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Home Loans

Every person dreams of owning a home and creating an asset for himself. It may not be always possible to finance the purchase from one’s savings and it becomes imperative to take a home loan. We at Sirohi Estates can put you in touch with reputed banks and financial institutions that can provide home loans suited to your financial needs. Here is what you need to know about eligibility criteria for home loans, the documentation required and the entire sanction process.

Different aspects of home loans:

One must be sure about the rationale behind of the home loan, whether it is for buying a new home or renovating an existing home. One must not take on a big loan that becomes a liability over time. Decide on the loan amount depending on your income and other obligations. Remember that the house will be a security against the loan taken and the property documents rest with the lender until you repay the loan.

The main thing to keep in mind is the rate of interest and the tenure of the loan. One would want the longest tenure at the lowest rate of interest. Interest rates are also of two types, namely fixed and floating rate. Fixed interest loans are suitable if there is no downward change expected in interest rates while floating rates are suitable if no upward trend is expected in interest rates. With the prevailing competition in the market, you must always negotiate with the bank for a good rate of interest. It is also possible to switch from floating to fixed and vice versa depending on the prevailing interest rates.

Eligibility for taking a home loan

A salaried individual must be above 21 years of age and not above 65 years with at least one year of service and an annual salary of at least Rs. 1 lakh. He can get a loan starting from two lakh rupees to twenty lakh rupees with a minimum tenure of five years and a maximum tenure of twenty years. The loan amount disbursed may be eighty percent of the agreement value.

For a self-employed individual, the eligible age is 21 years and the upper age limit is 70 years. The person must be earning at least Rs. 150,000 per annum for the past three years. The loan amount and the tenure are the same as for a salaried individual.

Applying for a home loan

  • Firstly, fill in the application form giving your personal, professional details and details of the value of the property and the financing for the same.
  • You need to give identity proof in the form of a passport, driving license or voter ID card copy.
  • Income proof: Most banks ask for proof of income including copies of salary slips of past three months, Form 16 income tax returns for past three years and bank statements for past six months. This reflects your paying capacity for EMIs. A self-employed individual needs to give last three months bank statements from operational account, last two years income tax return with computation of income and latest sales or service tax returns. Any returned cheque or delayed payments can affect the amount of loan sanctioned as it affects your credit rating. However, do not give wrong information as your application may be rejected.
  • Address proof in the form of passport, latest electricity or phone bill, or PAN card copy.
  • The bank may keep some additional documents as security against the loan.
  • In some cases, the bank may ask for a personal visit to verify your credentials before processing your application.
  • The bank then out sources agencies to verify details provided by you. This may include verification of address and phone details.
  • Next, the bank verifies your credit details and decides on the loan amount.
  • It will issue a loan sanction letter listing the loan amount, rate of interest tenure of loan and other conditions if any.
  • You must sign the acceptance letter and then provide the legal documents related to the property including title.
  • Legal experts examine the documents for authenticity and then clearance is given to sanction the loan.
  • The bank’s engineer or employee usually visits the property for a technical evaluation.
  • Once the agreement is drafted, you sign it and submit post-dated EMI cheques for the first three years.
  • The bank then gives the loan partly for under construction property or makes a full payment for a total cost of the property in the name of the builder or society.
Keep in mind that banks also charge processing fees, legal fees and insurance fees from the borrower. However, you can negotiate to get them waived or reduced to a nominal amount.