Category Archives: Home Loan

Documents Required Before Applying for a Home Loan


Buying a home will be one of the biggest purchases that you will make in life. For this purchase, you may require financial aid. Such aid is provided by banks and NBFCs in the form of home loan. Home finance is provided to applicants who are eager to purchase a property.

The price of real-estate is on an all-time high and so is the demand for home loans.  It is practically impossible for a regular salaried person to gather such a humongous amount to buy their dream house. In such situations, home loans come extremely handy.

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There are different types of home loans, whose repayment procedures, terms, and interest rates will vary. Depending on the type of loan you plan to avail, the eligibility criteria and clauses will change.  Moreover, eligibility is also based on the principal amount of loan, the tenure for which the loan is availed, expected interest rate, and the repayment procedure selected.

To understand the eligibility criteria, you will require help of loan officer. Still, to give you an intimation of the document mandates, we have shared the following housing finance eligibility criteria sanctioned by leading banks and NBFCs for most of their offerings.

Individuals who are eligible

Any Individual or Proprietor, Partner or Partnership Entity, or any other Corporate-entity is eligible to apply for a housing loan.

Individuals who develop Residential projects/ Townships.

Documents required

  • All the borrowers should have valid KYC documents under their name.
  • Proof of continuous income with assurance of stability
  • The banking and loan payment history should be clear
  • Technical and legal clearance for the property to be held as collateral
  • Checks and references should be positive

Segments that are eligible

  • Individuals who are manufacturers
  • Individuals who provide service
  • Traders & Retailers
  • Professionals who are self-employed
  • Entrepreneurs

The Pros and Cons of Home Construction Loan


Building one’s own home is one of the biggest joys of life but sometimes, one has to hold back due to poor financial circumstances. In order to eradicate this particular hurdle, you can avail a home construction loan that involves the payment of the construction and mortgage of a property. A construction loan differs from a traditional mortgage. These loans have certain advantages and disadvantages for a borrower; thus, you need to be sure of all the pros and cons associated with a Home Construction Loan.

Construction-Loan

One of the main advantages of availing this home loan is that you save a lot of time and energy, since you can close it in one instance that leads to less paperwork and stress. Also, you can reduce the closure costs, which are somewhat expensive. Another advantage is the fact that you can avail a good interest rate, and can choose from a fixed or floating interest rate.

Here are some points you might need to consider before selecting a home construction loan.

Build your own house

You can avail independence to building your own house because construction loans increases your chances to borrow a large amount of money, in order to build a house. When you undertake a traditional mortgage, you are supposed to purchase an already existing/constructed property. Thus, this process helps in fulfilling al your construction needs.

Construction to permanent loan

Borrowers are allowed to receive a construction to permanent loan by home loan companies wherein a loan begins as a traditional construction loan and is eventually converted into a permanent mortgage. Also, you will have to only pay for one closing cost, rather than paying for two.

Interest rate

The interest rates vary every year if you avail a floating interest rate policy. It is extremely advantageous for you when the interest rates drop at intervals. This way, you can pay a lesser amount. Bu if the interest rates are higher, say during inflation, then it can create problems for you because you shall have to pay much more than you originally planned.

Short Term

This kind of a loan has a short tenure, therefore, you will be required to take an extension or reapply for finance. When you are in the construction phase, you will have to avail a regular mortgage if you do not have a construction to permanent loan.

Thus, you can avail a home construction loan if you wish to fulfil your dream of a home that you can your own.

Certain Mandates for Availing a Home Loan


Buying a home is the biggest purchase that you will ever make in your life. To simplify the purchase, banks and NBFCs offer versatile home loans to eager house buyers. These borrowings carry certain restrictions and qualifying criteria.

home loansHome buyers are often confused while applying for a home loan. To simplify the process for them, we have presented a simple guide of essential documents and eligibility criteria.

Who is Eligible?

Several banks and NBFCs have versatile eligibility criteria. General eligibility criteria is as follows-

  • Any person, proprietor, partner, partnership entity or group, corporate entity and other associated parties are eligible to apply for house loan.
  • Builders and land developers are also eligible to apply.home-loan-eligibility-calculator

Once you are eligible, you can fill the application and then be ready to submit the required mandatory documents.

What are the documents required?

The list of documents to be submitted varies according to applicant’s profile. Such documents vary according to the income profile of the applicant.

List of documents for salaried individuals

  • 3 Months’ salary slips
  • Salary certificate
  • Form No-16
  • Copies of bank pass books, bank statement for last 6 months, and key account details.
  • Company profile

List of Documents for business owners

  • Last 3 years income tax return files
  • Last 3 years balance sheet, P&L account copies duly signed and verified by chartered accountant
  • Brief on business profile
  • Bank statement for past 1 year
  • Other business related statements required by loan sanctioning committee

What is the Eligibility Criteria?

After gathering the required documents, you will still require to meet the following eligibility criteria to get the loan sanctioned.

  • Valid KYC documents of applicants and co-applicants
  • Proof for continuity of income
  • Clean loan repayment and credit history
  • Technical and legal clearance for the property to be held as collateral
  • References and witnesses

After fulfilling the eligibility criteria, your loan application will become valid for processing.

Home Loan Tax Exemption Changes to Rs. 2 Lakh


It seems that the Union Budget report of 2014-15 has sprung a pleasant surprise on home loan borrowers, by hiking the deduction on home loan interest under Section 24 from Rs 1, 50, 000 to Rs 2, 00,000. This will enable purchasers to save an additional amount of almost Rs 15,450 from their tax liability. Enhancement of Section 80C’s limit is also positive for those, paying large EMIs but are still not getting full tax benefits on the repayment.

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The hike is also expected to lower the interest rates for home loans. So in case someone is planning to take a housing loan of about Rs 25,00,000 at a 10% rate of interest, for a period of 20 years, the EMI will be around Rs 24,125, which adds up to almost Rs 2, 89,500 annually. Also Post-Budget, the buyers can avail a deduction of about Rs 2,00,000 from their taxable income. This will enable the buyers to save around Rs 61,800 from tax liability but only if their income comes in the tax bracket of 30.9%.

Experts believe that buyers in big metros like Delhi, Mumbai and Bangalore, where most flats cost more than Rs. 1 Crore, would not be affected by this reform. However, this will be an incremental difference in case of homes within the price range of Rs. 25 lakh to Rs. 50 lakh, which may or may not be located in the metropolitan cities.

It is said that the benefit of this hike will be more in case of the salaried class, compared to the rest to some extent. Flat buyers in case smaller cities where prices are expected to be comparatively lower are expected to fee the real difference of the hike.

Tax-saving

Many property experts also believe that the current relaxation existent in the FDI norms for real estate are also expected to open up a new stream of cheaper money for developers, with the tax hike. They also say that the tax pass through status for Real Estate Investment Trusts (REITs) to avoid double taxation will bring in more investments into the property development sector.

Tax Benefits And Fluctuating Home Loan Interest Rates


In today’s time and age, buying a home has become far easier than it used to be. Various banks and other financial institutions offer a number of home loans to customers so that they can purchase the house of their dreams. This has not only led to an increase in the demand for properties in the country, but also a sharp rise in the standard of living. More and more people are able to full fill their dreams of purchasing their homes, even if they might not have the sufficient funds at the exact moment.

home loan interest rate

Prices of properties are not only determined by the location, type of flat opted for, etc. but also by the constantly inflating rise of the cost of land.  This price is also determined by the current exchange rate of the Rupee. These prices are not only determined by the cost of the property but also by the cost of the land. With both prices constantly on the rise, many people make use of home loans so as to finance the purchase of their homes.

Anyone can apply for a home loan and it is relatively easy to apply for these as a number of banks offer their services online. All a person is required to do is fill an online application form and submit certain key information about themselves.   They can also, if they prefer visit the branch of the bank and submit the relevant documents and fill a form out for the same.

Home loans differ according to their tenures and many customers opt for home loans from different providers owing to the different home loan interest rates that they offer. This is one of the most important factors while availing for a home loan. Home loan seekers are able to compare different interest rates from different providers all on a single platform online. This helps them to make a wise and informed decision.

Housing loans are available with various tax benefits under section 80C for the repayment of the principals. Those who have applied for home loans can claim up to INR 1 lakh along with various other permissible instruments such as NSC, ELSS, PPF, etc.