Loan

Loan

How to apply for a Home Loan?

  • Step 1: Approach a Housing Finance Company with the latest salary slip and TDS Form 16 of the last two financial years of yourself and your co-applicant. The loan officer will informally tell you the amount of loan you are eligible for, the areas in which they finance flats and the terms of the same. Collect a loan application form and confirm the needed documents (mainly proof of income). Visit more than one company since you are likely to get better terms / larger loan amount if you shop for the best deal.
  • Step 2: At your chosen HFC, submit the duly filled loan application, along with the requested documents and an application fee (around 1%). They will then interview you on the same. After conducting an appraisal of your application, the HFC will give an in-principle sanction of your loan.
  • Step 3: You now have to submit your property documents, which should show a clear title. The HFC will check these and levy an administrative fee (around 1%). It will then disburse the loan, either fully or in installments, directly to the builder/ seller of the flat.

 

How much housing loan can one get?

It depends on a person’s repaying capacity based on your income. You can add your spouse’s income to increase the amount of loan.

 

What tax benefits are available in regards to the housing loans?

Tax benefits are available to consumers of house loans for the interest component as well as principal component of the housing loans. The current budget has left the upper limit of the interest payment deduction at Rs 150,000 per annum. The section 80C also allows tax benefits on principal repayments.

 

What is the reducing balance method of interest payment?

In reducing balance you reduce the amount of principal payment already paid by you from the initial loan amount. You pay interest only on principal unpaid till that point of time and not the entire loan amount.

 

What is floating interest rate?

 

In a floating interest rate, you interest payment will vary according to the market lending rate. If interest rates rise your interest payments will rise and vice-versa. You bear the risk of interest fluctuations in the market. Floating rates are slightly cheaper than fixed interest rates.

 

What is fixed interest rate?

In a fixed interest rate, your interest rate is fixed over the entire tenure of loan

 

What are the documents required for the Home Loan?

Given below is the standard list of documents required for a home loan, some of the documents and terms may differ depending on the policy of the HFC.

 

Project Documents

  • Sale deed / lease deed / development agreement of the builder / society
  • If a development agreement is executed, power of attorney from land owner
  • Earlier chain of documents (if any)
  • Layout copy
  • Layout approval
  • Approved building plans (All blue prints are required)
  • Commencement certificate from municipal council / corporation
  • N.A. Permission & latest N.A. Tax receipt
  • Latest 7 / 12 extract
  • 6 d extract for 13 years
  • 8a extract if applicable
  • Copy of ULC clearance certificate
  • Property card extract in the name of land owner of the land
  • If the land is within city survey limits, then instead of 7/12, 6d & 8a please collect city survey extract and property card extract
  • Latest 6 months title & search report for the property under consideration
  • Partnership DEED / MOA / AOA of the builder
  • Copy of draft sale agreement
  • Completion certificate
  • Letter for bank a/c details
  • Original documents verification before given an APF number
  • Public notice
  • These are the basic documents. Some additional documents may be required on case-to-case basis

 

Individual Documents | Salaried

  • Applicant & Co- applicant Passport size Photograph (1 copy each)
  • Age, ID & Sign Verification Proof (Pan Card/ Driving License/Passport)
  • Address Proof (phone bill/MSEB bill/employer certificate)
  • Latest 3-month Salary Slips
  • Latest 2 years Form 16
  • Latest 2 years Form 16
  • Appointment / Confirmation Letter of Current Employer
  • Latest Increment letter
  • Experience letter of previous employer
  • Last 6 month bank statement of Salary Account
  • If any loan is going on than sanction letter of that loan with bank statement from where EMI is paid
  • Qualification Certificate
  • Processing fee Cheque

 

Individual Documents | Self Employed

  • Applicant & Co- applicant Passport size Photograph (1 copy each)
  • Age, ID & Sign Verification Proof (Pan Card/ Driving License/Passport)
  • Address Proof (phone bill/MSEB bill/employer certificate)
  • Last three years ITR’s along with Balance sheet & computation of Income
  • Shop act license
  • Latest Increment letter
  • Experience letter of previous employer
  • Last year’s bank statement of Firm as well as Individual Account
  • If any loan is going on than sanction letter of that loan with bank statement from where EMI is paid
  • Qualification Certificate
  • Processing fee Cheque
  • Apart from the Documents Given Above
  • Non–Resident Indians will require additional documents
  • NRI annexure, NRI letter & General Power of Attorney in our format
  • Employer Certificate, Copy of Passport & contract agreement duly certified by official from Indian embassy
  • Passport & Visa copy with original for verification at the bank