Your Home is a place where you relax after coming back from your day’s tiring work, it is that place where you can give time to your family & spend beautiful moments with them. To acquire a home which can be christened your “Own House” is a life-time decision & has to be taken with a lot of planning & requires huge finances. Your Dream Home is not very far away with a Home Loans which will fulfill your Dream into a reality. We at Property Punditz ® are working constantly to get you the BEST Loans Deal & have brought a small guide which would answer some important questions related to Home Loans & help you decide your loans deal.
Most borrowed home loans
SBI Home Loan: Before borrowing any loan borrower compare interest rates. Generally people prefer to take SBI Home Loan because SBI (State bank of India) is main centralized and national bank. SBI provides loan at comparatively low interest rate
HDFC stands for Housing Development Finance Corporation. It has counseling and advisory services for acquiring property. It provide loan from any office for purchase of home anywhere in India. It gives Loan approval even before a property is selected. Because of flexible feature and transparent policy, most people prefer. HDFC home Loan for their requirement
ICICI Bank Home Loan: ICICI Bank offers a wide range of Housing Loan products, designed to meet the requirements of customer. ICICI home loan offers Doorstep service, Speedy loan sanction, Simplified documentation and Loan amounts ranging from Rs. 2 lakh to Rs. 3 crore Rupees only.
Documents required in Home Loan
Generally the documents required to processing your loan application are almost similar across all the banks; however they may differ with various banks depending upon specific requirement etc. Following documents are required by financial institutions to process the loan application:
- Age Proof
- Address Proof
- Income Proof of the applicant & co-applicant
- Last 6 months bank A/C statement
- Passport size photograph of the applicant & co-applicant
In case of Salaried
- Employment certificate from the employer,
- Copies of pay slips for last few months and TDS certificate
- Latest Form 16 issued by employer Bank statements
In case of Self-employed
- Copy of audited financial statements for the last 2 years
- Copy of partnership deed if it is a partnership firm or copy of memorandum of association and articles of association if it is a company
- Profit and loss account for the last few years
- Income tax assessment order
Types of Home Loan
There are different types of home loans available in the market to cater borrower’s different needs.
- Home Purchase Loan: This is the basic type of a loan which has the purpose of purchasing a new house.
- Home Improvement Loan: This type of loan is for the renovation or repair of the home which is already bought
- Home Extension Loan: This type of loan serves the purpose when the borrower wants to extend or expand an existing home, like adding an extra room etc.
- Home Conversion Loan: It is that loan wherein the borrower has already taken a housing loan to finance his current home, but now wants to move to another home. The Conversion Housing Loan helps the borrower to transfer the existing loan to the new home which requires extra funds, so the new loan pays the previous loan & fulfills the money required for new home.
- Bridge Loan: This type of loan helps finance the new home of the borrower when he wants to sell the existing house, this is normally a short term loan to the borrower & helps during the interim period when he wants to sell the old house & want to buy a new one, It is given till the time a buyer is found for the old house.
- Home Construction Loan: This type of loan taken when the borrower wants to construct a new house.
- Land Purchase Loan: It is that loan which is taken to purchase a land for construction & investment purposes.
Home Loan Process & various steps involved
There are various steps involved in getting a Home Loan from selecting your property to filling up the loan application. Following are the various stages in Home Loan:
- The first step involved in the process is to find your property which is followed by the verification of property documents, post that the documents are examined & simultaneously you can start searching for the lender who can offer the BEST Home Loan Deal after checking your eligibility criteria.
- Know the Home Loan Eligibility: Banks offer the loan amount only after checking your profile & based on various eligibility criteria’s like age, income & salary banks lend you the money.
- Select the Best Home Loan after evaluation: Comparing home loan interest rates is the primary feature in the home loan selection, however other fees & charges like Application fees, processing fees, legal charges should not be neglected when comparing various loan offers. To check the interest rates & other charges incurred by various banks, Property Punditz ® has brought in a Home Loan Comparison Chart across various Banks.
- Applying for the Loan : After you have selected your lender, you have to fill in the application form wherein the lender requires complete information about your financial assets & liabilities; other personal & professional details together with the property details & its costs.
- Documentation & Verification Process: You are required to submit the necessary documents to the bank which will be verified together with the details in the application.
- Credit & default check: Bank checks out the borrower’s loan eligibility (through repayment capacity) & the amount of loan is confirmed. The borrower’s repayment capacity is reached which is based on the income, salary, age, experience & nature of business etc. Bank also checks credit history through the Cibil Score which plays a critical role in deciding & approving your loan application. Low Credit Score implies that the bank upfront rejects your application on the basis of earlier credit defaults; on the other hand high credit score gives a green signal to your application.
- Bank sanctions Loan & Offer letter to the borrower: After the credit appraisal of the borrower bank decides the final amount & sanctions the loan, the bank further sends an offer letter to the borrower which constitutes the details like rate of interest, loan tenure & repayment options etc.
- Acceptance Copy to the Bank: The borrower needs to send an acceptance copy to the bank after the borrower agrees with the terms & conditions in the offer letter.
- Bank checks the legal documents: The bank further asks the legal documents of property from the borrower to check its authenticity so as to keep them as a security for the loan amount given. The next step involved is the valuation of the property by the bank which determines the loan amount sanctioned by the bank.
- Signing of agreement & the loan disbursal: The borrower signs the loan agreement & the bank disburses the loan amount.
Home Loan Criteria by various banks
The borrower’s eligibility of getting a housing loan depend upon his/her repayment capacity & the banks establish this repayment capacity by considering various factors such income, spouse’s income, age, number of dependants qualifications , assets, liabilities, stability and continuity of occupation and savings history.