Food, clothing and shelter are the basic necessities of life and we have evolved from the cave dwelling types to more civilized times. Today, our houses are more for comfort than for survival. So it is every individual's desire to build the coziest nest to live in. This is where Home Loans come in.
Home Loans are finances taken from a Housing Finance Institution [HFI] to aid in the buying and/or modification of your property. To avail of a Home Loan from an HFI, these are the types of properties you can buy.
- A property under construction
- A constructed property
- Resale property
- Self construction or own construction
Space is permanently an issue and we could always do with more of that. Home Extension Loans are available for the very purpose of extending the built up area of a property. These are some of the instances for which you could take an Extension Loan.
- To construct an additional room or floor by getting additional FSI granted.
- Using grills or sliding windows to enclose the balcony.
- Construction of a garden or garage in the building vicinity
In a general Home Loan, the following are applicable.
Your LTV cannot exceed 85% and the elements that are included in the value of property are listed here. (Link to the Cost of Property).
Your loan duration usually does not exceed 20 years.
No one likes getting into the position where you have bitten off more than what you can chew. Therefore, to ensure that your hard earned money doesn't disappear only in the settlement of loans, normally not more than 50% of your GMI is allotted for the payment for all loans, including the one that you have just taken.
To ensure that the above point is adhered to, your EMI will normally not exceed 50% of your GMI. You can find out your probable EMI using this. (Link to the calculator).
Your loan eligibility is calculated using LTV norms, IIR norms and FOIR norms and the lowest amongst them is chosen to determine your loan amount.
Loan necessities :
Free goods are restricted to those produced by Mother Nature herself. A music CD is not very expensive to produce but the effort that goes into the production needs to be rewarded. Similarly, for Home Loans also, there is a charge. This amount will either be a percentage of the loan amount or a fixed amount once again based on the loan amount.
When we have important files on our computer, we always make sure we have back-up. The same way, HFIs also like to have a back-up so that in case the loan cannot be repaid, they do not lose out on the money. For this reason, most of them insist on Personal Guarantors and in such a case, you need to provide one before the disbursement of your loan.
It's better to be safe than sorry. Every HFI not only does a technical but also a legal check on your property. For the technical check, the bank sends it's team for a site visit. A legal check involves sending your docs to the bank's lawyer. Both these checks need to be passed and cleared before your loan can get disbursed.
Your disbursement kind depends on the type of property being purchased. If you are going in for a property that is being constructed, disbursement occurs in parts as per the stage of construction and simple interest or PEMI will be charged on the partly disbursed loans. A ready or resale property has the loan disbursed at one go.
The cheque for disbursement is almost always in the name of the builder, seller, society or developmental authority and will be in your name if you have already made a part payment to the above mentioned people.
Repayment of the loan can either be via DAS, PDCs, SI or Cash/DD
Tax benefits can be availed of on your Home Loan and to facilitate this, the HFI will issue interest certificates every year which need to be filed with your tax returns.
You have an option of either amortizing the loan using the monthly rest or annual rest. These are the general terms and conditions for most HFIs regarding Home Loans & HELs. There might also be specific terms and conditions that vary from HFI to HFI.