Home Loan FAQs
General
There are several Housing Finance Institutes that provides Home Loans
- SBI
- HDFC
- ICICI Bank
- LIC Housing Finance
- HSBC
- CITI Bank
- ABN AMRO
You can get a Home Loan of up to 85% of the total consideration value or your eligibility whichever is lower.
Yes. You can avail for a pre-approval from any financial institution. However all pre-approvals has a validity period, which may be checked out with the concerned financial institution.
- Fixed rate
- Floating rate
- 2 in 1 interest rate (has both fixed and floating interest rate)
The Fixed Interest rate is the interest rate that remains unchanged for the entire duration of the loan.
The Floating rate interest is the interest rate that fluctuates according to the market lending rate.
Yes, you can convert a variable rate product into a fixed rate product with no extra charges. However, to convert a fixed rate product to a variable rate product, most banks will charge a small fee. The swapping can be done any number of times and at any point of time.
EMI is Equated Monthly Installments that comprises of principle and interest. This is an easy loan repayment mode. It commences from the very next month when the full disbursement is taken.
On the account of pending in final disbursement, you may pay interest for the portion of the loan disbursed. This is called pre-EMI interest.
Yes. Resident Indians are eligible for certain tax benefits on principle and interest components of a loan under the Income Tax Act 1961. guide.
Yes you can have your wife, son/daughter, father/mother as a Co-Borrower. However you are again requested to check with the Financial Institution regarding their permissible ownership grid.
The spouse of the applicant can be included as a co-applicant for the home loan and his/her income shall be included to enhance the loan amount. Further, in case there are any other co-owners, they also need to be co-applicants.
Most HFIs allow only immediate relatives to co-own a property. This means that a parent-son combination and a husband-wife combination is only allowed. A minor, however, is not allowed to join in as a co-owner as he is not eligible to enter into a contract as per law and therefore the HFI cannot enforce the contract on a minor.
- Housing finance companies charge fees at the time of application (generally called processing fee) and at the time of loan sanction (termed as administrative fees).
- The processing fee could range between 0.8% to of the loan amount applied for, and is generally levied to cover the costs incidental to the application.
- Once the loan is sanctioned, an administrative fee of 1% of the loan amount sanctioned will have to be paid.
- It should be noted that both the processing fees and administration fees are payable upfront.
You can select the payment period you are comfortable with up to 15 years or Retirement age whichever is earlier.
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The Property being financed is mortgaged with the Financial Institution as the primary security. However other Co-Lateral security can be asked based on the Applicants Financial Profile/ Others, which are solely determined by the financial Institutions.
Check the Useful Links provided in our website.
NRI Specific
A home loan is sanctioned to the NRIs for any of the following housing finance schemes:
- To purchase a house either ready-built, under construction or from a second owner.
- For self-construction of a property on a plot of land.
- To finance the purchase of a plot of land allotted by a society / development authority.
- For renovation or improvement of an existing property in India.
Your eligibility is calculated in the same way as it is calculated for resident Indians. More emphasis is laid on the following criteria in the appraisal of a NRI case:
- Qualifications - the NRI applicant has to be graduate
- Current job profile & Past experience
- Probability of continuing abroad for the loan tenure
- Probability of servicing the loan with an extended tenure in case you have to return to India.
The housing finance offered to NRIs normally do not exceed 5 years. However, some HFCs offer loans for a term of 7 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 pay simple interest at the rate applicable on the loan amount that is disbursed to you.
The loan towards the house has to be paid upfront for the entire tenure of the loan by way of direct remittances from abroad through normal banking channels or from such accounts as may be permitted by RBI from time to time. As of today, the payments are done through NRO, NRE, NRNR and FCNR accounts. These accounts change on the basis of RBI permissions to each HFC.
No tax benefits are available for NRI customers unless you file returns and thereby become eligible to avail of the tax benefits as mentioned under Home Loans.
The repayment capacity of the applicant(s) based on Resident status is reassessed and a revised repayment schedule worked out. The new rate of interest will be as per the currently applicable rate of Resident Indian loans. This revised rate of interest would be applicable on the outstanding balance being converted
