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Home Loan

Overview

Your Home is a place where you relax after coming back from your day's tiring work, it is that place where you can give time to your family & spend beautiful moments with them. To acquire a home which can be christened your "Own House" is a life-time decision & has to be taken with a lot of planning & requires huge finances. Your Dream Home is not very far away with a Home Loans which will fulfill your Dream into a reality. We at Dream Home Reality are working constantly to get you the BEST Loans Deal & have brought a small guide which would answer some important questions related to Home Loans & help you decide your loans deal.

Most Borrowed Home Loans
Axis Bank Home Loan:

Axis Bank offers its valuable customers a variety of loans in India that will suit their needs. At Axis bank you are sure to find a loan product that is just meant for you. We offer loans in various denominations so that you can pursue your dreams of buying a car, a home or to send your child abroad for higher education. You can also avail our loan facilities through the internet by providing few basic details and our representative will promptly respond to your query for getting a loan. Most people prefer Axis Bank home Loan for their requirement. No matter what be your need, our liberal criteria for loan application processing will see to it that your application is processed in minimum time and in a hassle-free manner.

ICICI Bank Home Loan:

ICICI Bank offers a wide range of Housing Loan products, designed to meet the requirements of customer. ICICI home loan offers Doorstep service, Speedy loan sanction, Simplified documentation and Loan amounts ranging from Rs. 2 lakh to Rs. 3 crore Rupees only.

HDFC Bank Home Loan:

HDFC stands for Housing Development Finance Corporation. It has counseling and advisory services for acquiring property. It provide loan from any office for purchase of home anywhere in India. It gives Loan approval even before a property is selected. Because of flexible feature and transparent policy.

SBI Home Loan:

SBI Bank offers a wide range of Housing Loan products, designed to meet the requiremencustomer.

Documents Required in Home Loan

Generally the documents required to processing your loan application are almost similar across all the banks; however they may differ with various banks depending upon specific requirement etc.

Following documents are required by financial institutions to process the loan application:
Documents Required in Home Loan
  • Application Form duly signed by Applicant & Co-Applicant
  • Photograph of Applicant & Co-Applicant
  • Age, Photo ID & Signature Verification proof of Applicant & Co-Applicant ( Pan Card & Passport/ Driving License )
  • Residence Address Proof ( Latest Utility Bill / Company Letter )
  • Processing Fee Cheque in Favor of Bank Name
  • Marriage certificate if applicable
  • RTR or SOA of all loans of individuals
For Salaried Person
  • Latest 3 Months Salary Slips
  • Last 2 Year Form 16 & CTC copy
  • Latest 6 Months Bank Statement of Salary Account
  • Employee I- Card Copy
For NRI Customers
  • Valid Passport and Visa Copy
  • Latest Overseas Residence Proof
  • Latest Residence Proof Of India
  • Latest 3 Months Salary Slips
  • Contract Copy of employment & Confirmation Letter
  • Last six months International Bank Statement Salary Account (reflection of Salary Credits )
  • Age, Photo ID & Signature Verification & Address proof of Power of Attorney Holder
  • Power of Attorney in Bank Format
  • Detail credit report with score If Applicable
In case Of BT
  • Outstanding loan quotation
  • Repayment Track Record
  • NOC for take over
  • Copies of Property Agreement
  • Sanction plan copy ( Blue Print )
For Self Employed
  • Latest 3 years ITR's, both personal and business along with computation of income.
  • Latest three years' P&L accounts and B/S (with schedules) duly certified by a CA-both personal & business (with audited report if available)
  • Advance tax challans if available
  • Photocopies of updated bank statements for the last one year - from current a/c or C.C. of the firm / company & savings a/c of the individual applicants and co-applicant.
  • Memorandum & Articles of association, Resolution, Audit report in case of Director of company
  • Proof of existence (any one) - Partnership deed copy or Memorandum & Article of association if applicable or Shop Act in case of Proprietor Business Profile - (Must be on the letterhead of the company and should have details like- Detailed nature of business activity, No of years in business, Product/services, distribution, suppliers, Clients, infrastructure, no of employees, market, branches if any.
Note: Please do self attestation on each document.
Types of Home Loan

There are different types of home loans available in the market to cater borrower's different needs.

Home Loan - Purchase From Builder/Resale:

This is the basic type of a loan which has the purpose of purchasing a new house. Home Improvement Loan:

This type of loan is for the renovation or repair of the home which is already bought

Home Extension Loan:

This type of loan serves the purpose when the borrower wants to extend or expand an existing home, like adding an extra room etc.

Balance Transfer - Home Loan:

It is that loan wherein the borrower has already taken a housing loan to finance his current home, but now wants to move to another home. The Conversion Housing Loan helps the borrower to transfer the existing loan to the new home which requires extra funds, so the new loan pays the previous loan & fulfills the money required for new home.

Bridge Loan:

This type of loan helps finance the new home of the borrower when he wants to sell the existing house, this is normally a short term loan to the borrower & helps during the interim period when he wants to sell the old house & want to buy a new one, It is given till the time a buyer is found for the old house.

Home Construction Loan:

This type of loan taken when the borrower wants to construct a new house.

Land Purchase Loan:

It is that loan which is taken to purchase a land for construction & investment purposes.

And Land Purchase + Construction Loan
Home Loan Process & Various Steps Involved

There are various steps involved in getting a Home Loan from selecting your property to filling up the loan application.

Home Loan Process & Various Steps Involved The first step

The first step involved in the process is to find your property which is followed by the verification of property documents, post that the documents are examined & simultaneously you can start searching for the lender who can offer the BEST Home Loan Deal after checking your eligibility criteria.

Know the Home Loan Eligibility:

Banks offer the loan amount only after checking your profile & based on various eligibility criteria's like age, income & salary banks lend you the money.

Select the Best Home Loan after evaluation:

Comparing home loan interest rates is the primary feature in the home loan selection, however other fees & charges like Application fees, processing fees, legal charges should not be neglected when comparing various loan offers. To check the interest rates & other charges incurred by various banks, Dream Home Reality has brought in a Home Loan Comparison Chartacross various Banks.

Applying for the Loan :

After you have selected your lender, you have to fill in the application form wherein the lender requires complete information about your financial assets & liabilities; other personal & professional details together with the property details & its costs.

Documentation & Verification Process:

You are required to submit the necessary documents to the bank which will be verified together with the details in the application.

Credit & default check:

Bank checks out the borrower's loan eligibility (through repayment capacity) & the amount of loan is confirmed. The borrower's repayment capacity is reached which is based on the income, salary, age, experience & nature of business etc. Bank also checks credit history through theCibil Score which plays a critical role in deciding & approving your loan application. Low Credit Score implies that the bank upfront rejects your application on the basis of earlier credit defaults; on the other hand high credit score gives a green signal to your application.

Bank sanctions Loan & Offer letter to the borrower:

After the credit appraisal of the borrower bank decides the final amount & sanctions the loan, the bank further sends an offer letter to the borrower which constitutes the details like rate of interest, loan tenure & repayment options etc.

Acceptance Copy to the Bank:

The borrower needs to send an acceptance copy to the bank after the borrower agrees with the terms & conditions in the offer letter.

Bank checks the legal documents:

The bank further asks the legal documents of property from the borrower to check its authenticity so as to keep them as a security for the loan amount given. The next step involved is the valuation of the property by the bank which determines the loan amount sanctioned by the bank.

Signing of agreement & the loan disbursal:

The borrower signs the loan agreement & the bank disburses the loan amount.

Home Loan Criteria by Various Banks

The borrower's eligibility of getting a housing loan depend upon his/her repayment capacity & the banks establish this repayment capacity by considering various factors such income, spouse's income, age, number of dependants qualifications , assets, liabilities, stability and continuity of occupation and savings history.

Customer Information Sheet
FAQ
Home Loan FAQ
Can I have a co-applicant for a home loan?

Yes, it is good to have a co-applicant. This can help you increase the loan amount you are eligible for as the income of the co-applicant is also taken into consideration. Providing additional security like bonds, fixed deposits and LIC policies will also help in enhancing eligibility

What is EMI? How is it calculated?

An equated monthly Installment (EMI) is the amount of money that is paid back to the lender on a monthly basis. It is essentially made up of two parts, the principal amount and the interest on the principal amount equally divided across each month in the loan tenure. The EMI is always paid up to the bank or lender on a fixed date each month until the total amount due is paid up during the tenure. The EMI facility helps the borrower plan his budget. The EMI is calculated taking into account the loan amount, the time frame for repaying the loan and the interest rate on the borrowed sum.

What is an amortization schedule?

An amortization schedule is a table giving the reduction of your loan amount by monthly installments. The amortization schedule gives the breakup of every EMI towards repayment interest and outstanding principal of your loan.

Can I avail a tax rebate on my home loan?

Yes, under Section 80C and Section 24 tax deductions are capped at 1 lakh for the principal repaid and 1.5 lakhs for the interest repaid.

What are the loan tenure options?

Upto 30 years tenure option are available based on retirement & current age and Profile

What is the repayment period for a NRI Home Loan?

The housing finance offered to NRIs normally do not exceed 20 years. The repayment for the loan is by way of EMIs. The EMIs begin only after the entire loan is disbursed. In case of a part disbursement, you will pay only the interest amount on the disbursed loan amount every month instead of the EMI. This is known as pre-EMI.

What are the Tax Benefits applicable to Non-Resident Indians?

No tax benefits are available for NRI customers unless you file returns and hence become eligible to avail the tax rebates available for home loans.

How will the security and privacy of my data be ensured?

Dream Home Reality will never share your data with any third party other than the financial institution that you decide to apply to. Our sound technology practices ensure a highly secure environment for all your data.

Can I Close my Home Laon? What is the charges for closing?

You can make part prepayment of your home loan. There is no charge on part prepayment of your home loan. For prepayment of Loana)When your home loan is on fixed rate of interest or Top-up loan - In case you prepay your loan, you will be charged prepayment charges of 2% (+ applicable Service Tax) on the outstanding amount in your loan account at the time. b)When your home loan is on floating rate of interest - In case you prepay your loan, their will be no prepayment charges applicable for your loan. c)When your loan is a non-residential premises/Loan Against Property/Lease Rental Discounting - In case you prepay your loan, you will be charged prepayment charges of 4% (+ applicable Service Tax) on the outstanding amount in your loan account at the time of prepayment and amounts prepaid in the last one year, if any.

Are the interest rates going to reduce again in the future?

It is not possible for us to predict future interest rate movements.

When will I get my provisional/final Interest certificate?

You may download the provisional certificate from our website under Home Loan section . Alternatively, you may apply for the same by submitting your application to your nearest RAC/Branch .The Final Interest certificate shall be mailed to your last known address once in a year by the Bank

Can I Convert my floating rate loan to fixed rate loan or vice versa?

Switching from the Floating rate scheme to the Fixed rate scheme and vice versa is permissible. If a fixed rate customer wants to reschedule the loan to a lower interest rate, the same is also permissible. Charges for changing from fixed to floating rates of interest : Min. Rs. 5000 or 1% of the outstanding amount whichever is higher.

How does the floating rate change?

The Home loan floating rate of interest is linked to Bank's Base Rate (BR) for loans sanctioned from 1st July, 2010 The BR is a benchmark rate fixed by the Competent Authority, after taking into consideration various components like cost of funds, interest rates prevailing in the market, cost of operations and provisioning requirements etc. among others.

What is Pre-EMI interest?

Pending final disbursement, you pay interest on the portion of the loan disbursed. This interest called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement up to the date of commencement of EMI

I am ok with tenure change but not EMI change. This impacts my cash flows.

Please note that wherever permissible norms apply, we have gone ahead with tenure change. For all other cases, EMI changes become necessary

I am not ok with tenure change would like my EMI changed. Are there any extra charges?

No, there are no extra charges on this. Please contact our Retail Asset Centre or customer care for more information on the process involved.

Will my tenure change or there is a change in the EMI if there is change in ROI?

Tenure change is the default option. From customer ease point of view, we understand that Tenure change remains the preferred method, but wherever required we might change EMI, Bank will intimate you on the necessary change in your EMI

What is the Tranche Based EMI repayment option?

To help customers save pre-EMI interest, we have introduced a special facility of Tranche Based EMI. For under-construction properties, customers can choose the instalments they wish to pay till the time the property is ready for possession. Anything paid over and above the interest by the customer goes towards principal repayment. The customer benefits by starting EMI and hence repays the loan faster.

Do I get a tax benefit on the loan?

Yes. Resident Indians are eligible for certain tax benefits on principal and interest components of a loan under the Income Tax Act, 1961. Interest repayment of Rs. 1,50,000 p.a. can get you a tax saving up to about Rs. 50,490 p.a. Moreover, you can get added tax benefits under Section 80 C on repayment of principal amount up to Rs. 1,00,000 p.a. that can further reduce your tax liability by about Rs. 33,660 p.a.

What security will I have to provide?

The security for the loan is a first mortgage of the property to be financed, normally by way of deposit of title deeds and/or such other collateral security as may be necessary. Interim security may be additionally required, if the property is under construction. Collateral or interim security could be assignment to Bank of life insurance policies, the surrender value of which is at least equal to the loan amount, guarantees from sound and solvent guarantors, pledge of shares and such other investments that are acceptable to Bank. Please do ensure that the title to the property is clear, marketable and free from encumbrance. To elaborate, there should not be any existing mortgage, loan or litigation, which is likely to affect the title to the property adversely

Does the Agreement for Sale have to be registered?

In many states in India, the Agreement for Sale between the builder and purchaser is required by law to be registered. You are advised, in your own interest to lodge the Agreement for registration within four months of the date of the Agreement at the office of the Sub-Registrar appointed by the State Government, under the Indian Registration Act, 1908

Are there any restrictions on transfer of immovable properties?

In terms of Chapter XX C of the Income Tax Act, 1961, the Central Government has the first option to purchase certain immovable properties exceeding certain value and as such transactions covered by this Chapter can be proceeded with only after complying with the requirements prescribed therein.

How is my loan reassessed if there is a change in status from Non-Resident Indian to Resident Indian?

The repayment capacity of the applicant(s) based on Resident status is reasse ssed and a revised repayment schedule worked out. The new rate of interest will be as per the currently applicable rate of Resident Indian loans (for that specific loan product). This revised rate of interest would be applicable on the outstanding balance being converted. A letter is given to the customer confirming the change of status.

While borrowing a Home Loan what are the questions that need to be clarified specially in the context of fixed and floating loans?

One should seek clarifications regarding the fees for processing the loan, prepayment charges, spread, i.e., the difference between the PLR and the rate actually charged on the loan, charges for conversion from one loan rate structure to the other and the reset period clause for the floating rate loans. If one wants to borrow home loan on a fixed rate then one must check out whether the fixed rate is appli cable for the entire period of the loan as in case of Bank or whether it is attached with a money market clause whereby the fixed rate is changed after a certain period of time depending on the money markets or internal policies of the lender. If possible one can also seek a copy of the agreement copy and read it carefully before taking a decision.

Can I get a higher loan through my existing loan account?

You could go in for a Home Conversion Loan with your lender whereby your existing loan could be transferred to the new property with an increase in loan amount subject to your current loan eligibility. This would save you from the hassle of prepaying the first loan, also saving you from prepayment and processing charges to the extent of the loan converted

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