortgage loan is taken against the property. The interest rates are quite high on loan against property as compared to home loans.

Also, it is advisable to calculate your loan repaying capacity based on your monthly income deducting the monthly expenses, before you take a loan.

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