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Home loan advisory

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Home loan advisory




Overview



A home loan is a secured loan used to purchase a property, whether it's a developer's under-construction or ready-for-possession property or a resale property from a person or company. You can also use a home loan for property extension or refurbishment.
This is the traditional mortgage where customer has an option of selecting fixed or variable rate of interest and is provided for the purchase of property.

Loans are provided by the lender which is a financial institution such as a bank or a mortgage company. There are two types of loan widely offered to customer:

  • Fixed interest rate loan
  • Fluctuating/variable interest rate loan 

overview

Fixed interest rate loan: It is the type of loan where interest rate remains constant for the life of the loan.

Fluctuating/Variable interest rate loan: It is the type of loan where the interest rate is fixed for the period but then it fluctuates with the market interest rates. 



Home loan eligibility criteria



eligibility

To enjoy hassle-free loan processing, potential borrowers must meet specific home loan eligibility conditions before applying for a house loan.

Age, income, employment position and stability, and property value are among the conditions established.

Credit is available to both self-employed and salaried individuals who meet specific home loan qualifying standards.

Check your eligibility for a home loan as a salaried or self-employed individual and apply accordingly.

Home Loan Eligibility Criteria for Salaried Individuals:
Loan eligibility requirements for salaried individuals include:

  • He/she must be a residing Indian citizen
  • He/she must be in employment from atleast last 3years.
  • He /she shall have a stable source of income.

Note that the home loan qualifying requirements are only a guideline and may include additional requirements.

Home Loan Eligibility Criteria for Self-Employed Individuals:
Loan eligibility requirements for self-employed individuals include:

  • The applicant must be self-employed and have been with the current enterprise for at least 5 years.
  • He/she must be a residing citizen of India

Note that the home loan qualifying requirements are only a guideline and may include additional requirements.


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Documents required for a home loan



The documents required for a home loan are kept to a minimum to reduce the processing time.

  • Identity proof
  • Address proof
  • Income proof includes latest salary slips or Form 16 for salaried applicants and P&L statement and ITR documents for self-employed individuals
  • Passport-sized photographs
  • Proof of business existence with at least a 5-year vintage (for self-employed applicants only)
  • Account statements for the last 6 months

documents

Borrowers may be required to present additional documentation to prove their eligibility for a home loan. The terms and conditions apply.

All applicants must additionally present a set of property documents, such as the allotment letter, selling agreement, and receipts for payments made to the agent or developer, in order to qualify for a house loan.



Factors that decide home loan eligibility



The home loan eligibility of an individual depends on various factors. These include:

  • Credit score: Other important home loan eligibility characteristics are an applicant's credit background and score, which assist lenders assess the risk of providing the loan. Individuals with a credit score of above 750 and a positive credit history of on-time payments have a better chance of being approved for a home loan quickly.
  • Employment/business stability: Financial institutions examine the applicant's income stability based on their profile. For salaried applicants, 3+ years of employment indicates a steady revenue stream and a higher likelihood of prompt payback.
  • FOIR (Fixed Obligation to Income Ratio): It is a metric that assesses a borrower's ability to repay a loan. It's computed by dividing one's monthly income by fixed monthly liabilities like EMIs and rent. For the requisite permission, FOIR must not exceed 50% of an applicant's monthly salary.
  • LTV(Loan To Value): The maximum loan amount a lender can extend as a proportion of the mortgaged property's current market value is known as the Loan-to-Value ratio, or LTV. According to RBI norms, a lender cannot lend more than 90% of the entire value of a property as a home loan.


Process



1

The first step is filling the application form with all the relevant personal details.

2

The next step is to document submission.

3

Next comes the document processing and verification. In this step they will also conduct a credit enquiry to check your CIBIL score and credit report. Your loan application shall move to next step only if the the authority finds that the CIBIL score and credit rating is satisfactory.

4

You will receive the sanction letter after the successful completion of all the above steps. Sanction letter mainly contains the following details:
1. Loan amount
2. Rate of interest
3. Tenure of repayment
4. Type of interest rate
You need to sign the sanction letter and send it to the lender to accept their offer.

5

You need to pay one time secure fee after you sign the sanction letter.

6

The lender shall perform legal and technical check before disbursing your loan through their representative.

7

You will receive the final agreement after the lender has performed all their checks. Finally, the loan gets disbursed into your account.


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