What you need to know about home loans
Home loans are the financial aids that are taken to buy a house or a flat or a plot for construction of a house, or any other investment on the house namely for an extension, extension, or any other repairs on the existing living space.
Home loan amount according to your eligibility:
Before commencing the procedure of home loan what comes up as the first step is to determine whether you are eligible for the home loan or not. After that comes the point of repayment of the loaning amount. The eligibility of any individual for the repayment of the home loan mainly depends upon your monthly surplus or investment income. This surplus income is further dependent on the monthly income or the reduction of your expenses from the surplus income. Other factors like spouse income, assets, and liabilities, job stability, etc. are also involved in the determination of home loan repayment assurance.
What the bank needs to assure on the borrower’s end is the capability of the borrower to repay the loan. In simpler terms the higher the surplus income is, the higher amount of money can be lent to the borrower as it boosts the borrower’s eligibility.
The only thing that the bank is bothered about is making sure that the repayment of the loan amount is done in time. The loan amount will be based on the tenure and rate of interest as it is a major deciding factor too. Also, apart from this a general upper age limit is fixed by the bank for those who are willing to avail of a home loan. So in a way the age of the borrower also determines the amount of home loan that will be lent to them.
The maximum amount you can borrow from the bank as a home loan
Most of the banks require a down of at least 10-20 percent of the total cost of home purchase the borrower which is known as the down payment. The rest of the 80 to 90 percent of the payment is financed by the bank. The total amount which will be financed also includes the registration charges, transfer charges, and of course the stamp duty charges. Even though the amount calculated by the lender is a higher eligible amount, there is no necessity to borrow that same amount. In simpler terms a lesser amount can also be borrowed without an issue. But what should be kept in mind is to try and arrange the maximum amount of down payment instead of depending on the money financed by the bank so that the monthly installments can be kept at a minimum.
Is it necessary to have a co-applicant when it comes to taking a home loan?
Mostly yes, a co-applicant is a mandatory condition put forth by the bank. The co-applicant for the home loan can be someone who is also a co-owner of the property that is in concern. If you are the sole owner of the property in question then the co-applicant can be somebody who is a member of your immediate family.
What documents are generally sought for loan approval?
If you are thinking of availing a home loan, the first thing you need to do is file a loan application. Now know that the loan application form will constitute a checklist of documents that are to be attached along with the loan application form. Apart from this a few other things like a photograph also need to be attached. Also, additional all other legal In legal documents related to the purchase of the house, the bank will also ask you to submit your identity and residence proofs, a copy of the latest salary slip which should be authenticated by the employer and also be self-attested by the borrower himself and Form 16 or income-tax return for both businessmen as well as self-employed individuals and the last 6 months bank .bank statements/balance sheet, as applicable.
What is sanctioning and disbursement of loans?
The sanctioning is based solely upon the documentary proof, after which the bank decides whether or not the loan can be sanctioned or provided to you. The quantum of the loan that can be sanctioned depends on such factors completely. Once the loan is sanctioned the bank will give you a sanction letter in which they state that the loan amount, tenure, and the interest rate, among other terms of the home loan. The validity of the stated terms will be dependent upon the date mentioned in that letter.
When the loan is actually handed over to the borrower by the bank, it amounts to disbursement of the home loan. This happens only once the bank is done by conducting technical, legal, and valuation exercises. If you want to you can also opt for a lower loan amount during disbursement against what is mentioned in the sanction letter. This should be kept in mind that at the stage of disbursement, you need to submit the allotment letter, photocopies of title deed, encumbrance certificate, and the agreement to sell papers. Also, the interest rate on the date of disbursement will apply, however it will not be the same as mentioned in the sanction letter. In such a case, the bank has to prepare a new sanction letter for the borrower.
What is the procedure for the disbursement of the home loan to take place?
Disbursement of a home loan can be a lengthy and scary process. However, with flexible and fluid business ethics of banks makes it quite easy for the disposal off of the home loan. The loan can be disbursed either completely at once or in the form of installments, which usually does not take more than three in number. If the property is question is under construction then the disbursement is in its installments which is further based on progression seen at the construction site of the property. This is generally assessed by the bank since they are the lenders. Here the developers. What you need to make sure is to enter into an agreement with the developer wherein the payments are linked to the construction work and not pre-defined on a time-based schedule. If the case if of a fully constructed property, the disbursement is made in full.
What are the interest rate options?
The home loan rate can be both fixed or flexible. In the fixed interest rate, the interest rate is fixed for the loan’s entire tenor, while in the latter, the rate does not remain fixed. The interest rate can be easily calculated using virtual aids. One of the most prominently used virtual tools is the Home loan EMI calculator. The home loan EMI calculator uses a general formula and yields efficient and quick results.