Complete Home Loan Process in India

The moment when you finally find the perfect home that matches all your requirements is one of the happiest you will experience. However, zeroing in on a property is only half the journey. After that comes the process of finding and securing the finances to purchase it.

Historically, the biggest obstacle to growth in the real estate market was the high investment involved. Individuals had to have sizeable savings before they could even think of buying a home. Fast forward to the present, however, and the market has undergone a huge transformation. Most home buyers today turn to home loans to help them make their dream of becoming homeowners come true. Over the last few years, the home loan process has become much easier, paving the way for more Indians to start investing in real estate. However, for a first-time buyer, the entire home loan procedure can still seem complicated and daunting.

The good news is that it actually isn’t! Doing your research beforehand will automatically make your home loan experience easier, faster and hassle-free.

Choosing the best home loan is a lot like finding your dream home: it depends entirely on your unique requirements. Because of this, we aren’t going to present one type of home loan and proclaim it the best, but give you all the information you need to find the best home loan for yourself.
When you are selecting a home loan, the biggest factor that will influence your decision is the interest rate. But it isn’t as simple as choosing the lowest value.

Fixed vs. Floating Interest Rate

When shopping for a home loan, the interest rate plays a very important role. You will typically be faced with two interest options: Fixed and Floating. Each of these have their own advantages and disadvantages.

What is fixed interest rate?

A fixed interest rate for home loans is a specific amount you will be required to pay each month as part of your loan repayments. A fixed interest rate is insulated from market fluctuations and remains stable for the entire repayment period.

Advantages of fixed interest rate

Choosing a fixed interest rate for the home loan can give you a clear idea of the total amount you will need to pay. Since home loan repayments usually extend for a long time, a fixed interest rate can be perfect for those with low-risk appetite.

Disadvantages of fixed interest rate

Fixed interest rates for home loans are typically higher than floating interest rates. Sometimes, they can even be up to 2.5% higher. This might mean that you will end up paying a much higher total amount as part of your loan repayment.

What is floating interest rate?

Unlike a fixed interest rate, floating interest rate depends on a variety of market factors. They are primarily influenced by two values: your bank’s MCLR (Marginal Cost of Lending Rate) and the base rate set by the NBFC (Non Banking Financial Company)

Advantages of floating interest rate

Floating interest rates tend to be much lower than fixed interest rates. They can even go as low as 8.35%. This makes them very attractive for home buyers who are willing to take a risk for the opportunity to save more. They are best suited for home loans that extend for a shorter period since you will be able to predict market rates with greater accuracy. When it’s about a home loan, interest rates play a very important role. Therefore, taking this advantage of floating interest rate into consideration could help you make a better decision.

Disadvantages of floating interest rate

For home loans that extend for more than twenty years, a floating interest rate might be too unpredictable. An individual will not be able to make an accurate estimation of how much they will be required to repay.

Interest Rates Across Major Banks

When you are shopping around for the best home loan, invariably, the one factor it all boils down to is which bank can offer you the most competitive interest rate.

Bank Name Home Loan Rates
PNB Housing Finance Limited 8.99% to 9.75%
ICICI Bank 8.90% to 9.10%
Indiabulls Housing Finance 8.75% to 11.0%
Axis Bank 8.75% to 10%
DBS Bank 9.00%
Aditya Birla Housing Finance Limited 8.55% to 8.99%
Sundaram Finance Limited 8.90% – 9.55%
State Bank of India 8.35% to 8.65%
Bank Of Baroda 8.30% to 9.35%
DHFL 9% to 9.75%
Canara Bank 8.35% to 8.55%
IDBI Bank 8.35% to 8.65%

Note:

These values are not static; they can fluctuate based on market factors and changes in policy.

You can read our blog on 7 things a first-time home buyer should know before investing for more details on choosing the best home loan

Once you have narrowed down on the home loan that best fits your requirements, then comes the process of actually applying for it. The good news for home buyers is that in an effort to encourage more people to invest in real estate, banks have simplified their home loan application process by a large extent. Here is a complete breakdown of every step involved in the home loan process to help you get started.

Step 1: Fill out an application

The first step to securing a home loan is to apply for one. Every bank has their own home loan application form with a specific set of details required. Once you have selected the bank or financial institution you want to apply for a loan from, you will need to fill out and submit their form. Filling out the form is an important part of the home loan process, and thus needs to be done to perfection. Most banks allow you to download their forms online, but for some, you can only pick it up from a physical branch. The exact information required in a form varies between banks, but in general, they can be divided broadly into personal details and property details.

Personal details

  1. Personal identification details (including details of parents/spouse)
  2. Address details (both current and permanent if they are different)
  3. Employment details (employer and company details if you are a salaried individual)
  4. Income details (annual income and net worth)
  5. KYC details (passport, aadhaar and PAN card numbers)

Property details

  1. Amount you are applying for
  2. Tenure of the loan
  3. Fixed or floating rate
  4. Repayment mode

The end of the form will usually contain a box for you to sign and authenticate it.

Step 2: Get your documents ready

Having your documents in order is almost half the battle won when applying for a home loan. In the process of giving a home loan, the eligibility of an applicant is assessed through these documents. Hence, the right documents must be submitted at the right time. This will ensure that your application is approved the first time around and you will not have to go through any further hassles. The documents you will need to attach will be specified on the home loan application form. They will act as proof of the details you have specified in the form.In general, most banks ask you to submit the following documents:

Identification proof

A government-approved ID proof should be submitted. This can include:

– Aadhaar card
– Passport
– Driver’s license
– Voter ID
– PAN card
– Bank passbook
– Ration card

Address proof

These documents need to have the same address given in the application form. Accepted documents include:

– Utility bills
– Phone bills
– ID proof that has residential address (eg. passport, aadhaar card)
– Rental agreement
– Bank account statement
– Voter ID

Proof of age

These documents verify the DOB specified in the application form. You can submit the following as age proof:

– Birth certificate
– 10th mark sheet
– Driver’s license
– Bank passbook
– Passport
– PAN card

Proof of income (for salaried individuals)

– Form 16
– Authorised letter by employer
– Income Tax returns for the last three years
– Authorised letter by the company for salary increment or promotion
– Pay slip for the last 6 months

Proof of income (for self-employed individuals)

Self-employed individuals will need to submit a separate set of documents as proof of their income. These include:

– Balance sheet for the last 2 years (verified by a CA)
– Income tax returns for the last 3 years (verified by CA)
– A synopsis of the business
– Proof of investments made by the company
– Copy of registration certificate (Shops and Establishments Act or Factories Act)
– Proof of business address

Property-related documents

– Original copy of sales deed
– Blueprint of property
– Possession certificate
– Receipts of tax payments on land and building
– Breakdown of construction cost of the house
– Letter of allotment
– No Objection Certificate (NOC) issued by the builder
– Bank details of builder (such as account number and name) for the loan amount to be paid

Step 3: Payment of Processing Fee for Home Loan

At the time of submitting your home loan application, you will be charged a certain amount known as the processing fee. This charge is only levied one time and is not refundable. Even in the event that your home loan application doesn’t get approved, you will not be able to retrieve the amount paid as part of the processing fee. The percentage payable for the loan processing usually varies between 0.24% and 0.50%.Each bank has their own processing fee rate, usually a percentage of the total value of the home loan amount requested.

Bank Processing Fee as a % of loan amount Minimum and Maximum processing fees*
SBI Home Loan Nil Processing Fee till Dec, 2018
HDFC Home Loan 0.50% Min Rs. 3,000 – Max Rs. 10,000
ICICI Bank Home Loan 0.50% Min Rs. 5,000 – Max Rs. 5,000
Axis Bank 0.50% Min Rs. 1,000 – Max Rs. 25,000
PNB Housing Finance 1.00% Min Rs. 10,000 – Max Rs. 10,000
Bank of Baroda 0.50% Min Rs. 7,500 – Max Rs. 20,000
LIC Housing Finance 0.50%
Indiabulls Min Rs. 1,000 – Max Rs. 5,000
Citibank Min Rs. 10,000 – Max Rs. 10,000
DBS Bank Max Rs. 10,000
DHFL 0.50% Min Rs. 2,500 – Max Rs. 20,000
Kotak Bank Max Rs. 10,000
Dhan Laxmi Bank 1.00% Max Rs. 10,000
IDFC Bank Min Rs. 5,000 – Max Rs. 5,000
Canara Bank 0.50% Min Rs. 1,500 – Max Rs. 10,000
United Bank of India 0.59% Min Rs. 1,180 – Max Rs. 11,800
Syndicate Bank 0.13% Min Rs. 500 – Max Rs. 5,000
RBL Bank Min Rs. 5,000 – Max Rs. 15,000
Karur Vysya Bank Min Rs. 5,000
Indian Overseas Bank 0.53% Min Rs. 8,900 – Max Rs. 13,350
HSBC Bank 1.00% Max Rs. 10,000
Edelweiss 0.25%
DCB Bank 2.00% Min Rs. 5,000
Yes Bank 0.75% Max Rs. 10,000
Corporation Bank 0.50% Min Rs. 1,000 – Max Rs. 50,000
LT Housing Finance 2.00% Min Rs. 4,999
Bank of Maharashtra 0.50%
Union Bank of India 1.00% Max Rs. 15,000
Andhra Bank 0.50% Max Rs. 10,000
South Indian Bank 2.00% Max Rs. 10,000
Standard Chartered Bank 1.00% Min Rs. 5,000 – Max Rs. 10,000
Punjab and Sind Bank 0.25% Min Rs. 1,000 – Max Rs. 15,000
PNB 0.50% Min Rs. 20,000 – Max Rs. 50,000
Lakshmi Vilas Bank 0.40% Min Rs. 10,000 – Max Rs. 20,000
Karnataka Bank 0.25% Min Rs. 250
Indian Bank 0.23% Max Rs. 20,381
GIC Housing Finance Min Rs. 2,500
Dena Bank 0.50%
IIFL 1.00% Max Rs. 10,000
Central Bank of India 0.50% Max Rs. 20,000
Vijaya Bank 0.50% Min Rs. 1,000 – Max Rs. 20,000
Bank of India 0.25% Min Rs. 1,000 – Max Rs. 20,000
UCO Bank 0.50% Min Rs. 1,500 – Max Rs. 15,000
Allahabad Bank 0.40% Max Rs. 50,000
Reliance Capital 1.00% Min Rs. 3,000 – Max Rs. 6,500
OBC 0.50% Max Rs. 20,000
Jammu And Kashmir Bank 0.25% Min Rs. 500 – Max Rs. 10,000
IDBI Bank 0.50% Min Rs. 2,500
Federal Bank 0.50% Min Rs. 3,000 – Max Rs. 7,500

(source: MyLoanCare)

Should you trust ‘zero processing fees’?

When you venture into the search of finding the best home loan, there are some bank offers that may mislead you. The offer of ‘zero processing fees’ is one among them. Some banks offer ‘zero processing fees’ in an effort to attract more applicants. If this seems to be too good to be true, that’s because it probably is. While you might not be required to pay that amount up front, you will almost certainly be made to pay it at some other point. Most banks adjust their loan amount or add an extra cost later on to adjust the final cost. So don’t be blinded by these offers; instead, focus on finding the bank with the best repayment terms.

Step 4: Evaluation of home loan eligibility

Once you have submitted your application, the bank will review it and make a decision about whether to sanction your loan or not. For a bank, disbursing a loan always involves some degree of risk because there is a possibility that the individual might not pay it back. To minimise this chance, they have to do a complete evaluation of your credentials and a background check. In order to sanction a home loan, the eligibility of the applicant is calculated by the bank with the help of a few parameters:

Age: If you want to get a home loan in India, you must fit the parameter of age. This helps banks judge your payment capacity – the more number of working years you have left, the safer a candidate you are. This is why, buying a home when you are young is an excellent investment decision. Generally, the acceptable age for salaried individuals is 24-60 and for self-employed candidates is 24-65. The entire home loan process becomes easy when you fit the age criteria.

Income: Your earnings play a very important role as far as your home loan eligibility is concerned. The higher your income, the greater the chances of you repaying the loan. In recent years, however, candidates from lower income brackets are encouraged to apply as well due to special government schemes like PMAY and CLSS.

For salaried individuals, the minimum annual income is Rs. 1,80,000 while for self-employed individuals it is Rs. 1,50,000.

Current employment: Like your income, the kind of employment you have is also an indicator of your repayment capacity. Individuals who have switched jobs multiple times in the last few years, for example, might be viewed as unstable candidates. Financial stability is especially important for self-employed individuals due to the volatile nature of business. Therefore, if you have a stable job, the chances of you getting a home loan in India increases.

Individuals who have at least 6 months experience in their current job and at least 2 years overall professional experience will be given preference.

Credit history: Your credit history is arguably one of the most important criteria for your home loan application. It is commonly denoted as a CIBIL score, a value expressed between 300-900. The exact criteria taken into account when calculating your CIBIL score will be explained in the next section.

A CIBIL score of 750 or higher will make you more eligible for a home loan

One-on-one interview: Banks will usually send a representative to meet you or fix an appointment with you at their branch. During this interview, you will be asked a series of questions regarding your motivation behind buying the home, job stability and career prospects.

A personal interview will give banks a clearer understanding of your eligibility as an applicant.

How to improve home loan eligibility

If you don’t match some of the requirements for a home loan application approval, don’t let this dishearten you. There are several steps you can take in advance which can dramatically improve your chances of getting a home loan sanctioned.

Apply for a joint loan: Joint loan applications are generally viewed more favourably as the risk is lower. If your spouse has a stable career, it will be useful to take the loan in both your names.

Explore step-up loans: Certain professions like doctors and lawyers might not pay a lot initially, but the salary increases significantly with time. In these cases, you can apply for something called a ‘step up loan’. These loans come with lower EMIs and longer tenures to account for your higher future income.

Extend your tenure: By increasing your loan tenure, you will be reducing the amount payable as monthly EMIs. This can make you more eligible as the chances of you repaying a lower EMI amount is higher. Bear in mind, however, the total amount you end up paying can be more when interest is taken into account.

Step 5: Assessment of credit history

Undoubtedly, the term you are most likely to hear when researching a home loan is ‘CIBIL score’. The CIBIL score is the biggest determinant of your home loan eligibility and can be a make or break factor.

What is a CIBIL score?

A CIBIL score is a number between 300-900 which denotes how suitable a candidate you are for a loan. This score takes into account your entire credit history including running loans, punctuality with repayments and outstanding loan payments. The higher your CIBIL score, the better your credit history and the greater are your chances for getting a loan sanctioned. Generally, a score of 750 or higher is important when applying for a home loan.

Factors affecting CIBIL score

The following factors can play a large role in how high your CIBIL score is:

Credit repayment

If you haven’t been punctual in paying your credit card bills or past loan EMIs, you can expect to see a low CIBIL score.

Current loans

If you are currently repaying multiple loans, banks might see you as a risky candidate. Since you are already obligated to pay other loans, you might not be able to repay a home loan as well.

Credit usage

Your credit card comes with a certain maximum limit for which you can use it. If you regularly make purchases that reach close to this limit, it can decrease your CIBIL score. This is because it indicates that you are not spending within your means.

Long credit history

If you have been a credit card holder for a long time, banks will have more data they can use to calculate your credit history. This can help them paint a more accurate picture of your suitability.

How to improve CIBIL score

If you have a low CIBIL score, it is advisable to wait for a while before applying for a loan. This can give you time to take drastic measures to improve your score.
Here are a few of the things you can do to improve your CIBIL score:

Clear existing debt

If you are still repaying loans, try to clear all of them before applying for a home loan. Having no outstanding loan payments will immediately improve your CIBIL score.

Increase credit limit

Increasing the limit on your credit card often comes at no charge but can help improve your loan eligibility. Since with a higher limit you are less likely to come close to spending the full amount, it can improve your score.

Keep old credit card accounts open

Old (even unused) credit card accounts can be helpful when trying to improve your CIBIL score. These dormant accounts rarely have loans or payments on them. This can serve as an indication of your reliable financial behaviour.

Check your credit report for mistakes

Sometimes, your CIBIL score can be low even if you have been financially disciplined. If this is the case, you should comb through your entire credit report to check for mistakes. When you spot them, contact the committee by filling out a CIBIL Dispute Resolution Form. once the mistakes are rectified
you can expect your score to increase immediately.

Step 6: Receiving the loan sanction

Once the bank has received all the required documents they will conduct a complete evaluation of your application. The outcome of this isn’t just an approval or rejection of your application. Even if they approve it, banks will have to set a maximum loan amount you are eligible for based on the information you have provided. Most banks only provide 80% of the total value of your property, so you will still need to finance the remaining 20% yourself. Moreover, sometimes banks can sanction a loan amount lower than what you have requested for based on your credentials. Home buyers also need to factor in additional costs like stamp duty and registration fees when calculating a budget because these are usually not included in the home loan.

Once a bank sanctions your loan application, they will send you an offer letter. This letter will contain details of the loan amount approved, loan tenure, rate of interest and terms and conditions attached to the loan. When you receive the letter, you will to sign it and send it back to bank. This acts as proof of your acceptance.

Step 7: Inspection of property

Banks don’t just take the information provided by you about the property at face value. To ensure they are not taking a risk by approving your home loan, they will inspect the property first themselves.The parameters the inspectors look for include:

– What stage of completion the property is currently in and whether it matches the details provided by you.

– If the property is still under construction, the pace at which it is taking place.

– Whether the layout is compliant with the guidelines laid out by local development authorities.

– Quality of construction.

– How the price of the property compares with surrounding properties with similar specifications.

While the property inspection is done for the bank’s benefit, it can also be very useful to you. Having a professional examine your future home can give you a guarantee of its quality and legality.
To ensure that this step goes smoothly, it’s important that you choose a reputed and trustworthy builder to buy a home with.

Step 8: Submission of property documents for home loan

Before banks disburse the loan amount to you, they will ask you to submit your property documents for them. This will act as security for them in the event that you default on your loan payments. Banks will keep the documents with them for the entire tenure of your home loan, until the full amount has been repaid.The documents you will be required to submit include:

– No-Objection Certificate

This certificate is provided by the local authorities or housing societies to confirm the legality of the property’s construction.

– Title deed of seller

This document confirms the developer’s ownership of the property. If you are purchasing a home from an individual, you will need to get the title deeds documenting the entire chain of deeds documenting the transfer from the various property owners.

Down payment

Apart from the property documents, you will also be required to pay a lump sum as a down payment before the bank disburses the remaining amount to you. Usually, this sum is 20% of your total property value. Paying the down payment also acts as security for a bank.

Step 9: Registration of documents

Once the bank receives the required documents from you and approves your loan, the final step will be drawing up the loan disbursement documents. When you receive the draft, you will need to send it to a lawyer who has to check it for legal validity. If the document checks out, it will then have to be stamped and signed by you. This signed document needs to be sent to the bank so they can initiate the loan disbursement.

Step 10: Disbursement of loan amount

The final step will be receiving the loan amount by the bank. Each bank has its own process for disbursing the loan amount. While some send the entire loan amount as a one-time payment, others pay the amount in installments. Most times, the loan amount will be disbursed in the form of a cheque made out to the builder. This step is taken to prevent misuse of the loan amount.

Getting your home loan application approved is one of the most crucial steps to becoming a property owner. Unfortunately, many applicants make easily avoidable mistakes that can hurt their chances of receiving the loan.Here are the common pitfalls you need to avoid in order to ensure that your first home loan application is successful

1. Not improving your credit score first

Without a good credit score, your chances of getting a home loan approved are slim to none. Even if it means delaying your property purchase, ensure that you take the time to improve your CIBIL score before applying for a loan.

2. Submitting inaccurate documents

This is one of the most common, yet preventable, reasons for an application getting rejected. Always double check the documents you are providing to ensure that there are no inaccuracies in the information provided. You should also make sure that you are sending all the required documents at the time of applying for a home loan.

3. Making multiple loan applications concurrently

It might make sense to not store all your eggs in one basket, but when it comes to applying for a loan, the opposite is true. Many potential homeowners apply to multiple banks for home loans in the hope that even if one rejects them, they can fall back on another. However, every time they apply for a loan, it gets recorded in their credit report. Applying for too many loans can make an applicant seem too credit hungry, which makes them a riskier candidate. To avoid this (and protect your CIBIL score from falling), apply only to a single bank.

4. Applying again immediately after being rejected

In the unfortunate event that your home loan application is rejected, don’t be in a hurry to fill out another application form. Applying too quickly after being rejected can signal banks and other lending institutions that you are desperate for a loan, increasing your chances of being rejected yet again. To prevent this, make sure you keep an adequate gap between one loan application and another.You can read our blog on 5 common real estate investment mistakes most home buyers make to learn more about what you should avoid.

In some cases, despite doing all the required research beforehand, you might come across another lender with better interest rates or repayment conditions compared to your current bank. In this event, you don’t have to continue paying your home loan with the bank you started with. You can instead switch to the new lender through a simple process known as a balance transfer.

What is a home loan transfer?

In a home loan transfer, you can send in a separate application to the new lender. If they approve it, they will pay the balance of your home loan to your current bank. After this, you can start paying back the remainder of your loan amount through EMIs to the new lender.

Steps to transfer home loan

Transferring your home loan is a very simple process. As long as you follow these steps, you will be able to open a home loan with a new bank or lending institution with no time lost.

Step 1: Documents from existing lender

When you apply for a transfer, you will need a set of documents from your current home loan provider to validate it. In general, the documents you require for this include:

  • NOC from current lender
  • History of all EMIs paid and down payments made
  • Letter of foreclosure
  • List of your documents (both original and copies) that the bank is in possession of

Step 2: New home loan application

When applying for a new loan, along with the above set of documents from your old lender, you will also need to re-submit your personal and property-related documents. For the transfer process it varies between banks, however, most will require your ID proof, income proof and property documents. You can expect to submit the same documents for your new loan as you did for the first loan you applied for. Along with these documents, you will also need to download and fill out a home loan application from the lender you want to utilise.

Step 3: Evaluation of credit history

The new lender will also want to do a complete background check on your credit behaviour before sanctioning your loan. In this step, banks will check your CIBIL score and also how disciplined you were with repaying your home loan. Depending on these details, they will sanction your loan and also set an interest rate and repayment tenure.

Step 4: Exchange of documents

In this final step, your old bank will surrender your documents to the new bank, while the new bank will pay the remaining principal amount to the old one. While this step sounds simple, it presents a unique challenge. The old bank will only give up your documents when they receive the full loan amount, while the new bank will only pay the principal amount once they receive your documents. To resolve this, representatives from both banks will have to meet in person where the required documents will be exchanged.

Internal transfer of home loan

Another way to transfer a home loan is internally. Many times, home buyers choose to sell their property while still repaying the home loan amount. In these cases, the ongoing loan will have to be transferred to the new owner of the property. The steps for an internal home loan transfer are slightly different.

Step 1: Submission of documents

The old homeowner should submit a letter to the bank stating their intention of closing the loan due to the sale of the property. In addition to this, the new owner should submit a filled application form to the bank and pay the processing fee. A No-Objection Certificate by the builder should also be submitted

Step 2: Evaluation by bank

The bank will conduct an independent evaluation of the new owner’s credentials. If approved, the bank, previous owner and new owner will enter into a tripartite agreement. While the new owner can choose to take a loan with another bank, the process is much simpler when they apply for one with the same bank. This is because the bank doesn’t have to check the property again, they will just need to check the new owner’s credentials.

Step 3: Disbursement of loan amount

The bank will send the new owner a letter containing details of the outstanding loan amount. The new owner has to then submit this letter along with the property documents, KYC documents and income proof to the bank. Once they are approved the bank will disburse the outstanding loan amount to the previous owner.

With this step, the previous owner of the property can officially close their loan

Most people are prepared to pay a significant sum for the purchase of a home, but in fact, home loans can actually help you save a lot of money! In fact, this tax-saving aspect of home loan is one of the reasons why real estate is the best investment option today.

Here is how you can make full use of your home loan by saving big on taxes:

– Under Section 80C of the Income Tax Act, an individual can claim a tax of deduction up to 1.5 lakhs on the interest paid on a home loan.

– If you are planning to rent out your home, the tax deduction is especially beneficial as the entire interest paid on the home loan can be deducted from your (the borrower’s) income.

– If you plan to live in the home you have purchased, you can claim a tax benefit up to 2 lakhs under Section 24 (b) of the Income Tax Act. The tax code doesn’t just apply to a loan taken out from the bank but also includes loans from friends, family and other lenders as well. All you need to take advantage of the tax deduction is a confirmation letter from the lender.

– An individual looking to gain the most benefit from the tax deductions, can take out a joint loan and make equal payments on the loan. A joint loan lets you enjoy tax deductions on the principal amount and on the interest paid. Both, couples as well as parents and their children are eligible to take out join home loans.

In order to make use of the tax deductions available, the property needs to be fully constructed. If there are any delays in construction, you can still avail the tax benefits on the principal amount of your loan. Once construction is complete and you have taken full possession of your home, you can claim further tax deductions on the interest paid prior to completion of construction.

You can read our blog on Best Tax-Saving Options to Explore in the Home Buying Process for more tips on how to save money on your real estate purchase.

Conclusion

A home loan can make the entire process of becoming a homeowner easier and faster for you. With the financing of your property taken care of, all that is left to look forward to your new carefree life in your new home!

Shriram Properties has consistently pushed the boundaries when it comes to delivering unparalleled quality homes at the best possible price. If you are looking for the best developer to partner with for your new home, look no further!

You can also read our Complete Guide for First-Time Home buyers in India for everything you need to know about making your first real estate investment.

FAQ's

1. How long does it take for a home loan application to be approved?

The exact time period varies between different banks depending on their processes. However, the general time period for approval of a home loan application is between 4-6 weeks. It can take longer if there are any missing documents or errors with your application form.

2. How much home loan can I get for my salary?

Banks look at your salary as an indicator of your home loan eligibility. In general, banks approve up to 60 times of your net salary as the home loan amount you are eligible for. For eg. If your net income is Rs. 40,000, you are eligible for a loan of Rs. 24,00,000.

3. What is home loan disbursement?

Home loan disbursement is when your application is approved and the bank sends you the funds to purchase your property (usually in the form of a cheque). For fully-constructed properties, the entire amount is disbursed while for under-construction properties, the amount is disbursed in installments.

4. What are the documents required for home loan in India?

Documents required for a home loan can be divided into three categories: 1. Personal documents (Govt. approved ID, address proof) 2. Income proof (account statements, proof of employment) 3. Property documents (title deed, OC, EC). For the complete list of documents required, scroll up!

5. Is processing fee on home loan refundable?

Some banks do refund the processing fee on home loan if they reject your application, but you will have to clarify this beforehand. If the bank approves your loan and disburses the amount, the processing fee is not refundable. It is also not refundable if the bank approves your loan but you decline it.

6. Is home loan good for tax benefit?

A home loan offers several important tax benefits. You can claim up to Rs. 1.5 lakhs on the EMIs paid towards the principal amount of the home loan under section 80C. Up to Rs. 2 lakhs can also be claimed for the repayment towards the interest on your home loan under Section 24.

7. Can I claim tax benefit for under construction property?

Under-construction property is not immediately eligible for tax benefits, but you can claim additional benefits once it is completed. The EMI paid for the period during which it was under-construction can be claimed in 5 equal installments, adding up to a maximum amount of Rs. 2 lakhs.

8. Which is best home loan fixed or floating?

If you have a low risk appetite, a fixed interest rate is ideal as it offers higher predictability. However, a fixed interest rate is usually higher. Floating interest rates are typically lower and are a good option for loans with a short repayment period as you will be able to predict market fluctuations with greater accuracy.

9. What are the advantages and disadvantages of getting a home loan?

The main advantages of getting a home loan are the tax benefits and affordability that it offers. The biggest disadvantage is that you will have to pay higher than the property value because of interest. However, the tax benefits and secondary income through rent can negate this disadvantage.

10. What is the current interest rate for home loans?

The interest rates for home loans vary between different banks and can also depend upon your history with the bank and how high your CIBIL score is. For a complete list of the current interest rates for all major banks, scroll up!

11. Which bank is best for house loan interest rate?

The interest rate on your home loan is dependant on a variety of factors. If you have a long relationship with your bank, they might give you a lower interest rate on your home loan. Check out our list above for the interest rates on all major banks in India.

12. How many home loans can one person have?

You can have up to 20 home loans in your name. However, you need to have adequate repayment capacity for each home loan you apply for. Otherwise, your loan application can get rejected and your CIBIL score will drop.

13. Can we take personal loan and home loan together?

You can have a personal loan and a home loan together. But be wary of applying for too many loans as it might make you appear ‘credit-hungry’ and decrease your CIBIL score.

14. What are the property documents required for home loan?

Some of the property documents required for home loan are original copy of sales deed, blueprint of property, possession certificate, NOC and bank details of the builder.

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Thoughts on “The Complete Home Loan Process in India”

  1. Jerry_bus
    on February 28, 2019

    And, that s a wrap! Our Complete Home Loan Process. Hope it s useful. Do let us know what you think and if there are any topics you d like to see us cover in the future! Happy home buying!

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