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Home Loan

What is a Home loan?
Home Loan is a Secured Loan offered against the security of a house/property which is funded by the bank’s loan, the property could be a personal property or a commercial one. The Housing Loan is a loan taken by a borrower from the bank issued against the property/security intended to be bought on the part by the borrower giving the banker a conditional ownership over the property i.e. if the borrower is failed to pay back the loan, the banker can retrieve the lent money by selling the property.

We at Deal4Loans are working constantly to get you the BEST Loans Deal & have brought a small guide which would answer some important questions related to Home Loans & help you decide your loans deal.

Home Loan applications received for 312,978 crores till 24 November 2014

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Most borrowed home loans

Banks Loan to Property Value Age Bracket Maximum Tenure
State Bank of India 75% - 90% 18 – 70 Years Up to 30 years
HDFC Ltd 80% 20 – 70 years Up to 30 Years
LIC Housing Finance 85% 20 – 65 Years Up to 20 Years
Axis Bank Home Loan 75% - 85% 24 – 65 Years Up to 25 Years
ICICI Home Loan 80% - 90% 20 – 65 Years Up to 20 Years
FedBank Home Loan 85% 20 – 65 Years Up to 30 Years

Home Loan Criteria by various banks

The borrower’s eligibility of getting a housing loan depend upon his/her repayment capacity & the banks establish this repayment capacity by considering various factors such income, spouse's income, age, number of dependants qualifications , assets, liabilities, stability and continuity of occupation and savings history. Eligibility Factors in Housing loan Your Home Loan eligibility is determined by your repayment capacity, taking into consideration, factors such as: Your:
• Income
• Qualifications
• Age
• Spouse's income
• No. of dependants
• Stability and continuity of occupation
• Assets/LiabilitiesM.
• Savings history.
The most important concern of banks in determining your loan eligibility is that whether or not you are contentedly able to pay off the amount you borrow.

Documents required in Home Loan

Types of Home Loan

Generally the documents required to processing your loan application are almost similar across all the banks; however they may differ with various banks depending upon specific requirement etc. Following documents are required by financial institutions to process the loan application:
  • Age Proof
  • Address Proof
  • Income Proof of the applicant & co-applicant
  • Last 6 months bank A/C statement
  • Passport size photograph of the applicant & co-applicant

  • In case of Salaried

    In case of Self-employed

    ·  Employment certificate from the employer,
    ·  Copies of pay slips for last few months and TDS certificate
    ·  Latest Form 16 issued by employer Bank statements

    ·  Copy of audited financial statements for the last 2 years
    ·  Copy of partnership deed if it is a partnership firm or copy of memorandum of association and articles of association if it is a company
    ·  Profit and loss account for the last few years
    ·  Income tax assessment order


    Types of Home Loan

    There are different types of home loans available in the market to cater borrower’s different needs.
  • Home Purchase Loan: This is the basic type of a loan which has the purpose of purchasing a new house.
  • Home Improvement Loan: This type of loan is for the renovation or repair of the home which is already bought
  • Home Extension Loan: This type of loan serves the purpose when the borrower wants to extend or expand an existing home, like adding an extra room etc.
  • Home Conversion Loan: It is that loan wherein the borrower has already taken a housing loan to finance his current home, but now wants to move to another home. The Conversion Housing Loan helps the borrower to transfer the existing loan to the new home which requires extra funds, so the new loan pays the previous loan & fulfills the money required for new home.
  • Bridge Loan: This type of loan helps finance the new home of the borrower when he wants to sell the existing house, this is normally a short term loan to the borrower & helps during the interim period when he wants to sell the old house & want to buy a new one, It is given till the time a buyer is found for the old house.
  • Home Construction Loan: This type of loan taken when the borrower wants to construct a new house.
  • Land Purchase Loan: It is that loan which is taken to purchase a land for construction & investment purposes.
  • Home Loan Process & various steps involved

    There are various steps involved in getting a Home Loan from selecting your property to filling up the loan application. Following are the various stages in Home Loan:

  • The first step involved in the process is to find your property which is followed by the verification of property documents, post that the documents are examined & simultaneously you can start searching for the lender who can offer the BEST Home Loan Deal after checking your eligibility criteria.

  • Know the Home Loan Eligibility: Banks offer the loan amount only after checking your profile & based on various eligibility criteria’s like age, income & salary banks lend you the money.

  • Select the Best Home Loan after evaluation: Comparing home loan interest rates is the primary feature in the home loan selection, however other fees & charges like Application fees, processing fees, legal charges should not be neglected when comparing various loan offers. To check the interest rates & other charges incurred by various banks, Deal4Loans has brought in a Home Loan Comparison Chart across various Banks.

  • Applying for the Loan : After you have selected your lender, you have to fill in the application form wherein the lender requires complete information about your financial assets & liabilities; other personal & professional details together with the property details & its costs.

  • Documentation & Verification Process: You are required to submit the necessary documents to the bank which will be verified together with the details in the application.

  • Credit & default check: Bank checks out the borrower’s loan eligibility (through repayment capacity) & the amount of loan is confirmed. The borrower’s repayment capacity is reached which is based on the income, salary, age, experience & nature of business etc. Bank also checks credit history through the Cibil Score which plays a critical role in deciding & approving your loan application. Low Credit Score implies that the bank upfront rejects your application on the basis of earlier credit defaults; on the other hand high credit score gives a green signal to your application.

  • Bank sanctions Loan & Offer letter to the borrower: After the credit appraisal of the borrower bank decides the final amount & sanctions the loan, the bank further sends an offer letter to the borrower which constitutes the details like rate of interest, loan tenure & repayment options etc.

  • Acceptance Copy to the Bank: The borrower needs to send an acceptance copy to the bank after the borrower agrees with the terms & conditions in the offer letter.

  • Bank checks the legal documents: The bank further asks the legal documents of property from the borrower to check its authenticity so as to keep them as a security for the loan amount given. The next step involved is the valuation of the property by the bank which determines the loan amount sanctioned by the bank.

  • Signing of agreement & the loan disbursal: The borrower signs the loan agreement & the bank disburses the loan amount.
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    Home Loan Rate of Interest
    ( Last updated on 24 November 2014 )
    Bank Interest Rates Apply
    ICICI Bank 10.10% - 11.25%
    HDFC Ltd 10.15% - 10.50%
    LIC Housing 10.10% (Fixed for 2 yrs)
    AXIS Bank 10.15% - 10.90%
    Punjab National Bank 10.25% - 10.50%
    PNB Housing Finance 10.25% - 11.50%
    Standard Chartered 10.26%
    Citibank 10.15% - 10.20%
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