How to Apply for a Home Loan?

A home is one’s den. It is one’s own place where one can be himself/ herself. So, it holds a special sentimental value in everyone’s heart. However, owning a place has become increasingly difficult as real estate prices are skyrocketing in urban areas. Thanks to the facility of easy home loans a common man can still afford to own a place of his own in these crazy times. With interest rates rising, home loans are getting costlier. However, below we analyze a few of the leading financial institutions with easy loan options, the eligibility criteria, fees, etc.

Basic Checks

Step 1: Visit near by banks
Step 2: Apply for Home Loan
Step 3: Documents Required: Property Documents, Aadhar Card, PAN Card, Rasan Card, Regular 3 years ITR File, Business Proof (if you have), etc.
Step 4: Processing Fee: Rs. 3500/-
Step 5: Interest Rate: 7.50% to 9.00%
Step 6: Solar Tenure: 5 years to 25 years 

How to apply for a Home Loan?

1. Income Proof

Of course, you need to have a regular source of income to avail home loans. Banks assess the income level before granting loans as they need to be sure that the borrower returns the borrowed sum and also his liability to pay interest on loans. 

2. Financail Analysis (Income vs. Saving)

Needless to say, buying a home is a huge expenditure hence, the borrower must have sufficient savings to make the down payment and also honor the debt in case things do not go in his favor.

3. Regular 3 Years ITR File Returns

Three years’ income tax returns are a must to avail home loans. It shows the income and expense statement of the borrower and tax dues and payments if any. This serves as solid income proof for lenders.

4. Income Source

The borrower needs to prove a valid income source before availing any loan. This will serve as a reassurance for the lender/ bank/ financial institution that the borrowed funds will be returned and that the borrower has the capability of returning the funds within the stipulated time. A credible employment/ earning source is one of the major eligibility checks for the lender. 

5. Bank Statement

Bank statement is proof of the financial stability of the borrower. Often lenders need a copy of bank statements for the past few months/ years to check the financial soundness of their prospective clients.

6. Cibil Score

The financial institution also checks the borrower’s eligibility criteria before disbursing the loan. They are basically checking if one is financially sound or the CIBIL score to find out if one has the capability to return the loaned amount. Hence it is important for borrowers to maintain a decent CIBIL score. Given the rising number of financial frauds, it is a good step taken by banks/ financial institutions.

7. Verification

Residence – Not only in paper, but banks/ financial institutions also run a physical verification of the residential address to affirm the client’s soundness before disbursing loans. Many people tend to fake the papers hence a physical check by lenders rules out such cases.

8. Employee

Similar to residential address checks, banks also run a verification of the official address to check the facts. Hence, it is important to be completely transparent and truthful about one’s whereabouts before applying for a home loan. 

Eligibility Criteria

The loan eligibility is calculated based on various factors like gross monthly income, loan tenure, interest rates, and other EMIs. This determines the amount of housing loan that you are eligible for.

Most banks are currently offering loans at 8.20% per annum for a tenure of up to 30 years and for 90% of the property cost. Many banks will lend full 100% of the property's value, subject to qualification, but it is considered better to make a down payment for up to 20% of the property cost yourself to avoid excessive interest payments.

Home Loan Calculator

A home loan calculator is an easy way to calculate one’s EMI. It takes into account loan amount, loan tenure, and interest rates to calculate one monthly loan EMI. The website of banks/ financial institutions generally provides a free loan calculator on their websites. Please note these are approximate figures for the total monthly installment payments and not the exact amount. This is just a self-help planning tool.

Collaterals Required

The property papers are generally kept as a collateral deposit with the banks till the full payment of the amount borrowed plus interest if any.

Processing Fees

The loan processing fee is different for different banks and is generally between 0.50% and 1% of the total loan amount. GST is also applicable additionally. Few banks like Bank of Baroda charge a flat fee of Rs.8,500 plus GST.

Bank

Home Loan Interest Rate

Loan

Tenure

HDFC

8.20%-10.00%

Up to Rs.10 crores

30 years

SBI

8.40%-9.50%

90%

30 years

LIC

8.30%

Up to Rs.15 crores

30 years

Canara Bank

8.80%-10.80%

75%-90%

 

Bank of Maharashtra

7.80%

 

 

Central Bank of India

8.20%-9.00%

 

30 years

BoB Bank

8.60%-10.35%

Up to Rs.20 crores

30 years

Bandhan Bank

8.75%+

Up to Rs.5 crores

30 years

IDFC

8.75%-9.00%

Up to Rs.5 crores

30 years

Home with Solar Loan

The Government of India has set an ambitious target of installation of Grid Connected Rooftop Solar Photovoltaic (GC-RSPV) projects with capacity aggregating 40 GW out of total incremental target of 175 GW of Renewable Energy capacity by 2022. With a view to giving a fillip to this segment, SBI has availed a line of credit from World Bank specifically, for financing Grid Connected Rooftop Solar Photovoltaic projects across the country through its identified branches (refer Annexure I). A Customized financial product has been developed by SBI and benchmark parameters for the purpose drawn up.

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