There are some Home loan FAQs

(1). What is a home loan?

A home loan is a loan given by a bank or financial institution (lender) to an individual specifically for buying a residential property. Here, the lender holds the title of the property until the loan is paid back in full along with interest.

(2). What is the tenure of a home loan?

Home loans are long-term borrowing instruments with a minimum tenure of 5 years and maximum tenure of 30 years. The tenure offered to you for your personal loan depends on the loan amount that is sanctioned to you by the lender along with other factors.

(3). What are the eligibility criteria for a home loan?

A self-employed or Salary individual/professional with a regular source of income can apply for home loans. One must be at least 21 years old when the loan period begins and should not exceed the age of 65 years when the loan ends.

(4). What does an EMI stand for?

EMI stands for “equated monthly installment” which is the amount you will pay to the bank on a specific date each month till the loan is repaid in full.

(5). Do I get tax benefits on the loan?

Yes, you are eligible for tax benefits on the principal and interest components of your home loan under the Income Tax Act 1961.

(6). What does encumbrance refer to?

Encumbrance on a property refers to claims or charges on the property due to liabilities such as unpaid loans and Bills. It is essential that during your home search you consider properties that are free of encumbrances of any sort.

(7). What is a home extension loan? 

It is a loan to extend or add living space to your home such as additional rooms and floors etc.

(8). Can I repair my loan ahead of schedule? 

Yes, you can repair the loan ahead of the schedule by making lump payments towards part or full repayment, subject to the application pre-payment charges.

(9). What do financial Institutions consider when granting a home loan? 

Once repayment capacity determines your eligibility to apply for home loan lenders considered the following factors:-

• income level of the applicant
• Age of the applicant
• Qualification
• Resident status
• Spouse’s  income (household income is taken into account when there is a co-applicant)
• Credit history and score
• Status of existing loans

(10). What is the procedure for availing of a home loan?

In the process of availing home loan in India first of all, the applicant will fill in the details and with the required documents submit the application form. If the documents and all the eligibility criteria are met, the bank will sanction the loan and notify the customer about it within 30 days of the submission of the documents and application form. The 30-day submission period starts from the day the customer gets the receipt of the application form if the loan cannot be sanctioned that will be notified to the customer as well.

(11). Which bank is best for home loans? 

There are several banks but these top the list union bank of India, Kotak Mahindra bank, HDFC bank, ICICI bank, etc Before you begin to apply for a home loan, go through these important suggestions that could help ease the application process and simplify loan repayment:-

• Research on loan options
• Aim at affordability
• Spend cautiously
• Choose suitable EMIs
• Repayment tenure
• Know foreclosure norms.