Home Loan FAQ

Can I apply for the Home Loan without finalizing the property?

Yes you can apply for Home Loan without finalizing property. In such a case loan would be sanctioned based on your repayment capacity.

Who all can be Co-Applicant for a property and is it must to have one?

Most of the bank(s) these days prefer to have a Co-Applicant. They can be your spouse, son or parent. Also a co-owner have to be a co-applicant.

What coulb be the maximum tenure of a Home Loan?

These days maximum banks offer a Home Loan up to 20 years with a few exceptions who offer up to 30 years as well, with the condition that borrower does not cross the age limit of 65 years or the retirement age, whichever is earlier.

How is Interest charged / calculated for a Home Loan?

Most of the banks charge / calculate interest on monthly rest basis.

What is the security or collatral required for a Home Loan?

Primerily banks keeps for the security is the first and exclusive charge of the property. For this they keep title deed and all other relevant documents. It’s important that the title be clear, marketable and free from all encumbrances and technically approved.

State various types of Home Loans that bank provide.

Following are the type of Home Loans provided by bank:

  • Home Purchase Loans
  • Home Construction Loans
  • Home Improvement Loans
  • Home Extension Loans
  • Land Purchase Loans
  • Bridge Loans
  • Balance Transfer Loans
  • Loan Against Property
  • Lease Rental Discounting
Usual processing time for a home loan?
Processing time varies from bank to bank and is directly dependent upon the profile of a person needing home loan. As a thumb rule after receiving all the relevant documents, it usually takes a week or so for a salaried person and for a self employed or a professional it takes a little longer due to the fact that credit manager makes a personal visit to the premises of the person.
What is the meaning of Monthly Reducing Balance?

Home Loan EMI has two major components ie. Interest and Principal. In the monthly reducing balance, the principal is reduced with every EMI and the interest is calculated on the outstanding balance, resulting in significant savings for the customer over the tenure of the home loan.

Can all the applicants have a seperate Income Tax Certificate in their name?

According to Income Tax rules, just one certificate is issued with the name of all the names of all the applicants.

Benefits that home loan borrowers can awail?

As perĀ  Income Tax Act if you have applied for a home loan, you can avail tax benefit on both principal and interest component. These benefits are available in the form of deductions available to the one who have taken a loan either to build or buy a house. Tax benefit is under following heads:

  1. Under section 80(c), repayment of principal amount up to Rs 1 Lacs, you can save upto Rs 30,000/- p.a. on principal amount i.e. up to 1 lacs, tax is totally exempted.
  2. Under section 24 interest is deductible up to Rs 1.5 Lacs. Which means additional savings up to Rs. 45,000/- p.a.
My income is unsufficient for home loan that I need, can I club income of my family members?

Of course a BIG YES. You can add income of your son, parents and spouse to your income (subject to age requirements) to meetĀ  your requirement.

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