At Assetz, we believe in guiding you with expert advice on the types of Home Loan available, the necessary documentation and the eligibility criteria. Do reach out to us if you have further queries.
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+ Finance
Allow us to help you budget appropriately. Use our simple EMI calculator to know what your monthly financial commitment will be.
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EMI Calculator
Rate of Interest [ROI] is
8.10
EMI Payable
23,000/month
We offer you a better understanding of documents, checklists and laws in India that will make your purchase aneasier one.
For Indians abroad, owning property in India is a dream. One that comes with many questions. Our team understands the specific requirements and needs of NRIs, and are here to guide you to the perfect home. If, after reading this section, you have queries, please feel free to reach out to us.
+Document Checklist
1. KYC Document
PAN, Aadhaar, Passport, Driving License, Voters ID
2. Latest Employer Letter
Mentioning date of joining, current designation and relieving letter for less than 2 years
3. Copy of Employee ID
4. Current Company’s Appointment Letter
5. Previous Company’s Relieving and Experience Letter
6. Monthly Pay Slips – Latest 3 Months
7. Salary A/C Bank Statement
Latest 6 Months
8. Form 16
Latest 2 years (Part A and Part B)
9. Income Tax Return
Latest 2 Years Income Tax Returns along with computation sheets
10. Loan Details
Existing loan account details and loan statements, till date (if any)
+Document Checklist
1. KYC Document
PAN, Aadhaar, Passport, Driving License, Voters ID (Needs to notarized in the residing country)
2. Latest Employer Letter
Mentioning date of joining, current designation and relieving letter for less than 2 years
3. Copy of Employee ID
4. Current Company’s Appointment Letter
5. Previous Company’s Relieving and Experience Letter
6. Monthly Pay Slips - Latest 6 Months
7. Updated Resume
8. Salary A/C Bank Statement
A minimum of 6 months
9. Income Tax Return
Latest 2 Years Income Tax Returns of the Residing Company.
10. Loan Details
Existing loan account details and loan statements, till date (if any)
+ FAQs
What are the types of Home Loan available?
+
1. HOME PURCHASE LOAN
The common loan for purchasing a home/Flat.
2. HOME IMPROVEMENT LOAN
A loan given for undertaking repairs, renovations and/or upgradation/extension of your home.
3. HOME CONSTRUCTION LOAN
A loan for the construction of a new home.
4. PLOT/LAND PURCHASE LOAN
This type of loan is sanctioned for purchase of land for home construction.
5. BALANCE TRANSFER LOAN
Balance Transfer Loans help you pay off a high-cost existing Home Loan by transferring loan to another willing lender institution who offers lesser Rate of Interest.
6. REFINANCE LOAN or Loan Against Property.
This loan helps you pay off the debt you have incurred from private sources such as relatives and friends, for the purchase of your present home.
What is an EMI? +
EMI (Equated Monthly Instalment) is the amount payable to the lending institution every month, till the loan is paid back in full. It consists of interest due, as well as a portion repayable towards the principal.
a) Some of the lending institutions sanction the loan in-principal in advance of your identifying the property
b) Free accident insurance
c) Waiving of pre-payment penalty
d) Waiving of processing fee
e) Free property insurance
What are the eligibility conditions for a Home Loan?
+
To qualify for a Home Loan, most of the lending institutions in India require you to be:
a) An Indian resident or NRI
b) Above 21 years of age at the commencement of the loan
c) Below 65 when the loan matures
d) Either salaried or self employed and
e) Worthy of credit facility
For more details, refer module on "What are you getting into?"
What are the interest rates offered for Home Loan? What are: Daily Reducing, Monthly Reducing and Yearly Reducing?
+
Interest rates vary from institution to institution and presently range from 8.5% to 10% depending on the customer classifications. The interest on Home Loan in India is usually calculated on monthly reducing balance. In some cases, daily reducing basis is also adopted
ANNUAL REDUCING
In this system, the principal, for which you pay interest, reduces at the end of the year. Thus you continue to pay interest on a certain portion of the principal which you have actually paid back to the lender through EMIs paid during the year. This means the EMI for the monthly reducing system is effectively less than the annual reducing system.
MONTHLY REDUCING
In this system, the principal, for which you pay interest, reduces every month as you pay your EMI.
DAILY REDUCING
In this system, the principal, for which you pay interest, reduces from the day you pay your EMI. EMI in the daily reducing system is less than the monthly reducing system.
What is the best way to select the cheapest Home Loan? +
Calculate the total amount payable under the different loan options available for a fixed loan period and amount. The loan under which minimum total amount is payable will be the cheapest source of funds.
What is a fixed rate of interest? +
Fixed rate of interest means that the rate of interest remains unchanged for the specified duration of the loan. This means you do not benefit if rates of interest drop in the market. Similarly you do not lose if rates of interest increase. Under fixed Home Loan rates, banks/HFCs retain the right to increase the rate of interest after the prescribed interval. This provision is mentioned in the loan agreement. This is known as reset clause in fine print.
What are the other costs that usually accompany a Home Loan? +
a) PROCESSING CHARGE
A fee payable to the lender on applying for a loan. It is either a fixed amount or may be a percentage of the loan amount applied.
b) PRE-PAYMENT PENALTIES:
When a loan is paid back before the end of the agreed duration, a pre-payment charge is demanded by some banks/companies, which is usually between 1% and 2% of the amount being pre-paid.
c) COMMITMENT FEES:
Some institutions levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.
d) MISCELLANEOUS COSTS:
It is quite possible that some lenders may levy documentation, consultant charges and franking charges.
e) Registration of mortgage deed.
What are the repayment period options? +
Repayment period options range between 5 to 20 years.
How do banks/HFCs decide on the loan amount? +
Usually, most companies give Home Loan up to a maximum of 85% of the cost of the house. Balance 15%, sometimes called 'seed money', has to be provided by the loan applicant upfront. The amount, for which the applicant is eligible, is determined by the age, income, number of dependents, monthly outgoing and repayment capacity. This varies from case to case.
Are securities required for Home Loan? +
In most cases, the property to be purchased itself becomes the security and is mortgaged to the lending institution till the entire loan is repaid. Some institutions may ask for additional security such as life insurance policies, FD receipts and share or savings certificates.
Do I require a guarantor to get a Home Loan? +
Some institutions ask for guarantors.
What is the time required for loan application approval? +
It varies from 3 to 15 days.
Can I make a joint application for Home Loan? +
Most institutions are willing to consider the joint incomes of the applicants to decide the loan amount. Some institutions do not require the co-applicants to be co-owners of the property to be purchased.
What are the tax benefits of Home Loan? +
Both principal as well as interest of Home Loan attract tax benefits, under section 80C of the
Income Tax Act 1961:
Should one go for a long-term Home Loan ? +
If you can afford to, then opt for the 15 or 20 year loan repayment option. The interest rate will be lower, you own your home in half the time, and the payments are not significantly higher.
What is the time required for loan disbursement? +
Both principal as well as interest of Home Loan attract tax benefits, under section 80C of the
Income Tax Act 1961:
INTEREST PAID ON THE Home Loan
As per Sec 24(b) of the Act, a deduction up to Rs. 200,000 towards the total interest payable on the Home Loan towards purchase/ construction of house property can be claimed while computing the income from house property. The interest payable for the pre-acquisition or pre-construction period would be deductible in five equal annual instalments commencing from the year in which the house has been acquired or constructed. Please remember that in case of self occupied property, this deduction is allowed only for one such self-occupied property. The interest towards home loan taken for purchase, construction, repairs, renewal or reconstruction of house property is eligible for deduction under section 24(b).In case the property for which the home loan has been taken is not self-occupied, i.e., second home, no maximum limit has been prescribed and the taxpayer can take tax deduction of the whole interest amount under Section 24.PRINCIPAL REPAYMENT OF THE HOME LOAN
As per Section 80C of the Act, the principal repayment up to ₹ 150,000 on your Home Loan will be allowed as a deduction from the gross total income subject to fulfilment of prescribed conditions.
+RBI Guidelines
Permission for purchase of residential property / commercial property
+
A loan available for those who have financed the present home with a Home Loan and wish to purchase and move to another home for which some additional funds are required. Through a Home Conversion Loan, the existing loan is transferred to the new home, including the additional amount required, eliminating the need for pre-payment of the previous loan.
Repatriation of sale proceeds
+
A loan available for those who have financed the present home with a Home Loan and wish to purchase and move to another home for which some additional funds are required. Through a Home Conversion Loan, the existing loan is transferred to the new home, including the additional amount required, eliminating the need for pre-payment of the previous loan.
Sale of Property
+
A loan available for those who have financed the present home with a Home Loan and wish to purchase and move to another home for which some additional funds are required. Through a Home Conversion Loan, the existing loan is transferred to the new home, including the additional amount required, eliminating the need for pre-payment of the previous loan.
Income from property
+
A loan available for those who have financed the present home with a Home Loan and wish to purchase and move to another home for which some additional funds are required. Through a Home Conversion Loan, the existing loan is transferred to the new home, including the additional amount required, eliminating the need for pre-payment of the previous loan.
+ FAQs
What are the types of Home Loan available?
+
1. HOME PURCHASE LOAN
The common loan for purchasing a home/Flat.
2. HOME IMPROVEMENT LOAN
A loan given for undertaking repairs, renovations and/or upgradation/extension of your home.
3. HOME CONSTRUCTION LOAN
A loan for the construction of a new home.
4. PLOT/LAND PURCHASE LOAN
This type of loan is sanctioned for purchase of land for home construction.
5. BALANCE TRANSFER LOAN
Balance Transfer Loans help you pay off a high-cost existing Home Loan by transferring loan to another willing lender institution who offers lesser Rate of Interest.
6. REFINANCE LOAN or Loan Against Property
This loan helps you pay off the debt you have incurred from private sources such as relatives and friends, for the purchase of your present home.
What is an EMI?
+
EMI (Equated Monthly Instalment) is the amount payable to the lending institution every month, till the loan is paid back in full. It consists of interest due, as well as a portion repayable towards the principal.
Who can avail a Home Loan?
+
To qualify for a Home Loan, most of the lending institutions in India require you to be:
a) An Indian resident or NRI
b) Above 21 years of age at the commencement of the loan
c) Below 65 when the loan matures
d) Either salaried or self employed and
e) Worthy of credit facility
For more details, refer module on "What are you getting into?"
What are the interest rates offered for Home Loan? What are: Daily reducing, and monthly reducing?
+
Interest rates vary from institution to institution and presently range from 8% to 10% depending on the customer classifications. The interest on Home Loan in India is usually calculated on monthly reducing balance. In some institution, daily reducing basis is also adopted.
MONTHLY REDUCING
In this system, the principal, reduces every month as you pay your EMI/Part Payment.
DAILY REDUCING
In this system, the principal, reduces from the day you pay your EMI/Part Payment.
What is the best way to select the cheapest Home Loan?
+
Analyse the Rate of Interest Offered by the Financial Institution, charges which they levy like Processing Fee, Documentation Charges, MODT & any charges related to Part/Full closure of Loan, select the institution which is least on the above.
What is a fixed rate of interest?
+
Fixed rate of interest means that the rate of interest remains unchanged for the specified duration of the loan. This means you do not benefit if rates of interest drop in the market. Similarly, you do not lose if rates of interest increase. Under fixed Home Loan rates, banks/HFCs retain the right to increase the rate of interest after the prescribed interval. This provision is mentioned in the loan agreement. This is known as reset clause in fine print.
What is a floating rate?
+
This is the rate of interest that fluctuates according to the market lending rate. This means you stand the risk of paying more than you budgeted for, in case the lending rate goes up.
What are the other costs that usually accompany a Home Loan?
+
1. HOME PURCHASE LOAN
The common loan for purchasing a home/Flat.
a) PROCESSING CHARGE:
A fee payable to the lender on applying for a loan. It is either a fixed amount or may be a percentage of the loan amount applied.
b) PRE-PAYMENT PENALTIES:
When a loan is paid back before the end of the agreed duration, a pre-payment charge is demanded by some banks/companies, which is usually between 1% and 2% of the amount being pre-paid.
c) MISCELLANEOUS COSTS:
The lenders levy documentation charges and franking charges for executing the Loan Agreement.
d) REGISTRATION OF MORTAGE DEED:
This is as per State Government Stamps Act, In Karnataka its 0.50% for simple mortgage & 0.60% for the registered Mortgage. Generally, all the PSU (Public Sector Undertakings) insist on Registered Mortgage.
What are the repayment period options?
+
Repayment period options range between 5 to 30 years, which depends on the age of the borrowers.
How do banks/Hfcs decide on the Loan amount?
+
The Loan amount differs on the Total cost of the property. As per RBI/NHB norms, usually, most companies give Home Loan 75% to 90% of the cost of the house, keeping the RBI/NHB norms on LTV (Loan to Value Ratio). Balance 10% to 25%, sometimes called 'seed money' or ‘Own Contribution’, has to be provided by the loan applicant upfront from their own savings. The amount, for which the applicant is eligible, is determined by the age, income, number of dependents, monthly outgoing and repayment capacity & the credit history. This varies from case to case & the profile of the borrower/s.
Are securities required for Home Loan?
+
In most cases, the property to be purchased itself becomes the security and is mortgaged to the lending institution till the entire loan is repaid. Some institutions may ask for additional security such as life insurance policies, FD receipts and share or savings certificates (these are based on the profile of the borrower/s).
Do I require a guarantor to get a Home Loan?
+
Generally, no, but on a case-by-case basis some institutions ask for guarantors.
What is the time required for Loan application approval?
+
It varies from 3 to 15 days, depending on the Financial Institution.
What is the time required for Loan disbursement?
+
In an average, loans are disbursed within 1 to 3 working days after satisfactory and complete documentation and completion of all relevant procedures, including proof that 20% or 25% of the cost has been paid upfront to the seller of the property.
Can I make a joint application for Home Loan?
+
Most institutions are willing to consider the joint incomes of the applicants to decide the loan amount. Some institutions do not require the co- borrower/s to be co-owners of the property to be purchased.
What are the tax benefits of Home Loan?
+
Both principal as well as interest of Home Loan attract tax benefits, under Income Tax Act 1961:
INTEREST PAID ON THE HOME LOAN
As per Sec 24(b) of the Income Tax Act, a deduction up to Rs. 200,000 towards the total interest payable on the Home Loan towards purchase/ construction of house property can be claimed while computing the income from house property. The interest payable for the pre-acquisition or pre-construction period would be deductible in five equal annual instalments commencing from the year in which the house has been acquired or constructed. Please remember that in case of self-occupied property, this deduction is allowed only for one such self-occupied property. The interest towards home loan taken for purchase, construction, repairs, renewal or reconstruction of house property is eligible for deduction under section 24(b).
In case the property for which the home loan has been taken is not self-occupied, i.e., second home, no maximum limit has been prescribed, and the taxpayer can take tax deduction of the whole interest amount under Section Sec 24(b) of the Income Tax Act.
PRINCIPAL REPAYMENT OF THE HOME LOAN
As per Section 80C of the Income Tax Act, the principal repayment up to ₹ 150,000 on your Home Loan will be allowed as a deduction from the gross total income subject to fulfilment of prescribed conditions.
Should one go for a Long-term Home Loan?
+
If you can afford to, then opt for the 15- or 20-year loan repayment option. The total interest outflow will be lower for the shorter period loan, you own your home in half the time, and the payments are not significantly higher.
