Home Loan

"Home is where you hang your hat". There is nothing much needed to say about the significance of a home for anyone after this phrase. Another very famous phrase in western countries says, "Your home is your reflection". Being a home owner is and always a dream for most of us but not everyone achieves it.

Over the time, more and more financial companies came into existence. They are offering services to help people achieve their dreams. Now every Indian can afford to buy a home through a home loan. So, Banknomics is here to enhance your reflection and let you proudly reside in it. Banknomics will share your load in buying a house that will be your dream home.

Purchasing a home or availing for a housing loan requires a cluster of planning. We are here to help you at your every step from applying for a loan, documentation till approval. Banknomics will share your load in buying a house that will be your dream home.

Features & Benefits

A person can avail maximum 90% of the cost of house or land or both which can be extended to 30 years. This may differ depending upon the amount of the loan. Any person availing for a loan gets following benefits:

  1. A person can compare home loan interest rates and apply for home loan at the rate which he/she can afford. This way a person can avail of the cheapest home loan.
  2. Payment of home loan does not affect the budget much as one has to pay back in pre-decided installments.
  3. Anyone can apply for home loan online and manage account without standing in large queues.
  4. Real estate sector is a booming sector. Even if you purchase a house availing a home loan, it will add to your capital gain.
  5. Home loan gives a benefit of deduction of Interest paid as well as principle amount under Sec 24(c) and 80C.
  6. Banks certifies your investment before providing you a loan. Be free as your investment is safe now.
  7. Competitive Interest Rate
  8. Regular payments will improve credit history and Cibil Score too.

Documentation

List of documents required for home loan for all the Applicants are:

  1. Signed application with 3 passport size photographs
  2. Identity Proof
  3. Residence Proof
  4. Income Proof
    1. Current salary certificate or 3-6 months salary slip for the salaried person.
    2. 3-6 months bank statement or Audited financial statements for the Self-employed person.
  5. Processing fee cheque
  6. Tax Proof
    1. Latest Form 16 for salaried person
    2. Latest ITR form for self-employed person
  7. Statement of bank account or passbook of last 6 months
  8. Property Documents

Additional documents needed for Self-employed professionals/ non-professionals:

  • Proof of business address. (Only for non-professional self-employed)
  • Documents related to the establishment of business. (Deed, MOA, AOA etc.) (Only for non-professional Self-employed)
  • Education Qualification certificate.
  • Last 3 years acknowledged copies of IT Returns/Assessment Orders.
  • Last 3 years Audited and CA certified copies of Balance Sheet and P/L Account.

Additional documents needed for salaried person

  • Last 2 years TDS certificate on Form 16 duly acknowledged.

Home Loan Amortization Schedule

Home Loan Amortization Schedule is a table which gives you the following details:

  1. Outstanding Payment before EMI
  2. Total Amount of EMI
  3. EMI amount towards Interest
  4. EMI amount towards Principle amount
  5. Outstanding amount after payment of EMI

Equated Monthly Installments (EMI)

Equated Monthly Installments (EMI) are monthly installments that borrower has to make after taking a loan as per amortization schedule.

Principle and Interest Rate Payment

EMI repays a part of interest and a part of borrowed amount. However, this proportion of interest and principle amount varies from time to time.

Amortization schedule and criterion of interest rate, loan amount tenure etc will be typically same for all. It is because all Banks and Financial Institutes calculate EMI with a common formula.

Initial EMI's will contribute more towards interest rather than principle amount. In later EMI's principle amount will contribute more as compared to interest.

Calculate your EMI on Home Loan EMI Calculator here.

Adjustable Interest Rate

Some Banks and Financial Institutes associate their rates to Adjustable Interest Rates. If they revise their benchmark rates, an effect on the loans will be from the following month. This will result in the change of proportion in principle and interest rate amount in your EMI.

With an increase in interest rate, the proportion of interest amount will get a hike, which will result in an extension of EMI and vice versa.

Reduction in Tax Obligation

As per Income Tax Law, interest paid on home loans can be deducted up to Rs. 2,00,000 per year under sec 24(c). Principle amount up to 1,50,000 is also allowed for deduction under sec 80C.

Home Loan Eligibility

A person can afford to pay back his loan or not is measured through Home Loan Eligibility. For calculating Housing Loan Eligibility, various factors are to be taken into consideration. It includes monthly income and obligation, current age, retirement age etc. Co-applicant's income can be included to enhance Home Loan Eligibility.

Factors Affecting Home Loan Eligibility

Following are the factors that will affect your eligibility:

  • Age
  • Outstanding Loans
  • Income
  • Rate of Interest
  • Cibil Score
  • Loan Tenure

Ways to Boost Your Eligibility

  • Income - Banks prefer providing loans to applicants having a stable income. Mention other sources of income to enhance your Home Loan Eligibility.
  • Outstanding Loans - Payback outstanding loans soon to assure the bank about your eligibility to pay back your loans.
  • Co-Applicant's Income - Merge income of your spouse or any other family member. This will increase the income and decrease the risk of repayment for banks. 
  • Loan Term - Increase your loan term so that it will give you ample time to pay back your loan. It will also decrease your EMI but will ante up your interest amount.
  • Cibil Score - Improving your Cibil score will boost your ability to get a home loan. Here are the tips to improve your cibil score.

Top-up Loans

Top-up loans are loans you can avail on top up of your home loans. Usual tenure of the loan is 10 years and is provided only after few years of home loan repayments.

Refinance

Refinance is an option for a person who has purchased a property with his own funds within last 12 months. He/she can now avail a loan for it up to the registered value of the property.

Other Facilities

Home Loan Balance Transfer

Transferring balance payment of the housing loan to another bank is Home Loan Balance Transfer. This is done because of poor service by the bank, high Home Loan Interest Rate etc.

Part Prepayment Facility

This facility can be used if you want to pay back your loans faster. However, for prepayment minimum amount is 3 months EMI and there is no limit on maximum payment.

Nil Foreclosure Facility

A borrower can pay his entire remaining amount before completion of the term. But not all banks allow its borrowers to repay their loan before completion of its tenure without any additional charges.

3-EMI Holiday

To ease your repayment, some banks and financial institutes give you a grace period of 3 EMIs. This facility is provided so that you can manage your monthly expenses easily.

Online Facility

You can easily access loan information like payment track, interest certificate, payment schedule etc. through this facility. All the loan providers now provide this facility.