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Mar 23 2020

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How can i apply for a loan

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Home Loan in India

Housing is one of the most basic needs for humans along with food and clothing. Every youngster strives to build a house and makes it the first priority. This is preferred over other expenditure in household and basic needs. Housing is a major investment that allows a family to cut down on much other expenditure. The potential homeowner must first look out for the family’s monthly income and then look out for a loan which is generous so that he need not spend his entire life repaying the loan.

It is much known thing that if you own can land, then it is easy to build a space for yourself which is comfortable and unique. Several home loans are now available from various banks in order to fulfill your dreams. Plot Loans or Land Loans are also avaialable in a varied range like loans for plot, construction, renovation etc. it provides robust service which includes fast approval of loans. Lenders make sure that they provide high standards of principles, integrity and simplicity.

Revised rates as of 04 Apr,2019 in different banks are listed above. This information will help you in comparing the rates between different banks before applying for a home loan. Grab the opportunity to enjoy the benefit for the whole year 2019. Slash in home loan rates will definitely give opportunity for those who were waiting for the right time to take a home loan.

Types of Home Loans Available in India

Owning a plot or home is the dream of every man. It also provides financial stability as well as emotional security. In India, there has been great demand for loans from the very start. Several companies that work under many banking sectors are helpful in providing faster approval of loans. When it comes to loans there are many categories that includes:

Home Construction Loan:

Home loans are given to those people who are likely to build a new house in the way they desire instead of buying a property that has been already constructed. The process in which home construction loans are obtained is slightly different from that of the common loans provided for housing. When applying for home construction loans the borrower must have an idea of the cost that will incur and apply for the loan accordingly. House construction loans in most cases are easy to obtain once the borrower provides the necessary documents to support his claim.

House Purchase Loan:

One of the most popular and commonly availed loans would be home purchase loans. These loans are used when a person buys a property from another owner. It is also necessary to take adequate care in buying properties from another owner. The loans are given on both fixed and floating interests or even as hybrid loans. These kinds of hybrid loans are the ones which include floating interests and fixed interests combined in an ideal way. Almost all the banks give out home purchase loans. This loan includes a little elaborate process when compared to home construction loans.

House Improvement Loan:

House improvement loans are those that are provided when a property has to undergo renovations and other repair works. The kind of expenses that are covered under this includes painting works, repair works both internally and externally, electrical work, plumbing works, waterproofing the house and also when constructing underground tanks or overhead tanks.

NRI Home Loan:

For the application of NRI loans the applicant must be of a minimum age of 25 years and the age limit would 60 years. The applicant must be working abroad at least for a period of 1-3 years. Only a person holding a degree of diploma, graduate, post graduate or any kind of professional degree is eligible. The loan is provided for a maximum of 20 years of tenure and no loans will be provided for office premises.

House Extension/Expansion Loan:

Expansion or extension loans for homes are given out when people tend to expand or extend their present house. This includes addition of an extra bedroom, living room, a bigger bathroom or a new floor or a space for balcony. It is nothing but the modification in the structure of a house.

House Conversion Loan:

These are the loans that are provided to such people who wish to move into another home with the existing loan. If incase the person wants to move into a new place they have an option of moving by paying some extra amount or pre-payment on the prior loan. When this is done there is no need of paying loan for the previous home.

Bridged Loan:

These loans are otherwise called as short term goals which are taken up by owners of a residential property. Bridge loans help people to bridge the space between an old house and a newly purchased plot. These kinds of loans are extended for not less than 2 years which will later require finance documents of the new house.

Stamp Duty Loan:

When a property is bought, it is necessary to pay the stamp duty as well, apart from the price of the house. A specific amount of registration fee must also be paid, if the property’s value comes to ten lakhs.

Land Purchase Loan:

As the name itself mentions, land purchase loans are provided in order to buy lands or plots. These loans are provided for both investment purpose and also residential or housing purpose. The banks provide upto 85% loans when purchasing a plot or land. These loans are mostly taken in order to build a house.

Features and Benefits of a Home Loan

Home loan features are unique as compared to other loans. Few basic features are listed here:

  • Purpose : For resale or construction, purchase of fully constructed house from builders, extension or renovation of existing house.
  • Loan Amount : Home loans amount totally depends on the requirement; however there is limit is loan amount which is ranging from Rs.2 lac to Rs.200 lac, and this is calculated on applicant’s eligibility, repayment capacity and income.
  • Security : All home loans are secured wherein collateral is a must.
  • Loan Tenor : 20 years is the maximum loan tenure offered for home loan.
    Of course, there are a lot of benefits in availing a home loan:
  • Increases the probability of acquiring a house. Many, especially in India will not be able to buy a house will full cash readily available. This is where home loan creates an opportunity for low-class and middle-class community to have a home of their own.
  • This helps in capital appreciation; there is no doubt property prices have boomed in the past 5 years. Investment in home is always a safe and smart move. The value of land always increases and thus appreciation for your investment can be visibly seen within few years.
  • Applicants can avail tax benefit from home loans. Under Section 80CCE of the Income Tax Act, 1961 repayment of principal up to Rs 100,000 on home loan is subject for tax deduction. Once all prescribed conditions are met, this benefit can be availed.

Top 5 Banks for Home Loans in India

1. Axis Bank Home Loan

Axis Bank is the third largest private sector bank in India, It offers a number of loan products including home loans. An Axis bank home loan starts with a minimum loan amount of 3 Lakhs and a maximum loan amount depends on the borrower’s profile (eligibility). Axis bank home loan comes with Great customer support, fast problem-solving potential and fast loan disbursal. The Axis bank home loan comes with low interest which makes this bank one of the most preferred banks of India. The bank has no prepayment charge for floating interest rate borrowers and charges 2% of the outstanding principal amount prepaid on fixed interest rate home loans.

Details:

Interest Rate: 8% – 11% per annum

Processing Fee & Charges: Up to 1% (min of ₹ 10,000) + GST as applicable

Minimum Loan Tenure: 1 year

Maximum Tenure: 30 years

Minimum Loan Amount: ₹ 300,000

Maximum Loan Amount: ₹ 50,000,000

Prepayment / Foreclosure Charges: NIL

2. HDFC Bank Home Loan

HDFC is among one of the top provider of finance for housing in India. It offers easy documentation, doorstep assistance to its customers along with flexible repayment options. HDFC provides special benefits to the women applicants as they can get reduced interest rates starting at just 8.35% per annum. HDFC home loans have many benefits which include Home Loan Balance Transfer at zero processing fees. The bank facilitates fast processing and quick disbursal in a hassle-free way.

Details:

Interest Rate: 8.80% – 9.55%

Processing Fee & Charges: Up to 0.50% or ₹ 3,000 (whichever higher) + GST as applicable

Minimum Loan Tenure: 1 year

Maximum Tenure: 20 years

Minimum Loan Amount: ₹ 100,000

Maximum Loan Amount: ₹ 100,000,000

Prepayment / Foreclosure Charges: NIL

3. DHFL Home Loans

DHF is one of the largest Home Loan and housing finance company in India. It provides total transparency and flexibility in all DHFL Home Loan products to its customers. DHFL provide funds to purchase a built-up property or to purchase an under construction house/ flat. DHFL provides you flexible repayment options and the tenure period varies from 1year to 30 years.

Details:

Interest Rate: 10%: 19.07% per annum

Processing Fee & Charges: ₹ 2,500 + GST as applicable

Minimum Loan Amount: ₹ 100,000

Maximum Loan Amount: ₹ 3,000,000

Minimum Tenure Period: 1 year

Maximum Tenure Period: 30 years

Prepayment / Foreclosure Charges: NIL

4. Bajaj Finserv Home Loan

Bajaj Finserv offers home loan with many benefits which include, low-interest rate, no foreclosure charges are applicable for closing the loan amount, huge loan amounts and long tenures. Bajaj Finserv offers flexible schemes are offered for any existing loans. All these make Bajaj the most preferred choice over other banks and non-banking financial institutions.

Details:

Interest Rate: Salaried – 8.85%: 10.30% per annum

Self Employed – 9.25%: 11.15% per annum

Processing Fee & Charges: Salaried: Up to 0.80% + GST as applicable

Self Employed: Up to 1.20% + GST as applicable

Minimum Loan Amount: ₹ 2,000,000

Maximum Loan Amount: ₹ 35,000,000

Minimum Tenure: 10 years

Maximum Tenure: 20 years

Prepayment / Foreclosure Charges: NIL

5. ICICI Bank Home Loan

ICICI Bank provides housing finance in a quick, easy and transparent way which is light on your pocket. It facilitates fast processing along with quick disbursal. The rate for the home loans is affordable to common people with repayment tenure of up to 30 years.

Details:

Interest Rate: 8.35% – 9.10% per annum

Processing Fee & Charges: 0.5% + GST as applicable

Minimum Loan Amount: ₹ 500,000

Maximum Loan Amount: ₹ 30,000,000

Minimum Tenure Period: 1 year

Maximum Tenure Period: 30 years

Prepayment / Foreclosure Charges: NIL

What is Khata?

Khata is one of the essential legal revenue documents. It is required while authorizing any property for trade. Khata is basically an account of a person who is having a property in Bangalore which contains the tax details of the property. This Khata i.e. account is basically with Municipal Corporation.

Khata (account) contains all the details related to the property which includes the property’s owner name, property size, location of the property and all the other details which are required for filling the property tax. In Bangalore, Khata decides evaluation of the property’s owner. In Khata the nature of property is also mentioned like whether the property is commercial or residential in nature. As when this is mentioned in the Khata it becomes easy in Licensing and for using it for trade purpose and to acquire Loan on it.

Details which a Khata contain are:-

  • Name of the owner.
  • Location of the property.
  • Plot number.
  • The number of the floors.
  • Area and size of the Property.
  • The day of establishment and some more.

All the above mentioned details are very important for filling the Property tax. Overall khata is the document which licence the property and ensure that your property is eligible for paying the property tax. There are two types of Khata in Bangalore one is A Khata and the second is B Khata. These two are different in nature having their own significance.

What is A Khata?

A Khata is a register which contains the details of the property like, its name and their other tax details too. A Khata is basically the Khata which was being talked about above.

If a property is in khata A that means that for that property the property taxes are being paid. And they are having no outstanding tax amount on them.

There are two elements of A Khata those are:-

The Khata Certificate

The Khata Certificate is fundamentally a document that a property proprietor/owner requires to enlist his/her property or for the exchange of the ownership that basically happens when a property is sold or even if an owner wants to transfer his/her property to any other. With a specific end goal to make a demand for the khata authentication the proprietor of the property needs to compose a letter to the BBMP (Bruhat Bangalore Mahanagara Palike ) and furthermore join their most recent paid assessment receipt to it. These reports should be submitted with the board alongside a standard cost of Rs. 25 for every property they present the letter for. It is this permit or declaration issues by Khata that will empower the property proprietors to apply for water and power associations or so far as that is concerned getting their hands on a business permit.

The Khata Extract

The Khata extract is the document which contains all the documents regarding the property details. Those details are name of the owner, area of the property, tax details, plot number and mainly such details.

What is B Khata?

B Khata is totally different from the A Khata. B Khata contains the Name of properties which have outstanding taxes on them. And the taxes are yet to be given. Those properties which are in B Khata have yet not received their Khata certificate or any legal status.

How to apply for a Khata?

If you have not applied for Khata of your Property don’t delay this as from the above details now it would be clear to you that how important is khata.

For applying for a Khata all you need is to take an application form from the BBMP, fill that complete from and submit it to the revenue officer of the concerned area along with the tax details paper of the property.

Why is Khata important?

It is very important to have Khata of a property because you will need a Khata for taking electricity connection, water connection and even for any kind of loan.

Shall I use my savings to pre-pay my home loan?

Is there an option to get excess fund, then it’s time to check if the home loan is actually life a sword in your life. If the monthly EMI amount is huge, then without any doubt pre-close the loan amount. However, on the other hand if the EMI is a very minimal amount, then it’s fine to retain the home loan to avail tax benefits and make use of the surplus fund for other investments. Also if you interest amount is more than INR 200,000 per annum, there will be no tax exemption, thus it’s wise to pre-close the home loan amount as early as possible. Another available option will be to pre-pay the loan to the extent such that the annual interest will be less than INR 200,000, this was your EMI amount will drop, the interest will be tax free and you will have sufficient surplus of fund for any other type of small investment. On the whole it is advisable to pre-close the loan as early as possible as there is lot of changes in a span of 10-15 years. In case of any emergency situations, it is good to not have huge EMI commitments. Thus consider job security, health issues and any such serious aspects before making any decision.

What is the process to pre-close a home loan in India?

The whole process of pre-closure of home loan can be put into 7 simple steps. If the loan is pre-closed through these steps, the processing will be easy and fast.

  • Firstly make a list of all the documents that should be received back from the bank in order to complete the process.
  • Then obtain the no objection certificate, this is commonly known as NOC from the bank. This certificate is a clearance certificate from the bank stating you have cleared all the outstanding payments related to the home loan and there is no objection to transfer the ownership. Through this the bank confirms that it has no more interest on the property.
  • The third step is to remove lien on property from the registrar office, in case of no lien is created, then it’s not an issue at all.
  • Fourth step is to get the CIBIL score updated. The score will shoot up if the loan is repaid without any default.
  • Fifth is to get a certificate for legal clearance from a lawyer.
  • Then make sure you have a copy of the detailed tracking of loan repayment. This can either be taken through online bank website or directly from the bank officials.
  • Finally get a new Encumbrance certificate from Registrar.

Can I get Home Loan Tax Rebate on 2 separate Home Loans in India?

Yes, you can still get a home loan tax loan rebate even if you have two separate properties both registered in your name. Even if the property is in two different cities of India, it is still possible to get home loan tax rebate. However, the limit for both together will be only upto INR 200,000 for the owner of the property. However, only one house can be claimed as self-occupied and the other should be claimed as rented or let-out. Any rent from the let-out property will be considered as part of your income for income tax evaluation for a particular assessment year. If you really want to save tax and not show as let-out then buy the other property on your spouse’s name.

What are the Documents that I should get after closing a home loan?

Basically there are just 5 documents to be received once you close your existing home loan and the list of these documents are below:

  1. No Objection Certificate (NOC): This is an authorization certificate confirming there is no outstanding due and it is issued by the lending bank assuring that all payments have been settled. It is considered as the important documents to acquire during closure of home loan.
  2. Retrieve original property documents: Take back all documents from the bank that was submitted while applying for home loan. Check for misplaced or missing pages and documents. If possible, go the bank and personally retrieve your loan documents thus courier delays and problems can be avoided.
  3. Retrieve Security Cheques: Everyone would have submitted 3-4 security cheques at the time of applying loan to the lending bank. Make sure to take these back after filing necessary documents for the same. This was just shared with the bank for security reasons in case if you default the payments.
  4. Encumbrance Certificate (EC): An EC is a certificate listing all monetary transactions on your house. Once the home loan is closed, it must reflect in the EC. This is necessary to complete the home-loan closure procedure.
  5. Get Legal Clearance: Though this is optional, it is advisable to get a legal clearance certificate from a lawyer. In this way, you can be sure that all necessary formalities are completed from a legal stand-point. Also in case of any issues, a lawyer is the best person to make any decision on the same.

Can Siblings take Joint Home Loans in India?

Yes, siblings are allowed to take joint loan from any bank for home loan. And with the help of this both can avail tax benefits under Income Tax Act section 80C. However, here are some of the points to be kept in mind while taking a joint loan with a sibling.

  1. Joint home loan means both will be the owner of the property thus both has rights on the property however if the sibling is just a borrowers then he/she has the right of liability. A sibling can be a co-owner of the property only if you share the liability of the property as co-borrowers, else banks will not consider you as a co-owner. Loan liability and co-ownership percentage can be altered as per each applicant’s requirements.
  2. In case if siblings are taking a home loan, usually banks will approve the loan amount upto 10 years of tenure. This is the maximum tenure that is offered if siblings are the applicants.
  3. Under section 24 (interest repayment) and 80C (principal repayment) both the applicants have the right to claim tax benefits on their home loan.
  4. If you have an option to apply for a joint loan, this option is the best if you are in need of huge amount. As the income and CIBIL scoring of both together will be considered by the bank, thus huge amount will be approved. This way you can be the owner of huge property.
  5. Pre-EMI option is available even if it is a joint loan. This means both the applicants/ borrowers just have to pay the interest on the loan amount as a pre-EMI until the possession of the property. This works in cases when the property is still under construction, the applicant have the benefit of avoiding the actual benefit until the construction is completed and possession of the property is taken.
  6. Do a complete research on the joint home loan for siblings as not every bank will allow this. In cases of disputes bank will have to suffer any delayed payments or failure to pay.

Can a Home Loan be Transferred Completely to a Co-Borrower?

The number of people, who are availing the advantages of the home loan, is increasing day by day rapidly. Many home loan borrowers are now preferring to go for a joint home loan options due to various benefits such as the benefit to avail higher loan amount, income tax benefits and many more to name a few. A co borrower is the person that shares the ownership of the home loan in an asset with you or group or individual. The factors such as credit rating and CIBIL scores are being taken in to the consideration as far as home loan joint application is concerned.

However, there are certain eligibility rules and conditions that have to be satisfied that can be mentioned as follows.

  • The joint home loan can be availed maximum by six people and minimum by two people.
  • The co-borrower may or may not be the co-owner of the said property; however banks or lenders shall prefer that a co-borrower should be the co-owner of the property.
  • The joint home loan repayment is the collective responsibility of the main borrower as well as co-borrower(s). Each of them is equally liable as far as repayment is concerned.
  • If the home loan borrowers are married, then the same seems to be a perfect arrangement to the home loan lenders or providers. The couple is having the liberty to decide that which one of them wants to be the co-borrower and which one of them wants to be the co-owner.
  • If the applicants of the home loan are the son and father duo, or unmarried daughter and father or mother and unmarried daughter or mother and son, then bank or lenders shall prefer that son or daughter should be the primary owner of the property.
  • In the case of two brothers applying for the same, the lender or bank insist that they should be the co-owner of the property.
  • Unmarried couple living together or friends claiming for the joint home loan are usually not allowed for the same.

Home loan co-borrower and co-applicant is one and the same thing if we take a larger picture in the consideration because the person is sharing equal responsibility as far as the repayment is concerned. Hence, in special cases, the lender may consider to transfer the loan completely to a co-borrower. However, there can be some disadvantage in being a co-borrower in certain cases that can be discussed as follows.

  1. Conflict between Wife and Husband: – If husband and wife, any one of them is a co-borrower and both of them are paying the EMIs for the home loan, and because of the conflict, any one of them stops paying the EMI then the other borrower faces the problem.
  2. In case of death of Prime borrower or co-borrower:- In case if the prime borrower or co-borrower meets death, then the rest of the amount that has to be paid by the borrower, who is alive. It becomes the person’s responsibility to repay the amount and that can create a burden for the person.
  3. WILL beneficiary can be different: – if husband and wife are the borrowers of a home loan and the husband decides to inherit property to the parents or siblings and not to wife or let’s say he decides to equally distribute the property between parents and wife, the if a wife is not co-owner but just a co-applicant then it can create a huge trouble for her.
  4. Default Case: – in the case of default, the home loan applicant assets can be at risk be it co-borrower of borrower.

To avoid such cases, It is very essential that the home loan applicants are having separate legal liability agreement that has all the terms and conditions mentioned. The agreement should have stated and classified the liability of each and every party that is involved. The parties involved should execute the same on the legal stamp paper and should notarize it. Banks promote the co-borrowing as the same reduces the risk in terms of repayment of the loan. The bank can also insist in terms of getting the insurance as far as protection of repayment is concerned. It is essential for the borrower and co-borrower that they safeguard the loved ones by properly following terms & conditions as the future is quite uncertain and one should be ready to encounter any situation.

Home Loan Balance Transfer

A house is the basic requirement of every person in this world. It is the place where we live with our loved ones whom we call as our family. Home is not just a shelter but it is the place where we make memories for life time. Nowadays many people in big cities like Chennai, Bangalore, and Delhi etc. live in rented house, but somewhere in their heart there is a dream of living in their own home. But many are not able to change their dream into reality because they lack financially. Some people spend years to save money to purchase their own dream house.

Home loan is the best option available nowadays to go with and purchase one’s own house. Many Banks and NBFC provide home loan at different interest rates. Getting a home through home loan is such a hassle. And that too if the lender turns out to be bad, the entire home loan experience is spoiled. Also if the interest rate is high, the borrower gets overburdened with high EMIs. In such a case, Home Loan Balance Transfer helps to switch the loan account to another FI where there are better facilities available at lower interest rates.

Home loan balance transfer includes the way towards exchanging your current ongoing Home loan to another Bank or NBFCS. Individuals for the most part select a Balance transfer on the off chance that they are able to find or get a Bank or NBFC which are offering them a lower interest rate and better administration of the loan account.

Home loan balance transfer involves the fore-closing of the current home loan with the original lender and shifting the loan account with the remaining balance to another lender, be it a Bank or a NBFC, at a lower interest rate. Hence the overall outcome is that the interest rate and hence the EMI gets reduced significantly and this is realized from the first month itself.

So as to decide on this all you have to do is simply to fill the Home Loan Balance Transfer application frame alongside computing investment funds on top up and home advance adjust exchange. Parity exchange alternative is picked by a great many people as it will bring down the regularly scheduled payments by paying lower repayment sum. This saving can be utilized on other valuable things. It offers alluring financing costs that will turn your home credit to be substantially less demanding to the pocket and reasonable.


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SOURCE: http://financebuddha.com/home-loan

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