In this article, we will discuss on Home Loan such as what is the home loan, eligibility criteria for applicants, required documents & interest rate etc.
Introduction
House is a necessity to all human beings and owning a house is a dream for everyone. Earlier only a few people had the privilege to have an own house but now with the availability of house loans provided by banks many people’s dream has come true. These are loans which are provided either to buy an already built ready to occupy a house or a flat or to construct a house.
Eligibility
A definite method has been channelized by lenders to calculate the ability and willingness of a customer to be authorized for a loan. All people who are having a regular and steady income can qualify for a house loan, hence a salaried or a businessman is eligible to get a house loan. Some areas and facts that banks take into consideration before sanctioning a bank loan are:-
- Age: – Tenure of a loan depends on his/her age as your age, like a person above 60 years of age can’t qualify for a home loan for which tenure can be of more than 10 years.
- Life Style: – Banks do take into account of one’s lifestyle as in if one is earning 50,000, how much he requires to bear his household and personal expenses per month will be deducted from his monthly income and the remaining amount which comes is considered as his surplus or the amount that he can pay an installment.
- Cibil Score: – The most important things that banks take into reckoning is your cibil score. If you have been found guilty of not paying your credit limits or loans installments properly, in that case, the bank will straightaway deny your loan application.
- Loan Records: – Last but not the least, banks checks all your past and current records of loans. Have you paid your previous loans on time and currently how many loans are due from you?
If one passes all these criteria, he as per his income and depending on the banks gets his/her desirable amount of home loan at ease.
House Loan Providers
Banks like public sector, the private sector, multinational banks and all NBFC’s (A Non-Banking Finance Company) and financial institutions like LIC companies, mutual fund companies etc., provides house loan at a very competitive interest rate. Home loan providers like public sectors do a lot of paperwork in addition to have a deep look at your eligibility that is the reason why people these days are moving towards private NBFC’s for home loans. Some of the most popular finance companies and NBFC’s names are mentioned below;
- LIC Housing Finance
- PNB Housing Finance Ltd.
- Dewan Housing Finance Corp. Ltd.
- GRUH Finance Ltd.
- Can Fin Homes
- Repco Home
- India Bulls Housing Finance
- Tata Capital
- Reliance Capital
- Sundaram Finance Group
Document Required
If one has to avail of a home loan then, there are certain documents that are required to be submitted, failing which the loan can be rejected. Hence when requesting for loan and while loan processing takes place extra care needs to be taken to submit the required documents asked by the bank. It is important to keep in mind any misleading information or false documents are submitted it can lead rejection of loan.
Certain documents asked by all the banks are same, some are different. So, it is the duty of the customer to clearly find out and understand the exact documents that need to be submitted. Here are some general documents asked by most of the banks ask for and it differs from a salaried person and for a self-employed/professionals.
Documents which are required for a Salaried Person;
- Duly filled application form with the recent photograph
- Age proof (like PAN Card, passport or 10thstd marks card)
- Address proof (Passport, Aadhaar card, Driving License, election card)
- Latest degree certificate
- Salary slip of the last three month (Latest)
- Form 16 of last two years
- Bank statement of last 6 to 8 months (Salary account)
- Processing fee cheque in the name of the concerned bank
- Photocopy of all the documents related to the house
Documents which are required for a Self-Employed/Professionals/Businessperson;
- Duly filled application form with the recent photograph
- Age proof (like PAN Card, passport or 10thstd marks card)
- Address proof (Passport, Aadhaar card, Driving License, election card)
- Latest degree certificate
- Profile of the business along with proofs related to the existence of the business
- Three years income tax returns with P&L a/c and balance sheet which is certified by a Chartered Accountant. (Latest tax returns filed)
- One year bank statement of both personal and business account
- Processing fee cheque in the name of the concerned bank
- Photocopy of all the documents related to the house
As mentioned these are only indicative and differ from bank to bank.
Interest Rate & Tenure
The present interest rate for the home loan is 8.50 to 9.75%. Home loan interest has been fluctuating past few years. Below is the table which shows the interest rate since 2014. The tenure period for the home loan can be 5 to 30 years depends upon your requirement or loan EMI.
| Year | Interest Rate |
|---|---|
| 2017 | 8.50 to 9.75% |
| 2016 | 9.40 to 11.75% |
| 2015 | 10.10 to 10.65% |
| 2014 | 10.15 to 11.00% |
When a house loan is taken, there are other charges also included in processing fee, valuation, legal, or stamp duties. The processing fee is based on the amount of the loan that is taken and the bank from which we are taking, so those are other things to be considered apart from the interest rate.