Understanding What Is Home Loan and How Does It Work

Are you confused about what is home loan, its terms and the application process? Welcome to our comprehensive home loan guide. When considering a home loan, understand the traditional path to home ownership and look into other options. This guide provides a comprehensive understanding of home loans, emphasizing their importance and features. We streamline the entire home loan process for you to ensure easy access to information.

What is Home Loan?

A home loan, also known as a mortgage, is a type of financing used to buy real estate. It involves borrowing funds to buy a home and repaying them over a set period of time and with interest. Terms are based on credit score, income, and down payment size, making homeownership more accessible to individuals looking to build property equity and establish financial stability.

How Does Home Loan Work?

A home loan is a financial instrument obtained from a bank to help finance the purchase of a property. The bank pays the agreed-upon amount to the seller, while the borrower agrees to repay both principal and interest. The loan agreement, approved after application, specifies the terms and conditions, with a maximum repayment period of 30 years.

If you are thinking about buying a house, a home loan can help cover the significant costs, as real estate purchases can be financially difficult without outside financial assistance. A partial prepayment on a home loan lowers the outstanding balance, resulting in lower interest payments and a shorter loan term. Choosing a higher prepayment amount over a longer period of time can result in significant savings.

Importance of Home Loan

Making Homeownership Accessible: Home loans increase homeownership by providing financial assistance, making it easier for a larger population to afford homes. They offer flexibility in spreading costs over time, making homeownership more manageable and avoiding challenges in saving the full purchase price upfront.

Long-Term Financial Investment: Homes are more than just a place to live; they are a significant financial investment with the potential to increase wealth and financial stability. When combined with home loans, this investment provides a sense of security for both the homeowner and their loved ones.

Building Equity: Home loans help to build equity in your property. Each mortgage payment reduces the loan balance, increasing your ownership stake in the property. This accumulated equity can be used for a variety of purposes, such as home improvements, educational expenses, and retirement planning.

Tax Benefits: Home loans frequently provide significant tax benefits, with interest payments being tax-deductible in many countries. This can result in significant tax savings, making homeownership a more financially attractive option than renting.

Home Loan Eligibility Criteria

The eligibility criteria for a home loan include your age, employment status, credit repayment history, credit scores, income-to-expense ratio, and the submission of required documents.

Your Age

The age criteria for loan applicants typically begin at 18 years. Salaried individuals must fall within the age range of 23 to 62 years, while self-employed individuals should be between 25 to 70 years old.

Your Employment Status

Lenders prefer borrowers who have steady employment, particularly with reputable companies. Furthermore, they often require at least three years of continuous employment, preferably with the same company, before considering your loan application.

Your Credit Repayment Behavior and Your Credit Scores

The credit score reflects your credit repayment history, including on-time loan repayments, credit card bill payments, and any loan or debt defaults. A credit score of at least 700 out of 900 points is usually required to be considered for a home loan.

Your Income-to-Expense Ratio

To be eligible for the loan, you should have at least 60% of your income left over after paying for your mandatory monthly expenses.

Types of Home Loan

Home Loan to Buy Land

Home loans can be used to help finance the purchase of raw land for a variety of purposes, including house purchases.

• Terms & Conditions

  Loan amount, interest rates, a significant down payment typically 10% to 50% of the purchase price, a shorter loan term, creditworthiness consideration, the land as collateral, potential usage restrictions, appraisal, legal documentation, and insurance requirements are all common factors.

• Advantages

  A land loan provides financial assistance by spreading costs, increasing equity, allowing for flexible repayment options, potential tax breaks, and the possibility of future land appreciation. Once repaid, achieving full ownership provides long-term financial security and allows you to design and develop the land to your specifications.

• Disadvantages

  Investing in raw land may be riskier than purchasing an existing home due to unforeseen costs, zoning and environmental regulations, and market fluctuations. Furthermore, there is a greater risk of financial uncertainty and complexity than with fully developed properties, making it a less suitable investment option.

Home Construction Loan

A Home Construction Loan is used to construct a personal or investment residential home.

• Terms & Conditions

  A construction loan requires detailed home plans, specifications, and a budget outlining construction costs. In addition, a down payment of 10% to 20% of the total project cost is usually required.

• Advantages

  Home construction loans provide a variety of benefits, including interest payments based on the amount disbursed, personal building flexibility, extension and renovation flexibility, potential tax benefits, asset building guidelines, work streamlining, and high satisfaction levels. Once construction is completed, the loan can be converted into a traditional mortgage, allowing you to repay it over a set period of time.

• Disadvantages

  These loans offer flexibility, but they frequently have higher qualifying criteria, such as a credit score, deal experience, and a required down payment. One disadvantage is the possibility of higher interest costs, which would affect overall project expenses.

Home Extension Loan

Banks offers Home Extension Loan to individuals who want to expand their residential property.

• Terms & Conditions

  The terms and conditions for extension loans vary by lender and are determined by the loan amount. In general, you will be required to provide documentation indicating the estimated cost of the extension or renovation project, as well as proof of your income and creditworthiness.

• Advantages

  Home extension loans provide more living space, greater comfort, increased property value, personalisation, the avoidance of relocation costs, tailored financing options, and potential tax benefits.Extension loans typically have longer repayment periods than other types of loans, which contributes to lower monthly payments.

• Disadvantages

  Restructuring a home loan can boost your credit score, but it can also put a strain on your finances due to longer repayment periods and interest accumulation. The disadvantages of home extension loans include potential accrued interest, financial strain from restructuring charges, a temporary impact on credit scores, an extended loan tenure, and potential usage restrictions on the extended space.

Home Improvement Loan

A Home Improvement Loan, also known as a Home Renovation Loan, enables you to finance repairs or renovations to your current home.

• Terms & Conditions

  The terms and conditions for home improvement loans vary by lender and are determined by the loan amount. In most cases, you'll be required to provide documentation outlining the project's cost and your creditworthiness. Furthermore, proof of income and other financial information may be required.

• Advantages

  Home Improvement Loans offer flexible financing for a variety of improvements that may increase property value, as well as structured repayment plans for ease of management. Home improvement loans do not require collateral, which makes the application process faster and simpler than other types of loans.

• Disadvantages

  The disadvantages of home improvement loans include potentially high fees and interest rates, the possibility of secured loans, and a negative impact on credit. Before deciding on a home improvement loan, carefully consider these factors as well as the benefits.

NRI Home Loan

NRI Home Loans are a viable financing option for non-resident Indians looking to invest in Indian property.

• Terms & Conditions

  NRI Home Loans have special terms and conditions, such as eligibility requirements, loan amounts, interest rates, down payment, repayment period, currency options, required documentation, and the need for a power of attorney. It is critical to carefully review these details before applying.

• Advantages

  The provision enables non-resident Indians (NRIs) to invest in real estate in India while living abroad, allowing them to accumulate wealth and establish a strong presence in the Indian property market. Foreign investment enables NRIs to diversify their financial portfolios and establish a strategic foothold in India's dynamic property landscape, thereby contributing to the growth of the real estate industry.

• Disadvantages

  NRI home loans may have higher interest rates, stricter eligibility requirements, currency risks, limited property options, and complex documentation.

Composite Home Loan

A composite loan is a financial arrangement provided by banks and financial institutions to individuals who want to purchase a plot of land and build a house within a set timeframe.

The composite loan has general terms and conditions, such as beginning construction within two years to avoid higher interest rates, repaying two months after construction or two years from the loan date, and covering 20% of the costs yourself. To be eligible for tax benefits on the composite loan, submit a completion certificate to the lender and begin making EMI payments.

Home Loan Balance Transfer

Home Loan Balance Transfer, also known as Home Refinancing, allows you to transfer your loan balance to another bank that offers more flexible repayment options. The new bank may offer lower interest rates, a longer repayment period, or improved repayment options, and upon selection, it pays the outstanding balance to your original bank.

Hybrid Home Loan

Hybrid Home Loan combines fixed and adjustable interest rates and are commonly used for home purchases. They start with a fixed rate for a set period of time before adjusting based on the loan terms. If interest rates fall, the adjustable-rate period results in lower loan payments, which is beneficial for those who anticipate lower rates or do not intend to stay in their home for an extended period of time.

Hybrid loans begin with lower interest rates than traditional fixed-rate mortgages, but these can change over time. Lenders may impose interest rate caps, providing protection against significant rate increases while reducing the benefits of lower rates.

Things to Consider Before Applying for A Home Loan

Check Your Credit Score

• To check your credit score, go to the CIBIL website or UMANG and enter the required information. A credit score ranging from 700 to 900 indicates good credit.
• The higher the score, the more likely you are to get a better loan deal.

Consider Your Budget, Down Payment and EMI

• Look at your budget, including income stability, monthly expenses, an emergency fund, and your debt-to-income ratio. Consider future expenses, homeownership savings, financial objectives, and interest rate changes.
• When making a down payment on a home, contribute as much as possible to reduce the loan amount while remaining within your budget.
• Select an appropriate term and interest rate, consider prepayment options, keep an emergency fund, and plan for future financial obligations.

Documents Required for Home Loan

• Include a completed form, photos, proof of identity, residence, and six-month bank statements.
• Salaried individuals require an original salary certificate or IT returns from the previous two years.
• Self-employed individuals must provide IT returns or assessment orders from the previous three years, as well as business proof.

• NRI applicants must provide business documents, passport copies, employment proof, property-related documents, attested income documents, overseas bank statements, and the last six months of NRO/NRE bank statements.

Identify the Right Banks and Lenders

• When choosing a bank or lender for a home loan, look for competitive interest rates, flexible loan terms, a positive customer service reputation, quick loan processing, transparent fees, a favourable loan-to-value ratio, credit score requirements, overall reputation, and any specialized programs or incentives.

Duration

• When applying for a home loan, consider the loan duration in terms of monthly EMI affordability, overall interest accumulation, alignment with financial goals, age, income stability, prepayment options, total interest paid, flexibility, impact on loan-to-value ratio (LTV), and future financial commitments.

• Consider how long it will take you to repay the loan and select a repayment period that is appropriate for your financial situation based on the nature of your expected income.

Rate of Interest

• Consider how the interest rate will affect monthly payments, total interest paid, and loan affordability.

• The interest charged by the bank or financial institution is calculated using the principal amount, and you will repay the loan accordingly.

Initial Payment or Down Payment

• Making a down payment involves contributing your own funds, and it is best to contribute as much as possible to reduce the loan amount without causing a financial crisis.

• A smaller loan amount results in less interest paid. While some banks offer 100% financing, a down payment of 10% to 20% is recommended to avoid excessive interest payments and ensure a manageable repayment schedule.

Mortgage Insurance

• Mortgage insurance protects lenders or titleholders in the event of default, death, or noncompliance with contractual obligations. It encompasses private mortgage insurance (PMI), qualified mortgage insurance premium (MIP), and mortgage title insurance.

• Homeowners who require PMI due to 80% loan-to-value ratio rules can cancel the policy after paying 20% of the principal balance.

Additional Fees

• Keep in mind that banks may charge additional fees, such as administrative, processing, and service charges. These fees may be monthly or one-time and can be discussed with the lender.

• Adjust your monthly budget if these are one-time expenses. Maintain a check on these fees to ensure that you understand your financial obligations.

5 Important Terms About Home Loan

Equated Monthly Installment (EMI)

EMI is a monthly payment made by borrowers to settle their home loans that includes both the principal and interest components. It remains constant throughout the repayment period, but the proportions of interest and principal vary over time.

Loan-To-Value (LTV) Ratio

The loan-to-value (LTV) ratio plays an important role in determining lending risk and mortgage approval. Higher LTV ratios indicate riskier loans with higher interest rates, which may require the borrower to obtain private mortgage insurance (PMI).

Fixed Interest Rate

Fixed interest rates offer stability and predictability to borrowers, avoiding fluctuations in interest expenses. They are preferred in low-interest environments due to their predictable payment structure.

Prepayment

Prepayment is the practice of paying debts or instalment loans before their due date, which includes bills, operating expenses, and loans. Individuals, corporations, and organisations frequently prepay these expenses. However, some loans, such as mortgages, may have penalties for full early repayment.

Credit Score

A credit score, a three-digit number derived from your credit reports, reflects your creditworthiness. Influenced by factors like account number, age, payment history, and balances, its main purpose is to predict the likelihood of loan repayment.

List of Documents Required for Home Loan

Documents Required for Salaried Applicants

The necessary documents include PAN cards, passports, voter's IDs, Aadhaar, utility bills, rental agreements, birth certificates, school certificates, voter ID cards, last 3-6 months salary slips, Form 16, and property documents if the property has already been purchased.

Documents Required for Self-Employed Applicants

Self-employed applicants for home loans must provide proof of identity, residence, age, bank statements, business registration, IT returns, property documents, a processing fee cheque, and a signed passport-size photograph.

Other required documents include PAN cards, passports, voter IDs, Aadhaar, utility bills, rental agreements, birth certificates, school certificates, voter ID cards, bank statements, business registration documents, and the previous three years IT returns.

Other Documents Required for Home Loans

Business owners may need to submit additional documents when applying for a home loan, such as business proof (e.g., Shops & Establishment Certificate, SEBI Registration).

Address proof (e.g., Voter Card, Aadhaar, Utility Bill), income proof (profit and loss account, balance sheets, ITR), and property documents (agreement to sell, payment receipts, property chain documents).

List of Home Loan Documents Required for NRIs/PIOs

The NRI home loan application usually requires a passport, employment and income documents, bank statements, property documents, identity and address proof, visa and work permit (if working in a foreign country), and details of NRE/NRO accounts.

Legal documents like a power of attorney or will may also be required depending on the property being purchased.

Property Documents Required for Home Loan

Essential property documents for a home loan application include the Deed of Sale, Sale Agreement, or Share Certificate (for cooperative societies), tax receipts, possession certificates, and allotment letters.

Furthermore, approval documents, NOCs, and construction cost estimates are required. Legal reports, valuations, and post-closure handover documents, such as a power of attorney, all help to ensure a smooth and secure home loan process.

Step-by-Step Guide to Home Loan Process

Step 1: Calculate your Home Loan Eligibility

• The first stage of the home loan application process entails determining the maximum amount you can borrow.
• This eligibility is determined by a variety of factors, including your current income, age, the income of any co-applicant (if applicable), credit score, and outstanding debts.

Step 2: Choose the Home Loan Provider

• You can choose between banks, housing finance companies, and non-banking financial companies (NBFCs), each with their own interest rates, terms, and conditions.
• Before making a decision, take into account interest rates, loan tenure, processing fees, and additional features.

Step 3: Gather Financial Documents

Before applying for a loan, keep several relevant documents handy, as lenders or banks usually require the following financial records:

• Proof of identity (the Aadhaar card is the most commonly accepted document), PAN card, proof of address (including Aadhaar card, electricity bill, and property tax receipt), recent salary slips, bank statements from the previous six months, and income tax returns from the previous three years.
• Include Form 16, loan repayment history, and an asset and liability statement.

Step 4: Fill out the Loan Application Form & Attach the Documents

• Complete the application form with your name, phone number, residential address, monthly or yearly income, educational information, employment details, property details, and the estimated property value.
• Once these details have been completed, attach photocopies of the documents listed in Step 1.
• In some cases, lenders may ask you to self-attest these photocopies by signing them and including the date, indicating your attestation that they are true copies of the original documents.

Step 5: Document Processing and Verification

• Every day, banks receive a large number of loan applications and must review paperwork. Fake documents are a criminal offense, and banks must complete all paperwork before proceeding.
• Banks examine loan applicants personal information, such as employer credentials, residence address, and home and work phone numbers.
• A bank representative verifies the loan applicant's employment and residence information, and if all documents submitted are correct and true, the applicant moves on to the next step.

Step 6: Legal and Technical Check

• Because of the large lending amounts, banks employ property experts, such as civil engineers or architects, to inspect property premises and ensure safety.
• The expert makes a site visit to assess construction project details such as stage, quality, work progression, completion time, building layout, permissions, and certificates, all while adhering to environmental guidelines.
• For a completed construction, the expert evaluates the property's age, internal/external maintenance, loan tenure eligibility, construction quality, existing mortgages, government approvals, property valuation, and the presence of valid handover certificates.

Step 7: Pay the Processing Fee

• To keep their account active, a loan applicant must pay a processing fee to the bank or lender that facilitates the loan once a year after completing the application form and attaching the necessary documents.
• The processing fee is usually between 0.25% and 0.50% of the requested loan amount, calculated as a percentage charge. For a Rs. 50 Lakh home loan, the processing fee is expected to range between Rs. 12,500 and Rs. 25,000.

Step 8: Discussion with the Bank

• Before sanctioning a loan, banks or financial companies usually request a face-to-face interaction with the applicant to gather more information and determine their likelihood of repaying the loan with interest.
• This formal meeting ensures comprehensive understanding and alignment before the loan approval process, as all relevant information has been verified.

Step 9: The Sanction/Approval Process

• The bank's decision to approve or reject a loan application is critical, and if the bank is unsure about the applicant's information, it may halt the process or reject the application. However, if everything goes well, the loan will be approved based on the authenticity of the applicant's documents.
• The bank determines the maximum loan amount for an applicant and sends a sanction letter, which may include policies that the applicant must follow prior to repayment.

Step 10: Processing the Offer Letter / Sanction Letter

• The bank determines the maximum loan amount for each applicant and sends a sanction letter outlining the policies that must be followed before disbursement.
• When the loan amount is approved, the bank sends a certified offer letter outlining the sanctioned amount, interest rate, loan tenure details, mode of repayment, and the home loan's terms and conditions.
• When the applicant agrees to the offer letter, he or she must sign a duplicate copy, verifying the interest rate as discussed, which will be kept in the bank's records.

Step 11: Loan Agreement and Disbursal

• After signing the loan agreement and completing legal proceedings, the loan amount is typically disbursed in the form of a check in the name of the seller, development authority, or builder. If an excess payment is made, a check can be issued directly in the applicant's name.
• The payment process is dependent on the construction stage. For properties that have finished construction, the entire loan amount is released. If the property is still under construction, the loan will be disbursed in stages.

Benefits of Taking a Home Loan

Tax Benefits

The primary advantage of a home loan is the ability to deduct income tax on both principal and interest payments. Sections 80C and 24(b) of the Income Tax Act allow you to claim up to Rs. 1.5 Lakh in principal repayments and up to Rs. 2 Lakh in interest repayments.

Additional benefits may apply in certain circumstances under Sections 80EE and 80EEA, and up to Rs. 1.5 Lakh can be claimed for stamp duty expenses under Section 80C. A tax professional can provide the most up-to-date and personalized information.

Lower Interest Rate

Home Loan Interest Rates are significantly lower than for other loan types. During a cash crunch, obtaining a cash advance on an existing home loan is a cost-effective solution. The interest rate on this top-up is frequently lower than that of a personal loan. This makes it a good option for dealing with financial problems.

Due Diligence of Property

When applying for a home loan from a bank, rigorous legal checks are performed on the property to ensure the authenticity of all submitted documents. The bank's due diligence reduces the risk of potential scams, and approval indicates the property's safety, resulting in a secure transaction for both you and the property.

Long Repayment Tenure

Home loans typically come with prolonged repayment periods, often spanning 25 to 30 years. This extended tenure, driven by the substantial loan amounts needed for home acquisitions, leads to more affordable monthly EMIs, alleviating the financial strain on borrowers.

No Prepayment Penalty

Choosing a floating-rate home loan allows you to make prepayments without paying penalties whenever you have a specific amount available. This flexibility enables you to accelerate the repayment process, potentially allowing you to pay off your home loan before the loan term ends.

Balance Transfer Facility

Lower interest rates and better repayment terms make the home loan balance transfer option potentially cost-effective. Before deciding on a transfer to align with specific financial goals, take into account factors such as interest rates, service charges, and customer experience.

Disadvantages of Home Loan

Long-Term Commitment

A home loan is a long-term commitment that requires regular payments over several years, which can present challenges such as extended financial obligations, higher accumulated interest payments, reduced financial flexibility, risk to market fluctuations, and potential prepayment restrictions.

This significant financial burden can make it difficult to adjust to unexpected changes in income or expenses, emphasizing the importance of careful consideration by prospective homebuyers before entering into a long-term loan.

Interest Cost

Home loans provide the opportunity to become a homeowner, but they come with the disadvantage of accruing interest charges over time, which can significantly increase the cost of the home.

Furthermore, if borrowers fail to meet their repayment obligations, they risk losing their property through foreclosure. Prospective homeowners should carefully consider these factors before taking out a home loan.

Risk of Foreclosure

The risk of foreclosure in home loans, caused by factors such as payment default, financial hardship, property depreciation, and refinancing difficulties, emphasises the importance of effective communication and proactive measures for homeowners experiencing financial difficulties.

If unable to meet loan payments, the lender may foreclose on the home, resulting in potential property loss and significant financial consequences.

Limited Flexibility

Home loans can limit financial flexibility by requiring a significant portion of income to cover loan payments, potentially limiting savings for emergencies or long-term goals.

This commitment can also disrupt major purchases or investments, potentially limiting adaptability to unexpected changes in income or expenses. Individuals should assess their financial situation and seek professional advice before making home loan commitments.

Credit Score Dependent

Your credit score is critical for loan approval and determining interest rates. If your credit score is low, getting approved can be difficult, and you may be required to pay a higher interest rate. People with lower credit scores may have difficulty getting loans approved or face higher interest rates.

3 Risk Factors of Home Loan

Your Score

Your credit score significantly influences your home loan application, influencing approval probability, interest rates, and lender terms. A low score increases the risk of rejection and less favourable terms, making maintaining a good credit score crucial for a successful home loan application.

Debt-to-Income Ratio

The debt-to-income ratio, calculated by dividing monthly debt payments by income, is critical for lenders when determining loan eligibility. A lower ratio is generally more advantageous, whereas exceeding limits can restrict eligibility or result in higher interest rates. Managing existing debts and increasing income can help improve loan ratios and eligibility, particularly for mortgage applications.

Sources of Income and Down Payments

Individual income comes from employment salaries, self-employment earnings, rental income, and investment returns. Personal savings, gifts, government assistance, employee benefits, asset liquidation, or inheritance funds can all be used to make down payments on a home. Recognizing these various sources is critical for strategic home purchase planning.

Best Banks for Home Loan in India

SBI Bank Home Loan

SBI Bank Home Loan, India's premier home loan provider, offers competitive interest rates starting at 8.55% annually with the flexibility of a 30-year loan tenure. The processing fee, at 0.35% of the loan amount plus applicable taxes, is accompanied by an additional 0.05% interest reduction for female borrowers. Renowned for their affordability, SBI Home Loans also stand out for waiving prepayment penalties, contributing to their widespread popularity.

HDFC Bank Home Loan

HDFC Bank Home Loan is another top provider in India, with competitive annual interest rates beginning at 8.60% and a maximum loan term of 30 years. With a processing fee of Rs. 3,000 for employed individuals, it provides affordable and flexible housing financing options.

Axis Bank Home Loan

Axis Bank Home Loan offers competitive interest rates, beginning at 6.90% per annum for floating-rate loans and 12% per annum for fixed-rate loans. Eligible customers have the flexibility to choose housing loan tenures of up to 30 years (for floating-rate loans) or 20 years (for fixed-rate loans). There is a processing fee, potentially up to 1% of the loan amount, and an initial payment of Rs. 2,500 plus GST may apply. These features position Axis Bank as a notable choice for those seeking advantageous and adaptable home loan solutions.

ICICI Bank Home Loan

ICICI Bank offers competitive housing loans starting at 8.60% per annum with a loan term of 30 years. Floating-rate loans have no processing fees, whereas applicable fees range from 0% to 0.5% of the loan amount. Its partnership with the PMAY Scheme strengthens ICICI Bank's position as one of the best options for housing loans.

Bank of Baroda Home Loan

Bank of Baroda provides competitive home loan rates starting at 7.95% per. annum, offering a 30-year tenure and straightforward repayment options. With housing loans up to Rs. 10 Crore and minimal processing costs at 0.25%. Notably, it imposes no prepayment penalties and allows flexibility with up to five top-ups during the loan term. These features make the Bank of Baroda a preferred choice for affordable and flexible home financing in India.

Conclusion

What is Home Loan? A home loan, also known as a mortgage, allows people to finance real estate by borrowing money to buy a home and repaying it over time with interest.

How Does Home Loan Work? A bank-secured home loan allows for property purchases with a repayment period of 30 years. Annual statements from lenders provide information on anticipated and actual interest payments, which is important for tax purposes.

Importance of Home Loan: A home loan is important because it makes homeownership more accessible, serves as a long-term financial investment, facilitates equity building, and provides tax benefits.

Home Loan Eligibility Criteria

• Your Age
• Your Employment Status
• Your Credit Repayment Behavior and Your Credit Scores
• Your Income to Expense Ratio
• Documents You Need to Submit

Types of Home Loan

• Home Loan to Buy Land
• Home Loan
• Home Construction Loan
• Home Extension Loan
• Home Improvement Loan
• NRI Home Loan
• Composite Home Loan
• Home Loan Balance Transfer
• Hybrid Home Loan

Things to Consider Before Applying for A Home Loan

• Check Your Credit Score
• Consider Your Budget, Down Payment and EMI
• Documents Required for Home Loan
• Identify the Right Banks and Lenders
• Duration
• Rate of Interest
• Initial Payment or Down Payment
• Mortgage Insurance
• Additional Fees

5 Important Terms About Home Loan

• Equated Monthly Installment (EMI)
• Loan-to-Value (LTV) ratio
• Fixed interest rate
• Prepayment
• Credit Score

List of Documents Required for Home Loan

• Documents Required for Salaried Applicants
• Documents Required for Self-Employed Applicants
• Other Documents Required for Home Loans
• List of Home Loan Documents Required for NRIs/PIOs
• Property Documents Required for Home Loan

Step-by-Step Guide to Home Loan Process

• Step 1: Calculate your Home Loan Eligibility
• Step 2: Choose the Home Loan Provider
• Step 3: Gather Financial Documents
• Step 4: Fill out the Loan Application Form & Attach the Documents
• Step 5: Document Processing and Verification
• Step 6: Legal and Technical Check
• Step 7: Pay the Processing Fee
• Step 8: Discussion with the Bank
• Step 9: The Sanction / Approval Process
• Step 10: Processing the Offer Letter / Sanction Letter
• Step 11: Loan Agreement and Disbursal

Benefits of Taking a Home Loan

• Tax Benefits
• Lower Interest Rate
• Due Diligence of Property
• Long Repayment Tenure
• No Prepayment Penalty
• Balance Transfer Facility

Disadvantages of Home Loan

• Long-Term Commitment
• Interest Cost
• Risk of Foreclosure
• Limited Flexibility
• Credit Score Dependent

3 Risk of Home Loan

• Your Score
• Debt-to-Income Ratio
• Sources of Income and Down Payments

Best Banks for Home Loan in India

• SBI Home Loan
• HDFC Home Loan
• Axis Bank Home Loan
• ICICI Home Loan
• Bank of Baroda Home Loan