What is a home loan?
A Home Loan is a loan, or financing, that you take for the purpose of buying or renovating your home. The facility of Home Loan makes it easier, and more affordable, to make or buy your dream home. Most banks and many different kinds of financial institutions offer home loans to the public at fairly low interest rates. Whether it is for the purpose of buying a house or apartment, or constructing one, a home loan can be the simplest route towards achieving your dream.
How much can I get?
The actual amount of the loan you are eligible for, or can get, varies, and depends upon many factors such as your capacity to repay it, your age, your family income, the number of dependents you are responsible for, and so on. The amount of the loan will also depend upon the tenure of the loan and the current interest rate. Tenure is the total amount of time that you are given for the repayment of the loan. Most institutions and banks will extend home loans for the purpose of buying a house or even a flat, for renovation of an existing property, or for extensions or repairs to be made to your existing home. However, in the case of buying a second property, when you already have one house or flat, most banks will have a different policy and set of rules, so be sure to ask some relevant questions and get clarifications about the specifics from your bank before you sign.
Home loan process
There is a process for seeking a home loan, which partly depends on your need for information ad clarification, and partly on the internal bank processes. The first step is to apply to a few banks and financial institutions, and begin the process of comparing rates and tenures. (Or you can compare rates on our sites). Once you have decided on the bank, the steps are as follows.
· Filling out the relevant applications and submitting the necessary documents.
· The sanction of the loan from the bank or financial institution depending on their criteria for age, repayment capacity, and property value.
· The disbursement of the loan, transferring the home loan amount to you via check.
There will be some documents which are required before the bank will sanction or disburse your home loan. The information in these documents will decide whether or not you are given the loan, as well as the interest rate you will be charged, and the tenure that will be allowed.
These documents include:
· The application form, filled out correctly and truthfully
· Passport size photographs of the applicant and co-applicant (if any)
· The record of your repayment record for any existing loans
· photo ID
· Proof of age
· Proof of residence
· Signature verification
· A copy of the sanctioned plan for the house/flat
· Loan sanction letter
· A check for the processing fee amount
· Additional documents that are required may include
· Bank Statement for the salary account for 6 months (personal/current account in case of business owners)
· Income Tax return for up to three years
· TDS Certificate (for employed)
· Copy of company issued Identity card
· Salary slip and Form 16 for three months (for employed)
Home loan tips
· Do some homework before you apply for a Home Loan.
· Figure out how much of your income you can afford to pay as EMI.
· Check out bank rates to get a rough idea of how much your total loan can come to and look for properties in that price bracket.
· Different banks and financial institutions offer different interest rates for home loans, so compare rates and processing fees before you decide on a particular bank.
· Take your time, don’t be in a hurry. Discuss all aspects of thee loan with the bank, and get complete information about terms, conditions, waivers and so on.
· When you get the form, and the loan document, be sure to read through the fine print and ask for clarifications on any point you don’t understand.