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Zonkerala Articles -> Home Loan in India

In India getting a housing loan is not a big task. If you have a steady source of income with proof then both private and nationalized banks are ready to give home loan. Home loans are available for

  • Purchase of a property/house/flat

  • Construction of new house/flat

  • Extension/Renovation of an existing house/flat

Eligibility

Different banks have different criteria for home loan eligibility. In most cases you must be at least 21 years old and must be employed or self employed with are regular source of income. Also the loan term should be complete before you turn 65.

Loan Amount

Many factors affect your loan amount such as your total yearly income, age, number of dependants etc. To enhance loan amount you can add your spouse’s income. Bank normally considers 50 to 60% of your monthly salary for EMI payments. For example if you are getting Rs 20,000/- per month then you are eligible for a loan with EMI of Rs 10,000/- for a bank which takes 50% of salary as loan amount criteria. If you are taking a loan for 20 years with 9% interest then you will have to pay Rs 900/- per lakh. So your total eligible loan amount is 10000/900=11.11 lakhs.

Processing Fee

Some banks charge you a processing fee for home loans. Normally this will be in the range of 0.5% to 1%.

Repayment Period

This depends on your age and again different banks have different rules. Normally you will get 20 years tenure if you are below 45 years.

Prepayment Penalty

There will be prepayment penalty if you wish to close the loan in the middle. This will be normally 1 to 3% of total outstanding principle.

Documents

  • Completed Application Form

  • Photo ID Proof (PAN Card/ Voters ID/ Passport/ Driving License)

  • Proof of Residence (Telephone Bill/ Electricity Bill/ Tax receipt/ Passport/ Voters ID)

  • Bank Statement

  • Income Tax papers (Form 16) for last 3 years

  • Copy of Approved Plan

Interest Rates

Interest rate is normally a fluctuating parameter. So contact the nearest bank branch or visit their website to know current interest rate. There are two types of interest rate calculation. Fixed and Floating. If you opt for Fixed Interest rate then your interest rate and EMI will be same thought the loan tenure. Market interest rate fluctuations will not affect your EMI. But you will not get credit for any decrease in market interest rate as well as you are protected for any increase in market interest rates.

In floating type scheme your interest rate and EMI will be fluctuating according to the current market rate. Advantage with this scheme is if interest decreases then you will get benefited. But at present in India interest rate is in an upward direction so as per finance and loan experts it is better to go for fixed rate loans at this moment.

Some Banks and Financial Institutions offering Home Loans in India

ABN-Amro
Bank of India
Canara Bank
Federal Bank
GIC Housing Finance
HDFC Bank
HSBC
IDBI
ICICI
Indian Bank
Kotak Mahindra Bank
LIC Housing Finance
Punjab National Bank
Standard Chartered Bank
State Bank of India
State Bank of Travencore
Sundaram Home Finance
Tata Home Finance

 

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