Home Loan Tips

Welcome to Home Loan!

Let us help you every step of the way.

There are many confusions that people face while planning to purchase their home like today's interest rates, per month payment, best lenders etc.Keeping all of these problems in mind we have brought a good help for those who really want to make true their dream of a house.

Read Basics of Home Loan before applying

Home loans are for the purpose of purchasing/repairing/extending the existing house. There are tax benefits attached to these loans (up to Rs 100,000 on interest repayment and Rs 20,000 on principal repayment is deductible from taxable income). These benefits make the loan very attractive by lowering the effective interest rate by 2 to 4%. If you are planning to purchase or to undertake the repair or extension of your house, first home loan and improvement/extension loans are the best option.

When you apply for a New Home Loan, housing finance companies requires Income documents:

if you are employed :

Verification of Employment form

Latest salary slip/salary certificate showing all deductions for atleast the past 6 months

Form 16 from your employer for the past 3 years.

If your job is transferable, permanent address where correspondence relating to the application can be mailed.

If you have been in your present employment / business or profession for less than a year, mention details of occupation for previous 5 years, giving position held, reasons for change and period of the same.

if you are self employed:

Balance sheet and profit and loss account of the business/profession along with copies of individual income tax returns for the past 3 years as certified by a chartered accountant.

A note giving information on the nature of the business/profession, year of establishment, present bankers, form of organisation, clients, suppliers etc.

Your net worth as an applicant/co-applicant

improvement/extension loans

And in the case of improving or extending the existing house it is always better to take advice of a professional like an architect or a structural engineer for improvement/extension. You know that any structural changes in the building/flats like extensions or further construction (adding a room, adding kitchen, terrace or an additional bathroom) requires clearances from municipal authorities. Moreover the document for the same (sanctioned plan and licence for the extension) is even asked by housing finance companies before disbursing the loan. You should have these papers in your hand at the time of applying for the loan. The loan process should be initiated only after identifying the contractor to carry out the work at an estimated cost of repairs.

Documents required:

The basic documents asked by housing finance companies before disbursing the loan are:

title deeds for a period of atleast 13 years

encumbrance certificate for the past 13 years

'Khata' certificate, up-to-date tax receipts of the property

sanctioned plan and licence for the extension

estimates of costs from a qualified engineer

a cost estimate from the architect or contractors

Loan disbursement by housing finance companies is generally in full or in instalments depending on the progress of repairs. If the repairs are staggered, lenders link the disbursal amount to the progress of the repair work. Interest is calculated on the actual drawn amount of the loan. There are housing finance companies charging pre-EMI interest on the un-drawn loan amount. One should always secure the disbursement of the loan after the completion all the legal formalities. Housing finance companies allow the clubbing of the income of the co-applicant. So it is always better to bring in an earning member as co-applicant. This enhances the loan eligibility too. A co-applicant may or may not be a co-owner in the property.

So before you decide to embark on an exercise to do-up your home, do a check on all these counts. You may end up saving both time and money!

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