Home Loans: Frequently Asked Questions

 

Most people require finance while buying a home. With an increase in the number of institutions providing such facilities, making a choice becomes difficult.

Here are ten frequently asked questions (FAQs) that would help individuals overcome their doubts:

 

1. How to apply for the loan?

Applicants may apply for a home loan online by submitting an online application or they may visit the branch. Alternatively, they may call the institution or send a text or email message.

 

2. What documents are needed?

While applying for a home loan, applicants must submit an age, address, and identity proof. In addition, office address and income proof copies are required. Bank statements, existing loan details, and the processing fee cheque must also be submitted.

 

3. What is the maximum loan amount?

The maximum loan amount is capped at INR 10 crores. However, the actual amount is limited to up to 80% of the property value.

 

4. Who may co-apply on the loan?

Several applicants apply with a co-applicant to enhance their home loan eligibility. Income of spouse, children, siblings, or parents may be combined to take up a loan of a higher amount.

 

5. How much time does it take to sanction the loan?

The turnaround time depends on the complexity of the application, timely availability of necessary information and documents, and the profile of the applicant.

 

6. What are the repayment options?

Borrowers may repay either by providing post-dated cheques (PDCs) or through an electronic clearing system (ECS). Under the ECS facility, the amount of the equated monthly installment (EMI) is directly debited from the borrowers’ bank accounts.

 

7. How much pre-payment is allowed?

If the pre-payment amount is less than 25% of the outstanding loan amount, there are no charges. However, if the pre-payment exceeds this limit, the borrowers must pay 2% of the outstanding amount as a pre-payment penalty.

 

8. What is the maximum loan tenure?

The maximum tenure for home loans is 20 years. However, the tenure is subject to the applicant being less than 65 years (self-employed borrowers) and retirement age (salaried borrowers) at the time of repayment.

 

9. How many days does disbursement take?

The loan amount (on ready properties) is sanctioned when all the requirements are duly met. Under-construction property loans are disbursed in installments based on the progress of work.

 

10. What is the amount charged as processing fees?

Financial institutions undertake a legal and technical due diligence and therefore charge processing fees. Although the fee may vary, the maximum payable is limited to 0.5% of the loan amount. A home loan is the best way to purchase your dream home. Having all your doubts cleared before making the decision ensures you are not surprised later.