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1.   What are the documents required at the time of application?

Each bank has its own list of documents that one must submit at the time of application. The common documents that the banks require at the pre-approval stage are:

• Passport size photograph.
• Proof of Age.
• Copy of Bank A/C statements for the last 6 months.
• Copy of latest credit card statement.
• Signature verification from your banker.

If you are self-employed you require:

• your business track record.
• Copy of audited financial statements for the last 2 years.

If you are salaried, you need:

• Salary and TDS certificate
• Latest pay slip.
• Letter from employer.

2.      Do I get a tax benefit on Home Loan?

Yes, you are eligible for tax benefits on the principal and interest components of the loan under the Income Tax Act, 1961. However as the benefits could vary each year, do check out the current benefits available.

3.     What is the EMI?

EMI or Equated Monthly Installments refers to the fixed sum of money that you will be paying to the bank every month. The EMI comprise of both interest and principal repayment. The amount of the EMI depends on the quantum of loan, interest rate applicable and the term of the loan.

4.      How is my Home Loan eligibility determined?

Your Home Loan eligibility is determined by your repayment capacity, taking into consideration, factors such as: Your:

• Income
• Qualifications
• Age
• Spouse’s income
• No. of dependents
• Stability and continuity of occupation
• Assets/Liabilities.
• Savings history.

The most important concern of banks in determining your loan eligibility is that whether or not you are contentedly able to pay off the amount you borrow.

5.      What are the types of home loans available?

These are a range of Home Loans available:

• Home Purchase Loans: for the purchase of a new home.
• Home Improvement Loans: for implementing repair works/renovations in a home that you have already purchased.
• Home Construction Loans : for the construction of a new home.
• Home Extension Loans: for expanding/extending an existing home.
• Land Purchase Loans: for purchase of land for home construction/investment purposes.
• Home Conversion Loans: for those who have financed the present home with a home loan and wishes to purchase/move to another home for which some extra finances are required. In Home Conversion Loan, the existing loan is transferred to the new home including the extra amount required, eliminating the need for pre-payment of the previous loan.
• Balance Transfer Loans: helps you to pay-off an existing home loan and avail the option of a loan with a lower rate of interest.
• Bridge Loans: for people who wish to sell the existing home and purchase another. This loan helps you finance the new home, until you find a buyer for your old home.
• Refinance Loans: helps you pay off the debt you have incurred from private sources like relatives/friends, for the purchase of your present home.
• Stamp Duty Loans: is sanctioned to pay the stamp duty amount that needs to be paid on the purchase of property.
• Loans to NRIs: to build/buy a home in India. EMI is payable till the loan is paid back in full. It consists of a portion of the interest as well as the principal.

Some of the incentives offered by banks are:

• Loan sanction without requiring you to identify property as a pre-requisite for eligibility.
• Free accident/property insurance.
• Waiving of pre-payment penalty/processing fee.

6.      How long does it take to get my application processed and the loan sanctioned?

It takes around two weeks for processing of one’s application if all the necessary documents are in order and takes another week for the bank to inspect the property papers and make the disbursement.

7.      What is the maximum amount I can borrow?

The maximum amount that you can borrow depends on factors such as:
• The purpose of the loan.
• Whether it is for purchase of property or improvement or renovation.
• Or purchase of land for development etc.
Besides, your residential status (whether resident Indian or Non-Resident Indian) will also be significant on the maximum quantum of loan that you can borrow. Typically Home Loans are provided for in the range of 75%-85% of the cost of the property, including cost of land.

8.      What is the Fixed Rate of Interest?

Fixed Rate of Interest means that the interest rates remain FIXED for the entire duration the loan. This basically means that you do not benefit, even if the rates of interest drop in the market.

9.      And Floating Rate of Interest?

This is the rate of interest that fluctuates according to the market lending rate.

10.      What are the repayment period options?

The maximum period over which one can pay the loan varies for every bank, and is also different for every scheme. Also your residential status makes a difference. If you are a resident Indian, you could avail of a loan for duration of 5-20 years. Few banks offer a 20-year repayment period, generally at a higher interest rate. As a Non-Resident Indian, you can only avail of a loan for a maximum period of 7 years.

11.      Can I repay my loan ahead of schedule?

Yes, you can pay your loan ahead of schedule, if you want to. However, it must be noted that banks charge a fee for early redemption of loan. This fee can vary between 1-2% of the loan amount being pre-paid.