10 facts to know before you apply for home loan in India

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Everybody likes living in a happy home. A happy home is bliss. Living in your own house, decorating it in the way want, making wonderful memories in your home – all these moments make your life worth living for. Thus, having your own home is an ultimate means of happiness.

Everybody dreams about having their own house one day or the other. Living in a rented house or apartment is next to a liability since you can’t call it your own home. Thus, to fulfil this dream of the people at large many banks and financial institutions aid their clients with home loan so that they could build up their own house and live there happily ever after.

What is home loan?

In a very simple language, a home loan is nothing but a loan advanced to an individual in order to aid him in buying or building up his own house or flat. Thus, a home loan can be considered as a secured loan that is offered against any security of either a house or a property, which is funded by the loan of the bank. This property can either be a personal property or a commercial property. The borrower takes the home loan from the bank against a security or property which is intended to be bought by the borrower, but giving the bank a conditional ownership over the concerned property. This condition arises in all the cases where the borrower fails to pay back the amount of loan. In this situation, the bank or the banker is authorized to recover the lent money by carrying out the sale of the concerned property.

Following are the 10 facts to know before you apply for home loan in India

1. It is important to know about the criteria of obtaining home loan in India

In order to apply for a credit card or a bank account, there are no strict rules and regulation laid down. But if you are looking forward to applying for a home loan, there are certain conditions that you must fulfil. You need to have an enough amount of salary along with a guaranteed job. You must get a form 16 from your employer in your office. Once you fulfil these conditions, you may easily apply for home loan without any hassle.

2. A good Cibil score is a must

Yes, an applicant’s credit history is very wisely checked before granting him a home loan. Thus, your cibil score should be fair enough so that it could help you obtain the home loan. A bad cibil score would clearly reject your application for your home loan. Thus, you must maintain a good cibil score.

3. You must be capable enough for the repayment of the loan

You need to prove to the bank, your repayment capacity before seeking a home loan from the bank. For this purpose, you are required to share all your important data of investment with the bank. If you are a salaried person, you need to share all your details of employment with the bank. On the other hand, if you are self-employed then you are required to fetch some guarantee to the bank to convince it to provide you a home loan.

4. Only a few statutory expenses are considered

Generally, statutory expenses of a person and his income like stamp duty, service tax, value added tax, legal charges, etc are not taken into consideration while providing a home loan to an individual. But banks consider the cost of property along with the car parking while funding for the loan.

5. Time taken in the approval as well as disbursal of the loan

Once all the relevant documents are submitted, banks approve and sanction for the loans to the salaried individuals in 5-7 working days and in 10-15 working days to the self-employed individuals. If there are no such major hiccups with the income verification of an individual, the bank grants a conditional sanction of the loan to the individual within 5-15 working days. The loan amount is disbursed within 2 working days once the bank hands the sanction letter to the borrower.

6. You must have a check on other loans too

It is pretty difficult to take two loans at the same time since you cannot balance the payment of both of your loans. Banks generally take a look at the other loans of the individual. If you have taken two loans at the same time and your earning capacity is not sufficient enough to make the payment of both of them on time, the bank would deny giving you the loan.

7. Important documents to be presented

Whenever you plan for obtaining a home loan from the bank, you must fulfil their condition of presenting all the important documents to them. Banks generally lay down the list of all the necessary papers required in this procedure and you must confirm this rule to get your loan approved.

8. Various charges related to home loan

There are different types of charges related to your home loan, not all these charges apply to every home loan:

1. Processing fee; 2. Application fee; 3. Administrative fee; 4. Legal fee; 5. Notary fee; 6. Documentation fee; 7. Pre-payment charges; 8. Late payment charges; 9. Loan switch charges; 10. Franking fee on loan and sale agreement

9. Type and the age of the property

The kind of a property that you are planning to buy plays a very important role in the loan-system. If your property is a part of a renowned builder and is fresh or approved by other financial institution, you can get your loan without any hassle. On the other hand, you might face a lot of hiccups if the property you are planning to take is a re-sale or an old property.

10. Down payment is important

All the banks and financial institutions demand some down payment before the approval of the home loan. You must make a down payment of at least 20% of the total amount of the loan that you are planning to obtain.

If you have any doubts regarding Home loan charges, kindly leave as comment. We would try our level best to address those.

Photo courtesy: Jack Moreh “www.freerangestock.com”

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