Home Loan Overview

The possession of a home is one among the key signs of success among the aggressive Indians bourgeoisie, because the financial gain of the common Indian family will increase, there has been endless increase within the want to possess a house and this has lead the worth of property to succeed in unmatched highs in recent years. This can be true for not only the massive cities but also for smaller cities across India. This ungoverned worth rise has created it close to impossible to buy homes through simply savings. This can be among the main reasons for the house possession loan business to witness unmatched growth in recent years, mostly to provide prospective home patrons to have multiple choices to hunt a home equity loan from banks in addition as NBFCs.

Here we've enumerated completely different options of a home equity loan to assist you find the suitable house loans during a higher method.

When granting a home equity loan, the loaner uses your property (home) so as to secure the loan. Because of use of your house as collateral, home loans area unit secured loans that involve a coffee level of risk for the loaner. If you're unable to pay the loan for any reason, the loaner will ‘de jure’(i.e. that is officially sanctioned) sell your property to retrieve the outstanding loan quantity. Being a secured loan, rate of a home equity loan is relatively below the rate of an unsecured loan, like a personal loan. The amount of the house loan may vary depending on your financial gain, credit history, the locality/city you're designing the acquisition in and varied different factors. You will be able to apply for a home equity loan collectively along with your spousal equivalent, members of the family or others as co-applicants.

Home loans typically have longer reimbursement tenures that may vary from five years to thirty years. The reimbursement period for a home equity loan is mounted at the time you apply for home equity loan.

Pre-payment of a home equity loan may be done. Some home equity loan suppliers may or may not charge a defrayal fee when you pay a loan. Therefore, home patrons ought to compare the house loans accessible to seek out the simplest home equity loan offers.

The Equated Monthly installment (EMI) is that the cash you pay monthly to repay your home equity loan principal quantity and its interest quantity. Therefore once calculative the house Loan EMI, each the accumulated interest on the loan and also the principal quantity area unit taken under consideration. You’ll be able to use the house Loan EMI calculator to calculate the EMI that you may need to acquire your home equity loan.


Now you can compare interest, processing fee, tenure and max. Loan offers, of all the banks before choosing your desired loan.


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Features of Home Loan

All loans are not created equal, home loan has become a great option for people to use.

Deduction for Interest Paid on Housing Loan – If you are paying EMI for the home loan, it has two components – interest payment and principal repayment.

Deduction on Principal repayment - The Principal portion of the EMI paid for the year is allowed as deduction under section 80C of the Income Tax Act, 1961.

Capital Appreciation – We all are aware of the fact that property prices rise over time, which leads to capital appreciation and becomes one of the major reasons to invest in a property.

Low interest rate - Buying a home is a long-term decision, which makes it important to look for the interest component as the longer the home loan tenure will be, the expensive your home loan will become.

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Comparision Of Home Loan

compare Home loan interest rates by banks

# Providers Interest Rate Processing Fee
1 SBI Home Loan 12.55%-17.65% 1%-3% of the loan amount + applicable Service Tax
2 Axis Bank Home Loan 11.25%-24% 1.50%-2.00% of the loan amount + Service Tax, as applicable
3 ICICI Home Loan 11.29%-22.00% Upto 2.50% of the loan amount + Service Tax, as applicable

Documentation needed to apply for a Home loan:

Different banks and NBFCs have different minimum documentation requirement for Home loans. The common documents required by most banks and NBFCs for individuals requesting a Home loan include :

The documents that need to be submitted may vary from one lender to the other. Some of the necessary documents to be submitted include the following-

 Completed loan application form

 Passport size photographs

 Identity proof – PAN card/Passport/ DL/ Voters ID

 Residence proof- telephone or electricity bill/ passport/ voter ID / property tax receipt

 Bank statement for at least past 6 months and salary certificates/ latest acknowledged ITR

 Copy of plan approved for the proposed construction/extension

 Cost estimation/ valuation report from Bank’s (or finance company) authorised surveyor/evaluator.

 Allotment letter of housing board/ NOC of the society/Builder etc. as well as any other land use certificate/other

Frequently Ask Questions

If you have a question that deals with clients, customers or the public in general, there is bound to be a need for the FAQ page.

Home loan is a loan disbursed by a bank or financial institution (lender) to an individual specifically for buying a residential property. Here, the lender holds the title of property until the loan is paid back in full along with interest.

Anyone — whether self-employed or salaried individuals/professionals — with a regular source of income can apply for home loans. One must be at least 21 years old when the loan period begins and should not exceed an age of 65 years when the loan ends or at the time of superannuation. This is the generic eligibility criteria and specifics such as the minimum and maximum age limits, minimum income level, etc. may differ from one lender to another.

Once repayment capacity determines your eligibility to apply for home loan, lenders consider the following factors:
• Income level of the applicant
• Age of the applicant
• Qualification (stability and occupation continuity)
• Resident status (maximum limit for an Indian resident differs from that of a non-resident)
• Spouse’s income (household income is taken into account when there is a co-applicant)
• No. of dependants (it is a measure of repayment capacity)
• Credit history and score (past repayment track record)
• Status of existing loans

Immediate family members such as your parents, spouse and children are allowed to be joint borrowers in case of a home loan.

Before zeroing in on a home loan, it is best to compare the various interest rates that would be applicable to you. When you apply for a home loan through Paisabazaar, you get the opportunity to apply for a home loan through both private and public-sector banks. Also take into account, the fact that banks charge various processing and other related fees when you apply for a home loan and you should also consider these, when applying for a home loan.

• Processing Fee- When applying for a loan, a fee is paid to the lender known as processing fee. The amount paid could be either a percentage of the loan amount or a fixed amount that is paid in lieu of carrying out the loan sanction formalities.
• Commitment Fee- It is essential to avail the loan within a stipulated time period after it is processed and sanctioned otherwise some financial institutions levy a commitment fee. By paying the commitment fee, you are assured that you can access the loan at the interest rate and for the tenure that was initially agreed on. Most banks no longer charge this fee.
• Pre-payment Charges- Banks/ financial institutions might charge a penalty if the entire loan amount is paid off before completion of the loan tenure. The penalty amount also known as foreclosure/pre-payment charges could be a maximum of 5% of the loan amount that is paid off before the completion of loan tenure.
• Miscellaneous charges- Documentation, stamp duty, credit bureau report issuance charges and consultant charges are generally considered as miscellaneous charges by few lenders

The documents that need to be submitted may vary from one lender to the other. Some of the necessary documents to be submitted include the following-
• Completed loan application form
• Passport size photographs • Identity proof – PAN card/Passport/ DL/ Voters ID
• Residence proof- telephone or electricity bill/ passport/ voter ID / property tax receipt
• Bank statement for at least past 6 months and salary certificates/ latest acknowledged ITR
• Copy of plan approved for the proposed construction/extension
• Cost estimation/ valuation report from Bank’s (or finance company) authorised surveyor/evaluator.
• Allotment letter of housing board/ NOC of the society/Builder etc. as well as any other land use certificate/other

The tax benefit on home loan is divided into two sections-
• Tax exemption on repayment of the home loan principal: This is the deduction allowed under Tax Section 80C with a maximum annual tax deduction of Rs, 150,000 under the section.
• Tax benefit on the interest rate for home loan- Under Section 24 of the Income Tax Act, you can avail the tax benefit on the amount of interest paid on a home loan to the maximum limit of Rs. 2 lakhs for a self-occupied property.
Tax benefit for Joint Borrowers:
In case of joint home loans, each of the co-borrowers is eligible to receive a total of Rs. 3.5 lakhs (1.5 lakhs under section 80C + 2 lakhs under section 24) as tax exemption. Hence, if a married couple co-signs for a home loan, they can claim a total tax exemption of Rs. 7 lakhs on their home loan.

Yes. You can have a family member like your spouse or your parents co-sign with your when you apply for a home loan. Having a co-signor for your home loan improves your chances of being approved for a larger home loan amount. A co-signor is specially recommended if the primary applicant has a low credit score or has had problems when applying/paying off a loan in the past.

A home loan is a long-term loan (5 to 30 years tenure), hence lenders want to ensure that they will get their money back in the long term. Therefore, the loan sanctioning authority will definitely check your credit history before sanctioning a home loan to you. By having a good credit record/history you would be classified as a low risk borrower and you may be able to get preferred (low) interest rates and waivers on various bank fees on the basis of your credit history.

In case you have a poor credit score, you will find it difficult to get a home loan. However, you can improve your chances by getting a co-borrower. The co-borrower needs to be a family member like your spouse or parents. Ideally, you should choose a co-borrower who has a regular source of income and good credit history to bolter your chances of a successful application.

When banks sanction you a home loan, the EMI payments may not start immediately. In such a situation, the bank is liable to charge a pre-EMI interest on your loan. This interest is payable monthly from the time the loan is disbursed till the time the EMI payments start off. The pre-EMI interest amount is lower than the home loan EMI as the principal payment portion is excluded for pre-EMI interest payments.

Amortization is a table with details of interest payment and periodic principal of a loan along with the amount outstanding after each payment and the decrease of loan balance till zero.

There are various types of home loans depending upon your specific requirement. Some of the key ones are as follows:
Land purchase loans: These loans are granted to individuals for the purchase of land on which they intend to build a house.
Home purchase loans: These are the most common type of home loans that is granted to individuals and they are granted for the purchase of an apartment.
Home construction loan: This type of loan is granted to individuals for the construction of a house on a plot of land that is already owned by the applicant.
Home Expansion/Extension Loan: This loan is specifically granted to individuals who want to expand their current home to include a new construction such as an additional floor, room, bathroom, etc.
Home Improvement Loan: Existing home owners who lack sufficient funds to renovate their existing home can apply for this loan to upgrade their home with a new paint job, electrical wiring, water proofing, etc.
Home conversion loans: Using this type of home loan, an existing home owner can add to their existing loan so that they can purchase a new house. This type of loan is only applicable to existing home owners.
NRI Home Loans: These home loans are specifically designed to provide non-resident Indians with financing so that they can purchase a home in India.

You best option is to apply for a home conversion loan. Using this type of loan, you can add to your existing home loan and purchase the new one without having to opt for a second home loan.

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