Overview on 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
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 mortgage and 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, add an annexe, or 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.
Home Conversion Loan
Should you want to move from your present dwelling place to a new dwelling due to professional or personal reasons, you may opt for a Home Conversion Loan. A home conversion loan facilitates the smooth conversion of your current loan from your old home to your new home.
Pradhan Mantri Awas Yojna
The plan of the Government of India to allow every Indian Citizen an opportunity to own a home in India via the drafting of the Credit Linked Subsidy Scheme or CLSS is known as Pradhan Mantri Awas Yojna. Under the PMAY, a citizen can avail Home Loan from almost all banks allied with this scheme.
NRI Home Loan
If you are a patriot, a Non-Resident Indian, and wish to own residential property in India, NRI Home Loan is your choice. Though the formalities for application may be a little different, you can still get a loan up to a certain percentage of your property value.
Home Loan Eligibility Criteria
A Home Loan requires a borrower to pledge the property to be purchased as collateral. You may qualify for this type of credit by fulfilling your lender’s set eligibility criteria.
The basic home loan eligibility criteria or mortgage loan eligibility criteria are as follows:
Age
Typically, 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. 10,000 per month
- Self-Employed Person – Minimum Rs. 2,00,000 per year
Employment
- Salaried Person – Minimum 2 to 3 years of Experience in MNC, or a Private or Public Limited Company
- Self-Employed Person – Minimum 3 years of Experience in the current field
Credit Score
Typically, a credit score of 750 may be considered a good score for approval.
Home Loan Interest Rate
The term Interest Rate on a Home Loan or Mortgage Loan may be defined as an amount a lender charges you as a borrower in terms of a percentage of the Home Loan Principal Amount or Home Loan Value.
Also termed as Rate of Interest or ROI, this charge applies to the Principal Amount on an annual basis over the specified home loan tenure.
| Bank Name | Interest Rate | Lowest EMI(per lack) |
|---|---|---|
| Kotak Bank | 6.55% | Rs.11800 |
| HDFC Home Loan | 6.7% | Rs.3540 |
| Axis Bank | 6.75% | Rs.2021 |
| Standard Chartered Bank | 6.99% | 0.15% |
| ICICI Bank Home Loan | 6.75% | 0.30% |
| PNB Housing Finance | 7.15% | 0.50% |
| Tata Housing Finance | 6.7% | 0.30% |
| IDFC First Bank | 6.75% | Rs.11800 |
| Yes Bank | 6.7% | Rs.11800 |
| Bajaj Home Finance | 6.75% | Rs.11800 |
| Federal Bank | 6.6% | Rs.11800 |
| DBS Bank | 6.6% | Rs.11800 |
| Fullerton Grahshakti | 8.75% | 1% |
| DCB Bank | 8.25% | 0.50% |
| Priamal Housing Finance | 9.5% | 0.75% |
| Adhar Housing Finance | 10.5% | 1.50% |
| Vastu Housing Finance | 11% | 1.50% |
| Aditya Birla Housing | 9% | 1.00% |
| DMI Housing | 11% | 1.00% |
| Hero Housing | 9.5% | 0 |
| L & T Housing | 6.9% | 0.25% |
| Aavas Financiers | 8% | 1% |
| Shubham Housing | 11.75% | 2.50% |
| HSBC Bank | 6.45% | Nil |
| ICICI HFC | 8.75% | 0.50% |
| RBL Bank | 9.55% | 0.50% |
| Indiabulls | 8.65% | 1% |
| Bank of Baroda Home Loan | 6.5% | 0.30% |
| SBI Home Loan | 6.65% | 0.35% |
| Sundaram Home Finance | 6.95% | Nil |
| IDBI Bank | 6.9% | 1% |
| Karur Vysya Bank | 7.45% | 1% |
| IIFL | 8.7% | 1% |
| South Indian Bank | 7.9% | 0.50% |
Home Loan Processing Fees and Charges
Banks, and NBFCs while processing your home loan application at Ruloans may charge fees and charges apart from interest rates applicable. These charges may differ from lender to lender and are of the following types.
Processing Fees
Lenders charge a one-time non-refundable charge for processing your home loan application as Processing Fees. These fees can either be a specified percentage of the principal amount or a fixed sum.
Delayed EMI Payments
Almost all lenders charge a Delayed or Late EMI Payment in case you miss or default on your home loan EMI.
Conversion Charges
Lending Institutions generally offer two types of interest rates, which are fixed or floating. You may be charged a conversion charge when you choose to switch from one interest rate type to another. These are typically a percentage of your principal loan amount.
Prepayment Charges
When you choose to repay your home loan before time using funds borrowed from another lender, your existing lender may charge you a prepayment charge as a penalty for prepayment. However, if you choose to pay off your home loan with your own funds, these charges will not apply.
Legal Charges
Banks and NBFC hire third-party legal services to complete the task of verification of property and related documents for a Legal Charge. These charges depending on the lending institutions are typically based on the actually incurred expense.
Administrative Fees
Some institutions may charge you an Administrative Fees for your Home Loan to pay for the back-end administrative processes related to processing your home loan application.
Other Charges
Depending on the lender you select, other charges such as PDC or Post Dated Cheque Charges, Loan Cancellation Charges, Cheque Dishonour Charges or Cheque Bounce Charges, Rejection of Electronic Clearance Charges and more may be charged by your lender.
How to Calculate Interest on Home Loan
You may calculate your Home Loan Interest Rate or Rate of Interest manually by using the following formula –
Where:
P = Principal Amount, or Loan Amount
r = Rate of Interest or ROI
n = Loan Tenure or Period in Months
Documents Required for Home Loan
in collaboration with India’s Leading Banks and NBFCs offers you a range of Home Loans at attractive interest rates, flexible tenures, and easily affordable EMIs so that you can at last acquire a home that you envision without excessive debt burden.
Documents required for a Home Loan application are more or less the same, but may differ based on your Home Loan plan, the purpose of your loan, your individual credit profile, etc.
List of Documents Required for Home Loan
Identity Proof
- Aadhaar Card
- PAN
- Voter ID
- Passport
- Driving License
Age Proof
- Any of the above Identity Proof with Permanent Address
- Birth Certificate
- Bank Passbook
Residence or Address Proof
- 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
- Sale Deed
- Stamped Agreement of Sale
- Allotment Letter
- No Objection Certificate or NOC
- Housing Society
- Builder
- Possession Certificate
- Land Tax Receipt
- Construction Cost Estimate
- Bank Account Statement of Payment Made to Seller or Builder
- Payment Receipt of Payment Made to Seller or Builder
- Incase of resale property share certificate is required
- Occupancy Certificate
Additional Documents Required for Salaried and Self-Employed Individuals
- Form 16
- Employee Identity Card
- Employer’s Certified Letter
- Increment or Promotion letter
- 3 Months Salary Slip
- 6 Month Bank Account Statement
- Duration of Employment Evidence
- Appointment Letter
- Confirmation Letter
- Promotion Letter
- Increment Letter
- 3 Years IT Returns
Home Loan Balance Transfer & Topup
A Home Loan Balance Transfer is a loan transfer process where you transfer your outstanding home loan balance from your existing lending institution to a new lender. It facilitates savings in terms of interest payments when you opt for a lender who offers to charge you a lower rate of interest than what your current lender charges you. This migration known as Home Loan Balance Transfer may also be termed as Refinance, or Balance Transfer.
Your current lender will charge you a foreclosure or prepayment charge predetermined in your Home Loan agreement. In the course of the transfer, your new lender may charge processing fees and stamp duty on your loan agreement, if applicable.
Home Loan Balance Transfer Features
Home Loan Balance Transfer involves the transfer of your outstanding Home Loan Balance from your existing lender to a new lender.
You will be charged a foreclosure or prepayment charge by your existing lender according to your loan agreement.
Depending on the lender you have chosen for your home loan transfer, you may have to pay processing fees, and stamp duty on your loan agreement.
Most cases are treated as a new home loan agreement following the completion of a Home Loan Balance Transfer.
Depending on the terms and conditions in your existing loan agreement, you will be allowed a Home Loan Balance Transfer after the time-period in your original loan agreement lapses.
After the completion of your Home Loan Balance Transfer, you will owe the transferred principal loan sum with overheads to your new lender.
Home Loan Balance Transfer Eligibility
The process of getting the best Home Loan Balance Transfer can be made possible when you know your Home Loan Transfer Eligibility criteria, which is nearly the same for most lenders. Some basic criteria are discussed briefly below.
Nationality
You must be a Resident Indian or Non-Resident India
Age
Salaried Person – 21 to 60 Years of Age
Employment
Self-Employed Person – Up to 65 Years of Age
Salaried Person – 2 years with Current EmployerSelf-Employed Person – 3 years Business Vintage
Income
Lender Specific Minimum Income
Credit Score
You require a good Credit Score, which should not dip before transfer
The list of documents for home loan transfer is enumerated below
- Identity Proof
- Nationality and Address Proof
- Existing Home Loan Documents
- 3 months Salary Slips
- 6 months Bank Statements
- 3 years Balance Sheet for Self Employed
- 3 years Profit and Loss Account Statements for Self Employed
- Form 16
- 3 years IT Returns
- Property Documents with OC and CC
- Passport Size Photographs
Home Loan Balance Transfer Process
Your Home Refinance or Home Loan Balance Transfer Process takes place in the following manner in which you will have to participate as follows.
Request and obtain from your current lender, all documents that you will require for your Home Loan Balance Transfer.
Request and obtain a Letter of Consent along with details regarding your outstanding Home Loan Balance from your current lender.
Your new lender will then make arrangements to pay off the outstanding balance of your existing home loan to your old lender.
Consequently, your old Home Loan account will be closed, and all related payments will have to be paid to the new lender.
Your old lender will then hand over all your property related documents to transfer your home loan to the new lender to complete your Home Loan Balance Transfer.