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Equated asdadasdada Monthly Instalment (EMI) is a fixed amount of money that you pay to your lender each month till you have fully repaid your loan. The EMI can include both the interest and the principal.
You can take a home loan for a number of purposes. These include: • Loan for purchase of a new home • Home renovation loan • Home construction loan • Home extension loan • Loan to purchase a plot • Plot and construction loan • Pradhan Mantri Awas Yojana (PMAY) loan • Balance transfer for existing home loan • Loans against Property
It is possible to apply for a home loan either before or after you choose the property. Loan amounts are sanctioned ‘in-principle’, which means you will know the amount you can borrow. Disbursement of the loan is made after the application has been verified and all the documents checked.
A right over a security (the property you are purchasing) is created in favour of the lender; when this happens the security can’t be sold or transferred by the borrower. This is called a pledge.
Own contribution equals the total cost of property minus the amount that you have borrowed. In other words, it is the amount that you need to pay when you purchase the property. This is also called ‘down payment’.
The market value of the property means an estimated amount that may be received on the sale of property in the given market conditions.
The agreement to sell or ‘sale agreement’ is a legal document which is to be executed on a stamp paper and is basically an understanding between the buyer and seller. The agreement contains details such as the area, possession date, the price of property, etc. This agreement is a legal requirement in many states of India and should be registered by law. Ideally this agreement should be registered within four months of date of the agreement at the office of the Sub-registrar under the Indian Registration Act of 1908.
Encumbrance on a property means claims or charges on the property that may arise out of liabilities like previously unpaid loans or bills. When you are looking to purchase a property, there should be no encumbrances present.
An ‘under-construction’ property is a property that is still in the process of being constructed and possession of such a property will be handed over at a later date
The language of the registration document should be the one that is commonly used or prominently used in the district where it is registered. Under Section 19 of the Indian Registration Act, the registering officer may at his discretion decline the registration of your documents if they are presented in a language not commonly used in the district unless an authentic translation is also presented.
Yes, a home loan can be pre-approved from your lender.
There are certain advantages of applying for a home loan like tax benefits. It is best to consult your financial advisor.
Yes, according to existing tax regulations, the central government has the first option to purchase certain immovable properties exceeding a certain value. Any transactions on such properties can only be gone ahead with after you comply with prescribed requirements.
When you purchase a new property, you should check for the following documents: • Sale deed • Approved Building plans • Title deed • Completion certificate (in case the property is newly constructed) • Commencement certificate (in case the property is under-construction) • Conversion certificate (in case the property has been converted from agricultural land) • Khata certificate (especially in case of Bengaluru properties) • Encumbrance certificate • Latest tax receipts • Occupancy certificate
You may need the following documents at the time of possession: • Original copies of the chain of title agreements • Possession letter • Original stamp duty and registration receipts • Original share certificate in case of societies • Proof of payment of all maintenance charges, electricity, phone, water and property taxes till the date of handing possession. • No Objection Certificate from the society or anybody that is responsible for the property.
In order for you to register a new plot or apartment, you would need a sale deed, No Objection Certificate (NOC) from the builder, NOC from banks, Building Plan Approvals, Completion Certificate, PAN card and photographs.
You should check for clear and marketable title, the sale deed, encumbrance certificate, latest tax receipts, occupancy certificate, possession certificate as well as building plan approvals.
You would need the new sale deed, PAN card as well as photographs.
• You should verify project approvals from the municipal authorities or the sanctioning authority’s office. • Ownership documents should be verified from the office of the sub-registrar. • Share certificates can be verified from the office of the society.
The home loan is disbursed within 3-15 days if all the documentation has been provided to the satisfaction of the lender and all the procedures completed.
You will have to provide the property for which you are taking the loan; for this purpose, it is necessary that the title of the property is free of any encumbrances. The original title deed of the property should be deposited with the lender.
Application: The process is started by the submission of an application along with the documents required for the home loan. Sanction: Based on your repayment capability, requirement and the value of the property, the loan amount is sanctioned. Disbursement: Disbursement is made on the basis of the purpose of the loan. In cases of resale, disbursal is made favouring the seller. In cases of balance transfer, disbursal is done to the existing lender. In case of self-construction, it is done based on stages of construction to the borrower or the builder.
Home loans can be taken by: • A person who is older than 21 years of age at the commencement of the loan • A person who is younger than 65 years of age at the time of loan maturity • Self-employed or salaried individuals
A co-applicant is generally the spouse, father or son or other close family members. A co-applicant should be a co-owner of the property that is offered as a collateral or security; however, there is no requirement for all co-applicants to be co-owners.
A number of factors are considered before your home loan eligibility is decided. These include (but are not limited to) your age, the number of dependants in your family, your educational qualifications, your income and your spouse’s income, your existing assets and liabilities, your previous savings history and the stability and continuity of your current occupation.
Yes, a guarantor is required for a home loan. However, some lenders may agree to sanction a home-loan based only on a co-applicant.
You can get a home loan for up to 30 years; however, the loan should not extend beyond either your retirement age or 65 years of age.
There are various modes of repayment available for your home loan. You can pay through Electronic Clearing System (ECS), get your employer to deduct the instalments and pay them directly to the lender or issue post-dated cheques (PDCs) from your salary account.
The repayment starts in the month following the month in which the full disbursement was made by the lender. If the full disbursement is not made, you need to pay the interest portion of the loan that has been disbursed. This interest is called the pre-EMI interest. Pre-EMI interest is due each month from the date of each disbursement till the period in which the EMI starts.
It is possible to pre-pay your home loan and depending on the circumstance, there may be charges applicable.
The minimum amount that you can pre-pay is an amount equivalent to one EMI.
Once the EMI has increased, it is not possible to decrease it other than in those cases that involve part pre-payment conversion.
Yes, it is possible for you to apply for a home loan to repay an existing home loan from another bank or HFC. You may contact our nearest branch.
Yes, it is included; however, total loan amount will be determined by your eligibility criteria.
Interest rates change according to prevailing market conditions. Interest rates on home loans are calculated on monthly or yearly reducing balance. Some lenders though may also adopt daily reducing balance.
Here is a brief explanation of daily, monthly and yearly reducing balance: Daily Reducing: The principal on which interest is payable reduces from the day the first EMI is paid. The instalments on which daily reducing system is applied are less than the monthly reducing system. Monthly Reducing: The principal amount for which interest is paid reduces every month as the EMI is paid. Yearly Reducing: The principal amount on which interest is paid reduces annually at the end of the year. This means that even though you may have paid back the principal in the interim, interest continues to be levied on that paid back amount. It is thus best to opt for daily or monthly reducing rates.
Home loans are usually offered in fixed rates or floating rates.
When you opt for a fixed rate of interest, the interest rate remains constant throughout the tenure of the loan even if market conditions vary.
In case of a floating interest rate home loan, the interest rate can increase or decrease depending on market interest rates.
Yes, it is possible to have a home loan that is partly fixed and partly floating.
If the final disbursement has not been made, then the interest that is levied on the portion of the loan that has been already disbursed is called pre-EMI interest. The Pre-EMI interest is payable by the borrower each month from the date of part disbursement until the date of the commencement of the first EMI.
The amortization schedule is provided to the home loan customer in a table format and shows the reduction in the home loan amount in monthly instalments. The table contains the breakdown of each and every EMI into principal and interest.
MCLR means Marginal Cost of Funds based Lending Rate. The MCLR is basically a benchmark rate below which loans can’t be provided by lenders to those borrowers who are taking loans linked to MCLR. This new benchmark rate applies to those loans that were sanctioned from April 1, 2016.
If you opt for a longer loan tenure, your EMI would reduce, but your interest cost will rise since you are borrowing for a longer time period. However, in shorter tenure loans, the EMI would be higher and the loan gets paid sooner and you pay less in interest costs.
When you take a home loan, you incur the following costs: Processing charge: This is the fee that is charged on applying for the home loan. Pre-payment charge: This charge is not levied if you take out a floating interest rate and the loan is prepaid. However, if the loan is under a fixed rate, the prepaid charge applies unless the customer pays through his ‘own sources’. The own sources implies that the loan has not been repaid using refinance from any other HFC or bank or financial institutions. All other home loans attract a pre-payment charge based on the terms and conditions. Miscellaneous Costs: These costs vary and are explained during the time the loan is applied for.
There are tax benefits on both the principal repayment and interest paid on the home loan. However, as tax laws change regularly, you should consult with your financial advisor for the tax benefits applicable at the time of taking your loan.
We mail the income tax certificate to our home loan customers at the end of the financial year. However, you can also contact our nearest branch for the IT certificate or alternatively download it from our website.
You can get your provisional income tax certificate any time of the year.
As per existing regulations, only one certificate can be issued for a home loan and therefore, a certificate will be issued in the names of both the applicant and the co-applicant.
There are basically two types of insurance available for home loan customers: Term Insurance: This is a life insurance policy where in case of death of the insured (the home loan borrower in this case), the insurer pays a lump-sum to the lender so as to eliminate loan liabilities on the survivor family. Property Insurance: This policy covers property and protects private property against natural disasters or accidents etc.
A home insurance policy protects both the structure of the house as well as its contents or the possessions of the householder. Some policies may have other insurance features as well.
Home insurance companies generally define personal possessions as furniture, electrical and electronic items, jewellery etc. The maximum insurance coverage depends on the valuations made by the insurer as well as the insurance cover that has been applied for by the policyholder.
Yes, you will have to file a FIR in cases where the claim is being made due to riots, burglary, terrorism, theft and larceny or for malicious damages. In case the damage is due to fire, you will have to submit an assessment report from the local fire department as well.
During the pendency of the loan, it is required that you take out home insurance against perils such as fire and other hazards. You are required to submit the proof of home insurance. The beneficiary of the policy should be the lender.
It is usually done by multiplying the built up area with the cost of construction per square foot.
In case you need funds for your business or for personal use, you can consider taking a Loan Against Property
Your property can be utilised as a collateral to raise funds for personal or business expansion needs. Since overdraft loans are a liability for an indefinite period, the advantage of taking a LAP is that you pay a regular EMI and reduce your debt burden in an organised manner.
To apply for a LAP: • Contact our phone banking executive through the numbers available on the website • Visit our nearest branch • If you have an existing relationship, please contact your loan officer. • You could also fill a form on our website.
You can either use a self-occupied residential property as a collateral for a LAP or self-occupied commercial property like shops and offices.
A LAP can be applied for as a term loan with EMI repayments or as an overdraft.
A PDC is a cheque which is dated in the future and is collected from the borrower for repayment of the loan.
Interest rate is calculated on a monthly basis.
You can add your spouse or any blood relative as a co-applicant for a LAP.
You can take a LAP for a maximum tenure of 15 years or till the age of 65 years or retirement, whichever is earlier.
An Equated Monthly Instalment (EMI) is a fixed monthly payment by the borrower to the lender. It comprises of interest as well as a principal component. EMI repayments commence a month after full disbursement of the loan.
Your EMI has two components i.e. interest and principal. In case of monthly reducing balance, the interest is calculated on the outstanding loan amount at the end of each month.
An amortization schedule is a table that provides you with information about each of your EMIs and tells you the breakup towards interest and outstanding principal.
The maximum amount that you can avail of as a LAP is 60% of the market value of your property subject to certain conditions.
Residential or commercial property owned by the applicant is required as a security or collateral. The property should be free of any encumbrance and have a clear and marketable title.
The following documents are required for securing a LAP: In case of salaried individuals • Your proof of residence: Either a ration card, telephone bill, electric bill or voters’ card. • Proof of your finances: Either your latest bank statement or passbook (Salary or income should be credited to the account) • Proof of income: Your salary slips with all deductions from the past two years along with Form 16. • Proof of property ownership: Copies of all relevant property documents. In case of self-employed individuals • Your proof of residence: Either a ration card, telephone bill, electric bill or voters’ card. • Proof of your finances: Either your latest bank statement or passbook • Proof of income: Certified financial statement for last 2 years. • Proof of property ownership: Copies of all relevant property documents.
To apply for a LAP, please visit our nearest branch. Alternatively, you can apply through our website or customer care.
A LAP application has the following stages: • Submission: You will need to submit an application, which is fully filled out along with the necessary documents. • Sanction: Based on the result of your application, a loan amount will be sanctioned. • Disbursement: Disbursement will be done once the loan is sanctioned.
LAP applications are processed in 6 working days. However, the processing time depends on the completion of complete financial and collateral documents. Extra time may also be required for legal and technical clearance.
To change the address on your LAP account, visit our nearest branch and submit the following documents: • Request form for change of address • A self-attested copy of your new proof of address and your original address • In case someone else is submitting the request on your behalf, please provide an authorisation letter and your KYC documents such as PAN card, Aadhaar Card, Driving License or Passport.
Yes, you can foreclose your account by placing a written request at the nearest branch. Our personnel will provide you with the necessary assistance.
Foreclosure charges are applied on outstanding principal or outstanding limit depending on the case. However, you can only pre-pay a LAP after 6 months of loan disbursement.
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A home loan balance transfer (usually called ‘balance transfer’) implies changing your home loan provider. In other words, you shift your home loan account from your existing lender to a new lender. The new lender pays off the outstanding amount of your home loan to your existing lender and henceforth, you need to make EMI payments to your new lender. Most people apply for a home loan balance transfer to take advantage of lower rates with other lenders or better terms.
Resetting’ means that you negotiate for a lower interest rate with your existing home loan provider. ‘Balance transfer’ means you move your home loan account to a new lender. Sometimes resetting may be a better option because you have an existing relationship with your lender or if the advantages gained by balance transfer are marginal.
Balance transfer applicants should be: • Salaried or self-employed (must file income tax returns) OR Professionals (doctors, lawyers, engineers, chartered accountants etc) • Must be between 21 years and 65 years of age.
You would normally need the following documents: • A filled out application form • Documents in possession with the existing lender • A copy of your loan statement • Your bank statement for the previous 12 months from which EMIs were deducted • A ‘No Objection’ certificate from your existing lender • Income Statements/ salary slips and Form 16 • Latest Income Tax Returns • Your proof of age (Passport, PAN Card, Aadhaar, Driving License) • Identification Proof (Passport, Aadhaar, Voter ID, Driving License)
Teaser rates are offered by banks and other lenders to encourage borrowers to shift their home loan accounts to them (i.e. to do a balance transfer). These rates reset after a couple of years to floating rate. Borrowers should be careful with teaser rates and read the terms and conditions of such loans very carefully; sometimes after the rate has been reset to floating rate, the borrower no longer has any benefits from the balance transfer.
While balance transfer can be advantageous under many circumstances, you should be careful before taking this decision. Keep in mind: • Do not be swayed by teaser offers • Carry out a cost to benefit analysis • Read the terms and conditions • Shop around for best terms • Consider the reputation of the new lender • Consult with existing customers
Balance transfer makes sense under some circumstances such as: • When the interest rate on your home loan is higher than the current market rates • You want to move to a fixed rate from a floating rate • You would like to lower your EMIs and improve your cash flow. However, there are times when you should not opt for a balance transfer: • You have repaid most of the home loan and have a low outstanding amount • Your current lender imposes a significant prepayment penalty • You plan to sell the property soon
Many lenders do not charge pre-payment penalty; however, if your lender does have it, you can ask your new lender to take it into consideration.
You may be able to secure an additional loan from a new lender for the purposes of renovation or extension or for adding new furnishings; however, the application will be judged on merit and your eligibility to seek the higher amount.
No, your existing lender’s evaluation is not considered. When you apply for a balance transfer, it is considered as a fresh application and your eligibility is judged afresh.
The income tax certificate carries the names of all the applicants and only one certificate can be issued as per existing income tax rules.
Approval usually takes 15-20 days from the time of application.
A lower credit rating would affect your application adversely since a balance transfer is basically a fresh loan application.