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Home Loan

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What is Home Loan?

Any amount of money borrowed from a bank or an NBFC for the purchase, expansion, or construction of a home at a certain fixed or floating rate of interest, payable in EMI or Equated Monthly Instalment over an agreed period, is termed as a Home Loan. The property remains as security with the lender for the term or period of the loan.

You may avail a home loan for purposes such as:

  • Purchase of Residential Property
  • Acquisition of Land
  • Home Construction
  • Home Expansion
  • Home Renovation
  • Balance Transfer

Home Loan Types

Different Types of Home Loan for Your Varied Needs

A vast array of institutions offer you the best home loan rates at the most competitive rates and affordable EMIs.

Types of home finance are discussed in brief below

Home Loan : A Home loan happens to be the most common type of loan wherein the house is held as collateral until you repay the loan. Numerous housing finance companies, public and private banks make such offerings with a choice of repayment options.

Home Construction Loan : If you have a plot of land and lack financial support to construct a home on that piece of property, you may choose a house construction loan. Such borrowing is mainly made to construct or repair a major part of your home.

Home Extension Loan :Should you already own a home, and feel the need to extend the building, build another floor, etc., Home Extension Loan is your go-to option that finances such needs.

Home Improvement Loan : All of us wish to improve and upgrade our homes for a better life. From your old-age furniture, fixtures to faulty lightning systems, Home Improvement Loan funds all your plans.

Home Loan Balance Transfer : Burdened with high-interest rate debt on your current home loan? Home Loan Balance Transfer lets you transfer your debt to a low-interest rate charging plan to lower your burden and improve your paying capacity.

Composite Home Loan : A Composite Home Loan empowers you to purchase a plot and construct a house as well on the acquired land; both with a single loan and within a stipulated time mentioned by your Bank.

 

Benefits of a Home Loan

Home Loans are popular with people for several reasons, including the reasons that you can avail such loans for purchase of land and residential property, and for construction and other purposes.

Both Banks and NBFCs offer home loans that feature benefits such as mentioned below

  • Tax Benefits :When you avail a home loan, you avail tax benefits offered with your loan as well. You can claim income tax deduction on interest and principal repayments. You can claim up to Rs.1.5 lakh on principal repayments u/s 80C, up to Rs.2 lakh on interest repayments u/s 24B, up to Rs.2 lakh on interest repayment in special circumstances u/s 80EE and 80EEA, and up to Rs.1.5 lakh on stamp duty expenses u/s 80C.
  • Low Rate of Interest : As a rule, most financial institutions offer home loans at much lower interest rates than offered on other available types of loans. Some lenders even offer home loan top up facilities at lower interest rates on existing loans, which enable you to overcome cash crunches.
  • Due Diligence of Property :Your application for home loans runs through several process, one of which includes due diligence. The due diligence process verifies and validates documents related to you property, thereby reducing the risk of being fooled by fraudsters and cheater. Approval and disbursal takes place only after the due diligence of property.
  • Long Repayment Tenure :Home loans are generally high value loans, and lenders typically offer home loans with longer loan tenures. This helps, since a long period for repayment of loan extends the loan amount for that period leading to low EMIs, which can be planned.
  • No Prepayment Penalty : Many financial institutions also offer you home loan foreclosure or prepayment facilities without having you to pay prepayment charges or penalties. This gives you the opportunity to prepay you home loan when you have the required funds. This helps you reduce debt burden.
  • Balance Transfer Facility : A home loan balance transfer enables you to transfer your current outstanding home loan balance from your existing lender to a new lender to avail benefits such as interest rates, service charges, etc. This facility also allows you to reduce your debt burden.
  • Insurance Cover : Insurance cover keeps your loved ones protected when unfortunate incidents occur. Home loans are subject to property insurance, and costs related to insurance must be borne by you along with your home loan EMIs.
  • Complimentary Value- Added Services : A host of complimentary offers and benefits to keep you in good financial health are offered by various banks and NBFCs, which you can avail when you plan your home loan.

Eligibility Criteria

Home Loan Eligibility Criteria

Home loans are secured forms of credit advances that may be availed for purchase of residential property, purchase of land, home construction, repair, and renovation. To qualify for this form of credit, you need to fulfil eligibility criteria prescribed by your lender.

Following are the basic eligibility required by most lenders.

  • Age
  • You must be above 21 years of age at the time of the commencing of your loan, and up to 65 years or less at home loan maturity
    Salaried Person – 21 years to 58 years
    Self-Employed Person – 25 years to 65 years
  • Income
  • Salaried Person – Minimum Rs. 25,000 per month
  • Self-Employed Person – Minimum Rs. 3,00,000 per year
  • Employment
  • Salaried Person – Minimum 2 to 3 years’ Experience MNC, or a Private or Public limited Company
  • Self-Employed Person – Minimum 3 years’ Experience in current field
  • CIBIL Score

Typically, a credit score of 750 may be considered a good score for approval

Documents you need to keep handy to prove your eligibility for a Home Loan

Application Form

Application Form – Completely Filled-Out with Signatures

Photographs

3 Passport Sized Photographs

Identity Proof

    • Aadhaar Card
    • PAN
    • Voter ID
    • Passport
    • Driving License

Proof of Age

    • Any of the above Identity Proof with Permanent Address
    • Birth Certificate
    • SSC School Leaving Certificate

Residence or Address Proof

    • Any of the above Identity Proof with Permanent Address
    • Electricity Bill
    • Telephone Bill
    • Post-Paid Mobile Phone Bill
    • Water Tax Receipt
    • Property Tax Receipt
    • LIC Policy Receipt
    • Recognized Public Authority Verification Letter

 

Property Documents required for Home Loan

    • Sale Deed with  all parent link deeds
    • Registered Agreement for Sale
    • Approved Colony layout Plan by Competent authority.
    • Approved Building Plan by Competent authority.
    • Allotment Letter
    • No Objection Certificate or NOC from society.
    • Property Tax Receipt
    • Construction Cost Estimate
    • Bank Account Statement of Payment Made to Seller or Builder
    • Payment Receipt of Payment Made to Seller or Builder

Additional Loan Documents List for Salaried Individual

    • Form 16 (Part A and Part B) and filed income tax return of the past two year.
    • Employee Identity Card
    • Employer’s Certified Letter
    • Duration of Employment Evidence
      • Appointment Letter
      • Confirmation Letter
      • Promotion Letter
      • Increment Letter
    • 3 Months’ Salary Slip (latest)
    • 6 Months  Bank Account Statement (Salary Account)
    • 2 Years IT Returns

 

Additional Loan Documents List for Self Employed

    • Proof of Business
      • PAN
      • GST Registration Certificate
      • Trade License
      • Partnership Deed
      • Article of Association
      • Memorandum of Association
      • Import Export Code
      • SEBI Registration Certificate
      • ROC Registration Certificate

 

    • 3 years Income Tax Returns with computation sheet and balance Sheet
    • One year Saving/Current account Statement
    • Professional Practice License for Doctors, Consultants, etc
    • Registration Certificate of Establishment for Shops, Factories, and Other Establishments
    • Business Address Proof (Electricity Bill Copy)

Funding kart is one of the leading credit lending establishment founded by professionals and financial experts who with an experience of 15 years have created a rich profile of satisfying the needs of more than 1 lakhs+ clients.

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