Question 1

What is a Home loan?

Accepted Answer

A home loan is a loan you take to buy your dream home. The interest rate home loan ranges from 7% to 10% annually, depending upon the lender. You can get a home loan for a maximum term of 30 years.

Question 2

Is a Co-signor/Guarantor/Co-applicant required for a Home Loan?

Accepted Answer

A co-applicant is someone who applies for the home loan where you sign as the primary applicant. When getting a home loan, the presence of a co-applicant is not required. However, all owners of the property must co-apply for the home loan.

Question 3

How do I apply for a housing loan?

Accepted Answer

Applying for a home loan includes 3 steps:

· Application and approval process

· Sanctioning

· Disbursement

After applying for a home loan, your property verification is done following which the finalize the loan is sanctioned.

Question 4

What is the Tax Benefit of a Home Loan?

Accepted Answer

Under the income tax rule, homeowners may claim up to Rs 2 lakh in home loan interest costs and up to Rs 1.5 lakh in principal repayment costs. The co-owners of the property can also claim this deduction.

Question 5

What are the Documents Required to apply for a Home Loan?

Accepted Answer

Your authorized ID, address, income, and property details are needed to apply for a home loan. One can get a pre-sanction on a home loan based on income and KYC details subject to property verification.

Question 6

How do I get a balance transfer/top-up/refinance on my home loan?

Accepted Answer

You can refinance your home loan's outstanding balance if you get lower interest rates from other lenders.

You can also get a "top-up" amount, which is available apart from your home loan amount.

The documents required for a balance transfer are your home loan statement for 12 months (with no bounces) and KYC documents. Income documents are required if you want an additional loan amount(top-up)

Question 7

How do I part-close/foreclose/repay/close my home loan?

Accepted Answer

You may foreclose or partially pre-close your loan account anytime by paying a portion of your house loan. Loan accounts with floating rates do not have any foreclosure penalty. After paying off the home loan fully,it typically takes 15 to 30 days to get your original documents.

Question 8

What is the processing time for a home loan?

Accepted Answer

If the applicant's documents are valid, the house loan application procedure typically takes two to four weeks.

Question 9

Is it advisable to take a home loan?

Accepted Answer

You should know the pros and cons of taking a home loan for decision-making.

Pros of Home Loans

Fulfill your dream of buying a home
Give you tax benefits
Help you build a credit score

Cons of Home Loans

It's a long-term commitment
Defaulting can harm your credit score

So, decide accordingly.

Question 10

Can I take a Home Loan from two Banks?

Accepted Answer

No, you can get a home loan on a single property from only one lender.

Question 11

Is Insurance Mandatory for a Home Loan?

Accepted Answer

The insurance on a home loan is optional. Home loan insurance plans are not required by law or regulatory organizations like the RBI or IRDAI. Yet, it secures your family in the event of death of the home loan applicant.

Question 12

What are the documents required for a home loan?

Accepted Answer

Common documents required to apply for a home loan are:

· Loan application form

· 3 passport-sized photographs

· Identify proof

· Residence proof

· Bank Account Statement/Passbook for the last 6 months

· Signature verification by bankers of the applicant

· Liabilities statement and Personal Assets

· Property detailed documents

· Salary Certificate (original) from employer

· Form 16/IT Returns for the past 2 financial years

· IT Returns/Assessment Orders copies of the last 3 years

Question 13

How is home loan eligibility calculated?

Accepted Answer

Your home loan eligibility is calculated based on your income, property evaluation, and your credit score.

Usually, banks offer loans of up to 85% of the home value.

Question 14

Can I get a home sanctioned but not disbursed?

Accepted Answer

Yes, your home loan application can be sanctioned based on your income subject to an evaluation of your property.

The typical duration of such an income-based sanction is six months.

Question 15

How can an NRI/OCI get a home loan?

Accepted Answer

NRI Home Loan enables OCI (Overseas Citizen of India) and NRI (Non-Resident Indian) holders to get home loans and purchase property in India.

Question 16

How can I reduce the EMI on my home loan?

Accepted Answer

Following options are available to lower your housing loan EMI:

Request an extension of the loan tenure from your lender
Switch your loan to a lender offering a lower interest rate

Question 17

What is the difference between a floating and fixed-rate home loan?

Accepted Answer

Fixed Interest Rate: A fixed-rate house loan has fixed interest rates for the duration of its term

Floating Rate: A floating home loan interest rate is linked to the base rate and may fluctuate.

NOTE: A fixed-rate home loan is usually more costly more than a flexible rate home loan.

Question 18

What are the Reasons for Rejection of a Home Loan?

Accepted Answer

Common Reasons for Home Loan rejection are:

- Poor credit history
- Unstable income sources
- Age
- Lack of a suitable property as security

Question 19

What is a Home Saver/Home Loan OD?

Accepted Answer

With a Home Saver Loan, the borrower is able to put their extra savings into their current account linked to a home loan. The bank subtracts the amount in the current account from the borrower's outstanding principal when computing the interest component.

NOTE: Such loans are typically more expensive than usual home loans.

Question 20

What is PMAY?

Accepted Answer

The Pradhan Mantri Awas Yojana (PMAY) is a scheme introduced by the Government of India. It is a a Credit Linked Subsidy Scheme (CLSS, for the economically underprivileged groups in society. Under the scheme, eligible applicants receive a home loan interest discount when they buy, build, extend, or renovate their house.

Question 21

What are the costs not covered by a Home Loan?

Accepted Answer

There are various expenses associated with the property price. The expenses which are not covered by a home loan are Registration charges and Stamp duty. Home Loans do not finance Registration fees and Stamp duty.

Question 22

What is Own Contribution/Down Payment in a Home Loan?

Accepted Answer

Most lenders prefer 10-20 percent of the house's purchasing price as a down payment. It is often termed "one's own contribution." The lender finances the remaining 80–90% of the property's value.

Question 23

What is an Under-construction Home Loan?

Accepted Answer

You can finance a building that is under construction when applying for a home loan. The loan gets disbursed as and when the construction milestones are met. The EMI also changes accordingly.

Question 24

What is a Home Improvement/Home Extension Loan?

Accepted Answer

People who want to repair a property can apply for a Home improvement loan. Such loans provide funding for maintenance, remodeling, renovations, and energy efficiency upgrades.

NOTE: The only requirement is that the changes be attached to the building permanently.

Question 25

What is pre-EMI on a home loan?

Accepted Answer

If you have only availed a portion of your home loan, you will only need to pay the interest on that amount until the total loan amount is disbursed. This interest, known as pre-EMI interest (PEMI), is due each month until the final payout, at which point the EMIs would start.

Home Loans Frequently Asked Questions (FAQ)