Home loans are a way through which every employed person can realise his/ her dream of owning a home. This is a great product because it allows you to own something that ultimately increases in value, giving you financial stability.
Home Loan plays an important role in helping one for easy availability of dream home. There are number of banks that offer home loans for low interest rate. Home loan has some formalities starting from submitting application to disbursement of loan amount. You can keep basic documents ready for saving time and efforts.
Home Loan amount varies from person to person depending on the repayment capacity, age and income, dependents and so on. The loan is available to those who are eligible for a contract. Such as any person who is not less than 18 years, must not be insane and insolvent or bankrupt. Loans are offered to salaried individuals, professionals or businessmen or self employed individuals and NRI's.
Give N Take real estate, makes sure that all the deals are dealt with complete transparency and accuracy and disclosing all the facts, pros and cons of the property. Depending on one's investment size, investment duration and availability of contiguous land, we help one park their valuable savings and turn them into appreciating asset for the coming years.
There are mainly three stages for transferring home loan from lender to borrower. They are as follows:
- Duly filled applications with necessary documents: This is the first step in applying for home loan. Borrower has to submit a duly filled application with all necessary documents.
- Sanction: This is the process of allotting home loan depending upon your age, repayment capacity and value of your property.
- Disbursement: This is process of transferring loan from lender to borrower. There are number of banks to lend you a home loan. They will transfer the amount sanctioned to your account.
For sanction of home loans by a bank you need to submit basic documents along with application. It determines the rate of interest and amounts to be sanctioned as home loan. The amount varies for each person depending upon their repayment capacity and credit rating. Following documents are essential for getting sanction of home loans.
Duly completed application form with Passport size Photo
Repayment Track record of existing loans (if any)
Proof for Photo and age
Residence Address proof and signature verification proof
Copy of Sanctioned plan and sanction letter
Additional documents required are the following
In Case Of Self Employed
Bank Statement for 6 months (Operating Account in case of self occupied)
Income Tax return/ Computation of Total income Certified by Charted Accountant (CA) for last three years
Tax Challan, Balance sheet and Profit/Loss Account for last three years
In Case Of Salaried
TDS Certificate and Identity card
Bank Statement of Salary Account for 6 months
Last three months salary slip and Form 16
Property Documents :
- Allotment Letter
- Share Certificate
- Possession Letter
- Payment Receipts
- N.A. - N.O.C.
- Construction Permission
- Society Registration
- B.U. Permission
- Approved Plan by the Authority
- Village Namuna 7 & 12. 8-A & 6A (Half Patrak)
- Sale Deed in favour of Society or Index
Important things to consider when going for a home loan
Ensure you calculate the total loan payments yourself. You need to know the exact amount you will be paying at the end of your loan term. You also need to know the penalty you will be charged if you prepay the loan. Sometimes, such penalties can be substantial.
Loan repayments are tricky to calculate, so make sure you know how the payments are worked out on acompound interest basis.
The kind of interest rate you choose is also very important. Are you going in for a fixed rate loan or a floating rate loan? If you are a first time buyer, make sure that, whatever option you choose, your EMI remains fixed even if the interest rate goes up for the first few years of your loan term. This will enable you to plan ahead and feel safe that your payments will not increase like they would with a pure floating rate home loan.
Before you go in for a home loan, make sure you have a good credit history. Banks and other financial institutions use credit checks. To have a good credit history, you should pay your credit card bills on time and not change your house address frequently.
Try and set aside a solid deposit, say 15 per cent of your property price, so you can make your monthly payments even if you are without a job for a brief period.
Ask your lender if they will allow you to make more than your allocated payments. If they agree, you can pay more money whenever possible, so that you pay less interest at the end of your loan tenure.
Before applying for a home loan, you should know for sure you have a permanent job to pay your EMIs on time. If you are holding a temporary job and you lose your contract and fail to make payments on time, it may result in the bank taking away your home.
Use money wisely and gradually. Don't expect sales persons from banks to educate you. Do your research thoroughly and then make a decision.
Finally, any form of credit does carry its risk. But, if it is managed in a methodical manner, you will be in a comfortable position in the future.
Types of Home Loans
Home Loan is mostly used for purchase of new home or property. Most of the borrowers consider home loan is only for buying a home or property but there are different home loans for meeting different needs. Some of them are as follows:
Home Purchase Loans: This for purchase of new home and most of borrowers use this type of loan in purchase of new home or property. These are very common and are basic home loans.
Home Improvement Loans: It is a loan sanctioned or disbursed for the repairs and renovation in existing home. This is very helpful for borrowers who wish to renovate or implement some repair works in existing home or property.
Home Extension loans: This is a loan given for extending or expanding existing home. This can be used for modification of rooms or adding an additional or extra room.
Land Purchase Loan: The name itself states the purpose of loan. It is the loan sanctioned for the purchase of land. Land can be either for construction or investment purpose.
Home Construction Loan: The loan is available for construction of new home. It is a loan sanctioned for constructing a home in existing land or property.
Home Conversion Loan: This loan sanctioned for existing borrower who have financed present home with home loan and wished to move new home which needs an extra funds. This loan helps to transfer existing loan to new home with extra amount and helps to avoid pre-payment charge of previous loan.
Bridge Loan: Bridge loan is a loan for those who want to sell existing home and buy a new home. This loan helps you to finance new home until you find a buyer for existing home.
Tips for Choosing right Home Loan Lender
It is advisable to do proper research before going for any loan. Choosing a right home loan lender is vital because there are numerous customers who lose out on their property deals due to delays and complications at their lender. When you are comparing offers, ask each lender about their policy regarding locking in their quoted rates and see whether there is a fee. Following are some important points to consider when choosing a home loan lender.
Lender's reputation: If you don't have any past experience with the bank earlier, it is good to check out their reputation by talking to family and friends. It is essential that the lender provides quality customer service and maintains high customer satisfaction levels as the relation between the borrower and bank spans for 10 to15 years.
Switching option: Most lenders offer both fixed and floating interest rate. However it is possible that you might want to switch from fixed to floating or vice versa depending on market scenario. Confirm with the home loan lender whether switching option is available and charges for the same.
Speed of Loan sanction: Typically, it takes about 10 to 14 working days for the processing of a home loan if you have all the documents in order. However, there are numerous customers who lose out on their property deals due to delays and complications at their lender. Ask your lender and friends who have dealt with the same lender about the speed with which their loan was processed.
Eligibility criteria: Every bank has its own set of eligibility criteria that may differ slightly. The eligibility criteria are related to your age, income, past repayment history and the cost of the property. It also considers your work experience, number of dependents, spouse's income, stability of income and employment, assets, liabilities, etc.
Hidden costs: Hidden Costs are cost that involved with most loans that prick the borrower's pocket. It is advisable to decide on all legal charges, down payment, pre-payment charges, valuation fees, processing fee and other hidden costs before a loan is availed.
Prepayment penalties: Often, customers are asked to sign loan documents with no mention of prepayment penalty. Thus, they are not even aware of what the actual prepayment charges are. Prepayment penalties can be negotiated and competition among banks can also force them to be kinder on their customers. Banks may waive off prepayment charges if you negotiate.
Different banks have different yardsticks to calculate loan eligibility. There are now many loan products being offered by various financial institutions and banks. So, it can be pretty confusing and hard to choose one organization to apply for a loan. It is advisable to do proper research before going for any loan. It is better to verify the facts properly before deciding to go for a loan offered by the lender. Make sure that home lender you choose is quick in processing and disbursal of loan. Confirm with the home loan lender whether switching option is available and charges applicable. If you don't have any past experience with the bank earlier, it is good to check out their reputation by talking to family and friends.