Home Loans Related Frequently Asked Questions
What are the types of housing loans available?
Various housing loans are offered by financial institutions. Prominent among these are:
This is the basic housing loan for the purchase of a new home which covers cost of the flat, deposits and charges, stamp duty and registration charges
Home Improvement / Extension Loans
For implementing repair works and renovations in a home that has already been purchased by you.
Home Construction Loans
For the construction of a new house.
For people who wish to sell the existing house and purchase another and need finance for the new house, until a buyer is found for the old house.
To pay off an existing housing loan and avail of the option of a loan with a lower rate of interest.
To pay off the debt you have incurred from private sources such as relatives and friends, for the purchase of your present house.
Who can apply for a housing loan?
Any Indian citizen, including Non Resident Indians, with a steady source of income can borrow funds for financing the cost of a flat from housing finance companies and banks
Can a Non Resident Indian avail of housing loans
Yes, depending upon the eligibility criteria and policy of the bank.
How much can a person borrow?
Loans are generally disbursed between 70%-80% of the cost of the flat. The balance money is to be funded by the flat purchaser from his own contribution. The percentage of loan would vary from bank to bank.
How does Vikas Developer assist a flat purchaser for procuring Housing Finance?
All projects at Vikas Developer are pre-approved for grant of home loans by leading housing finance companies and banks. The sales team liaises with the all leading Housing Finance Institutions for project approvals, processing the loan, documentation and disbursement of loans.
What is an EMI?
Equated Monthly Installment ("EMI") is the amount comprising a portion of the interest and the principal loan amount which is payable by a borrower to the lender every month.
How is the rate of interest calculated in India?
Interest rates vary from time to time and from institution to institution. The interest calculated either on a daily or monthly reducing or yearly reducing balances.
What is a fixed-rate housing loan?
A fixed-rate housing loan is a loan where the rate of interest is constant through the entire term of the loan period.
What is a floating interest rate housing loan?
A floating interest rate loan is a loan where the interest rate payable is linked to the market conditions such as the base rate and rises and falls with the bank rate varies. Hence a borrower bears the risk of interest rate fluctuations.
What are the repayment period options?
Repayment period options range generally from 5 to 20 years. Some of the banks may give loans up to 25 years also.
What are the charges for availing a housing loan?
- Processing Fees payable to the lender on applying for a loan and is either a fixed amount not linked to the loan or may also be a percentage of the loan amount.
- Prepayment Penalty between 1% and 2% of the amount being pre paid is charged by some institutions when a loan is paid back before the end of the agreed duration. Many banks now don't levy penalty on partial Prepayment
- Stamp duty and registration fee as per prevailing rate of Government Authority.
- Miscellaneous costs: such as administrative costs, legal documentation charges, technical consultant charges.
What security is required for a housing loan?
The flat purchased is the primary security and is mortgaged to the lending institution till the entire loan is repaid. Additional security such as life insurance policies, shares, bonds, fixed deposit receipts, national savings certificates can also be offered, as per the requirements of the institution.
Do lending companies require guarantors?
Yes. Many lending companies require 1 guarantor or a co-applicant.
What is the time required for approval of a loan application?
Varies from Bank to Bank but usually it is 15 – 20 days for a salaried person and 20 – 30 days for a self employed person depending on the applicant's documents.
What is the time required for disbursement of loans?
Usually loans are disbursed within 10 – 15 days after completion of verification by the institution, documentation (such as handing over of the original agreement for sale / lodging receipt to the lender) and completion of all relevant procedures and only after proof that the borrower's own contribution has been paid by him to the Vendor / Builder / Developer.
Do institutions accept joint loan applications?
Yes but it varies from Bank to Bank.
What are the documents required at the time of making an Application for a housing loan?
- Proof of age
- Identity papers
- Proof of residence
- For salaried individuals: Latest salary slip
- Bank statements reflecting salary credits for the previous six months
- For self employed individuals: certified copies of balance sheet, profit and loss statement and tax challans / tax returns for the previous 3 years
- For partnership/private limited companies: the Articles of Association, partnership deed and details about the firm
- For NRIs Latest salary certificate specifying, Name (as it appears in the passport), Date of joining, Passport Number, Designation, Perquisites and salary, Photocopy of labour card/identity card, Photocopy of valid resident visa stamped on the passport, Photocopy of monthly statement of local bank account, Property related documents
Do lending institutions offer incentives for housing finance?
Sometimes lending institutions offer incentives for a specified period or under a special scheme. Incentives could be any of the following:
- Free accident insurance
- Waiving of pre payment penalty
- Waiving of processing fee
- Property insurance
* Loans are at the sole discretion of the bank