Frequently Asked Questions(FAQ)
What types of documents needed for Home loan approval?
To avail a home loan, there are certain documents to be produced to the banker. Banks undertake measures to keep paperwork and formalities to a minimum; but some documents are mandatory to avail a home loan. Once you present the pertinent documents, getting a home loan is a quick and easy process. Among the most important pre-requisites for a home loan is the availability of authentic documents that help the borrower to establish all information stated in the application form to the lender. Initially banks will require :
• Loan Application Form
• Photographs, Passport size
• Identity Proof: PAN Card/ Voters ID/Driving License / Passport etc.
• Residence Proof: Electricity Bill /Recent Telephone Bill/ Property tax receipt/ Voters ID/ Passport etc.
• Bank Account Statements / Pass Book for last 6 months to 1 year
• Any investments showing financial background Statements of borrower ( shares, fixed deposits, fixed assets such as land etc.)
• Deed of Sale
• Agreement to Sale
• Approved plan copy of the proposed construction / extension / addition
• Cost estimate detail/ valuation report from Bank's Panel Chartered Engineer / Architect
• Allotment letter of Builders / Housing Board /Co-operative Housing Society / Apartment Owners' Association / NOC from the Society / Association.
• Legal Report,NEC for the past 13 years, Property Tax paid receipt, permission to mortgage and Khata, wherever necessary
Additional Documents for Salaried Persons
• Form No. 16 and Salary Certificate
• With all deductions Recent Salary Slips
Additional Documents for Non-Salaried Persons
• Last 2 years IT Returns
• Business address Proof
• Document that describes the nature of business, type of organization, year of establishment, etc.
• Profit & Loss Statements and Balance Sheet for the past 2 years
What is Margin money or down payment?
A certain percentage (example: up to 80 to 85%) of the property value given by lenders as loan amount.Remaining amount (example: 15 to20%) paid by the buyer at the time of property purchase, called margin money or down payment. At the time of the loan approval , you have to show the ability to pay the lender as margin money towards the home purchase. The Remaining money on the home purchase will come from the lender in the form of the loan amount.
What is EMI (Equated Monthly Installments)?
EMI plays an important role during your loan searching process.In order to repay your loan, each month the amount of money you have to pay is called EMI. It has two components like principal amount of the loan as well as the interest on the loan and it’s based on the loan amount, the interest rate and the loan period. With the help of EMI calculator you can determine how much you may have to pay each month and whether you can afford it.
What are the fees I would pay when I apply for a loan?
Are you looking for the best mortgage to finance your home purchase? Then one of the first steps that you need to do is to take a closer look on different mortgage expenses,along with interest rates and includes other fee & charges at various stages of taking the Home loan.
Processing Charge : It is charged when a loan is processed.At the time of submitting the Home Loan application to the bank which is normally non-refundable. Between 0.5 % and 1% of the loan amount may be charged by the lenders.
Administrative Fee : At the time of loan sanction this fee charged by banks.Few banks who have removed this fee so you must check it with all the banks.
Prepayment Penalties : Few lenders charge a penalty when you pre-pay the loan before loan tenure, banks which usually depend between 1 % and 2 % of the pre-paid amount. Some lenders may not have any prepayment penalty at all.
Legal Charges : For legal and technical verification of the property banks also incur some charges to the customer.
Delayed payment Charges : Banks charge a late payment fee from the borrower when there is a delay in the payment of your EMI,which normally ranges from 2% to 3% of the EMI.
Cheque bounce charges : When cheque is bounced towards the Home Loan payment banks charge between Rs. 250 and Rs. 500.
Insurance cover (an added cost): To safeguard their interest many banks may insist on getting your home insured. There are lots of insurance covers available for you. You should try to get insurance as per your circumstances apart from getting the mandatory ones. You also have a choice of getting insured from another company without any objection from your bank.
What is the maximum (loan eligibility) loan amount I can expect to get?
Most banks and housing finance companies in India have their respective rules regarding home loan eligibility criteria. However, there are certain maximum loan amount restrictions that are published by individual lenders and that can provide you an idea of the maximum loan amount you can expect to get.
Home loan eligibility criteria depend upon a host of factors. Predominantly, they include borrower's income and repayment track record. In addition, the cost of the property purchasable is also considered in this regard. Borrower's income and expenditure patterns are two of the most considerable factors when it comes to availing home finance.
For instance, if a borrower's monthly income is Rs 100000 and expenditure is around Rs 80000, the borrower's home loan eligibility is decided on the remaining income i.e. Rs 20000. If the income is less as per the predetermined criteria of a bank, the borrower can't avail housing finance from the bank.
Credit history plays one of the most crucial
roles to determine eligibility of potential borrowers for housing finance.
Credit history stands for details of financial transactions between borrowers
and bank regarding loan. If the borrower has a history of outstanding finance
from previous bank, he/she is declined from acquiring housing finance on the
ground of bad credit score.
On the other hand, if the borrower doesn't incur outstanding money from any bank Or he/she has good tracks of settlements, the bank prefers such applicant and grants money on the ground of good credit score. Hence, it is quite prudent of you to pay off your pending before applying for housing finance from your bank.
Salaried and self employed borrowers have to ensure their eligibility to acquire home loan. In most cases, borrowers are rejected on the ground of misinforming or holding off crucial information pertaining to acquisition of housing finance. Don't involve into an act of folly by misinforming bank about your repayment capacity, income source, age and others with having a link to eligibility criteria.
If your current income is insufficient to satisfy eligibility criteria of a bank, you can club income of kindred like spouse/parents/children. This will subsequently increase your eligibility and the bank will consider sanctioning your loan on the clubbed income.Visit Loanexpertise.com to have more information about their set of criteria.
Fixed Interest rates Advantages and Disadvantages
Getting Home loans have become very easy today with lucrative offerings from every bank and various financial institutions. However, choosing the most beneficial deal is a decision as delicate as a flower. Before applying for a home loan, a person must do his homework properly to know the advantages and disadvantages of fixed and floating rate of interests. To eliminate the dilemma, here are some facts about both types of rate of interests:
Fixed Interest rates
Opting for a fixed rate of interest implies to the repayment of the home loan in fixed Equated Monthly Installments (EMIs) over the entire tenure of loan. In such a case the interest remains the same throughout and does not change with market fluctuations. In the initial stage of the loan repayment the EMIs are paid comprising majorly of the interest whereas the principal amount is paid in the later stage of the loan repayment tenure
• Interest does not fluctuate with market conditions
• Fixed Monthly repayment
• Beneficial for those who are good at budgeting
• Has got Certainty and Security
• Generally 1 to 2.5 % points higher than the floating rates of interest for home loan.
• In case of decreased floating rates, the borrower does not get the benefitted with reduced rate.
Floating Interest Rate Advantages and Disadvantages
As the name itself implies, in this case the rate of interest varies as per the market conditions. Home Loans with floating rates of interest corresponds to a base rate in addition to some floating element. Thus, in case the base rate varies, the interest rate is bound to vary.
Floating rate of interest for Home Loans is mostly preferred by home buyers. The entirely depends on the preference of an individual. After all it is up to a loan borrower to choose what suits him the best.
How much time does it take for a home loan to get approved?
It depends on the lenders, when you submit your documents to the bank typical times may be between 10 to15 days to get home loan approved.
How can I choose the cheapest or best home loan option?
To get a cheap home loan in India is not a matter of piece of cake because of many things of a crucial nature involved. India is one of the countries in the world where demand for home ownership is highest and the domestic market is very strong. Unfortunately, most individuals don't have enough savings or liquid funds to buy property outright and so they are dependable on external source like home loan to be able to have home ownership easily. That's what home loan is all about here.
The Internet is one of the most convenient
sources to search for the housing finance which you can obtain cheap and very
affordable. Our website uploaded with the latest information and
details on various types of loan programs to enlighten you significantly how to
grab the best home loan offers.
Most of the offers from different lenders can be compared using the virtual way which will help you choose a particular offer that comparatively seems cheaper and more affordable than the rest ones. So the inclusion of virtual way of shopping for the best and cheap housing finance will make your entire processes least time consuming.
The availability of sufficient down payment is one of the best ways to grab cheap housing finance. If you have much down payment, then home loan interest is reduced as the quantum of loan you require will not be much corresponding to your down payment.
How should I choose an appropriate loan duration or period?
Normally longer loan tenure is offered to increase the home loan eligibility. It totally depends on the paying capacity of the borrower.The total interest you pay over the loan period is a cost to you for taking the loan and one of the goals of choosing a loan duration should be to minimize it. So you have to choose a loan duration based on how much you can afford to pay as EMI each month towards the loan based on your income and financial situation, while trying to minimize how much you would pay as the total interest over the loan period. The longer the loan duration, the smaller the EMI and the larger the total interest you have to pay for the same loan amount and interest rate. Conversely, the shorter the loan duration, the larger the EMI and smaller the total interest you pay for the loan.
How does Loanexpertise.com help in home loan search?
At Loanexpertise.com, we save your lot of time and money by providing you with the best available loan choices on one screen. We have a comprehensive database of home loan related information from all the lenders in the country who have published their loan criteria. We are a unique website in that we actually calculate important information such as your EMI, fees, margin, total interest paid over the entire loan duration based on your exact loan criteria and the lender loan information.
We provide you a comprehensive list of loan options. We do not just provide you with the information from the lenders, we actually do the calculations to provide you with the various details. This saves you the effort of running various complex calculations on your own from multiple lenders to arrive at the best possible options. All these tools provide you with the ability to evaluate each loan option and adjust various factors such as loan duration to get to some of the best available choices before you actually apply.