Everything about Home loan: Process, Documents
How to get Housing loan, Housing loan Types, Home loan to purchase plot, buy a house. Documents for Housing loan, Calculate EMI.
Home Loans: Having a house is the first and foremost desire of a family and a person. There are so many lucrative offers from builders and property dealers in the market to purchase a house. When it comes to buying a house, either budget is a constraint, or we don’t want to invest our whole money in buying a house. There, Home loans play major roles and help us in buying a house with small capital spending.
So many Non-Banking Financial companies (NBFC), Private Banks, Public Sector Banks (Govt Banks) are offering housing loans at very affordable interest rates. The interest paid towards a housing loan also gives you a chance to get benefitted while paying income tax as you get tax relaxation under Section 24 of the Income Tax Act, 1961.
Read article on 15 tricks to save income tax
Now the question arises for what purpose Home loans are available?
The Housing loan can be availed for –
- To buy a ready to move house (Builder Floor, Row House, Villa etc.)
- To buy a plot and then construct it.
- To construct a house on a previously owned plot.
- To repair your own house.
- To purchase furniture and Fixtures.
- To purchase a plot.
Availability of housing loans from public sector banks is cheaper than NBFCs and some private banks. However, there are some hectic formalities of public sector banks. One of which is handling legal issues in property and income related matters. But, public sector banks provide housing loans at cheaper rates.
In Today’s scenario, private banks and NBFCs are offering pre-approved housing loans based on your income and job profile, or bank account maintained with them. Some of the banks have collaborations with renowned builders and property firms which makes the process easier, and time involved in the housing loan process gets reduced.
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Where big players like SBI, HDFC etc. make full scrutiny of legal papers of property. They also check the income source of the customer. Big lenders deny providing loans if there is any discrepancy. NBFCs are helping people to get housing loans with less due diligence but at higher rates.
What are the documents required to avail a housing loan?
To avail a housing loan, customer must provide to the lender –
- Legal papers of the property being purchased (some of the banks demand property title chain for last 30 years)
- Income source and related documents like ITRs for last 3 years (For salaried person Form 16 from employer may also help if ITR copy is not available), Salary Slips for salaried person, Balance Sheets for businessperson.
- KYC documents like Pan, UID, Driving license, Voter Card etc. (This may differ bank to bank)
The government of India is also providing subsidies on Housing loans under PM Awas Yojna, for which one can apply directly through a bank. Bank must do all the formalities to get the subsidy. However, there are conditions which are applied to avail the subsidy (More about PM Awas Yojna can be read through the link http://pmaymis.gov.in)
Role of credit score:
While availing a home loan for any of the purposes, whether to purchase a ready built house or construct a house, Credit score plays a major role. The lenders first and foremost will check your credit score. The person having a higher credit score will have some advantages like lower interest rate and higher amount. Some of the lenders prefer to provide home loans to people who have never availed home loans previously to give advantage of PMAY. BY generating CIBIL or any other credit report, the lender gets an idea about how many home loans a person has availed.
Know more about how to improve your credit score.
There are some websites which are providing options to compare housing loan rates. Also you can compare the amount which can be financed.
You can calculate EMI of a housing loan from BankWire Home Loan EMI Calculator.
Role of agents in Home loans
Since competition has grown rapidly in providing housing loans, banks and NFBCs are hiring agents who help banks to reach the customer easily. Not all the banks are providing this facility. The agents are also helpful to the customer as the agent is having full knowledge of the process. Agents know the key persons who can help in early sanction of the loans. However, the suggestion is to contact a bank branch directly to avoid frauds.
Do builders help in getting home loans?
The answer is Yes. If you book a flat with a builder, which already is on the panel of the lending bank, It will be very helpful to you. The lenders generally complete all the legal formalities related to property while empaneling them. Hence any new loan from an empaneled builder will be scrutinised for income related issues majorly. This will save your time and money. You can always explore the possibility of bank approved builders to purchase a flat. However, in most of the cases only reputed builders apply for empanelment with banks.
To conclude, I would say buying a house is much easier with the help of housing loans. These home loans can be availed from various public and private lenders. All you need to have a desire of buying a house and genuine property and lender are ready in the market.
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