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Home Loan









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HOME LOAN BASIC ELIGIBILITY CRITERIA

01

Good Credit Score

02

Over 23 Years of Age

03

Valid Bank Account

04

Resident of India

05

Self-Employed or Salaried Professional

06

Aadhar Card, Voter ID/Driving License, and PAN Card

07

Bank Statements for the Previous Three Months

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Salary Statements for the Previous Three Months
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WHAT IS A HOME LOAN?

The dream of owning a home is deeply ingrained in the Indian psyche. Whether it’s for investment purposes or a place to call your own. However, the upfront cost of buying a home can be overwhelming for many. This is where home loans come into play, offering a lifeline to those aspiring to own a property.
Home loans not only make homeownership more accessible but also provide several financial advantages. They offer tax benefits and flexible repayment options, making them a popular choice among aspiring homeowners.

Home loans typically come in two primary types: fixed and floating:

Fixed-rate loans offer the stability of a constant interest rate throughout the loan tenure, resulting in predictable monthly payments. 

Floating-rate loans on the other hand, may have lower initial interest rates but are subject to periodic adjustments based on market conditions.

It’s important to note that various banks may impose additional charges like prepayment fees, processing fees, and pre-closure fees, depending on their specific loan terms and conditions.

WHY SHOULD I GET A HOME LOAN?

While property investment has proven to be one of the most lucrative opportunities in India, the soaring property prices can be a significant barrier for individuals looking to purchase a home. Home loans serve as a crucial financial tool, enabling countless individuals to realise their dream of homeownership.

In many cases, owning a home is considered a necessity shortly after starting a career. However, it’s often impossible for young professionals to afford the entire property cost upfront. This is where banks step in, offering to finance up to eighty percent of the property’s purchase price, to be repaid over an extended period with a reasonable interest rate.

The symbiotic relationship between borrowers and banks in the home loan sector is a win-win. Banks earn interest over an extended duration, while borrowers gain ownership of their property and enjoy the benefits of tax deductions, potentially even generating rental income if they choose to lease their property.

WHAT ARE THE FEATURES OF A HOME LOAN?

The specific features of a home loan can vary depending on the agreement with the lending bank.

Some common features, guided by Reserve Bank of India:

Interest Rate Type:

Home loans can have fixed, floating, or hybrid interest rates. Fixed rates remain constant throughout the loan term, while floating rates fluctuate periodically based on market conditions.

Loan Amount and Tenure:

Home loans typically involve substantial sums and have longer repayment tenures compared to other types of loans.

Purpose:

Home loans can be availed for purchasing a residence or for investment purposes.

Collateral:

These loans are typically secured by the property being financed, allowing the bank to seize the property in case of default.

Processing Fees:

Banks may charge processing fees and other one-time charges when processing the loan application.

Prepayment:

Many banks have eliminated prepayment fees, allowing borrowers to pay off their loans early without incurring extra costs.

Tax Benefits:

Home loan EMIs are tax-deductible under the Income Tax Act of 1961, making them an attractive option for long-term investment.

AM I ELIGIBLE FOR A HOME LOAN?

Eligibility criteria for home loans can vary from one bank to another.

Some common requirements you need to fulfil:

Proof of Employment:

Banks typically require evidence of stable employment, with different criteria for salaried employees and self-employed individuals.

Age:

Applicants usually need to be at least 21 years old, and the loan tenure should not extend beyond the age of 60.

Income Proof:

A minimum income threshold is often required to ensure the borrower's ability to repay the loan.

Credit Rating:

Banks assess the applicant's creditworthiness, and a good credit rating is crucial for loan approval.

Residential Proof:

Applicants are generally required to demonstrate stable residency in the same location for a specified period.

Existing Debts:

Declarations of other outstanding debts and liabilities are necessary for assessing repayment capacity.

WHAT ARE THE DOCUMENTS I NEED TO APPLY FOR A HOME LOAN?

While the specific document requirements can vary among banks, here’s a list of common documents you’ll need when applying for a home loan:

Government-issued Identity Proof:

Such as a passport or driver's licence.

Proof of Residence:

To confirm your current address.

Income Proof:

Typically in the form of a salary certificate from your employer.

Bank Statements:

For the last six months or passbook entries.

Asset and Liability Statements:

Listing your personal assets and any existing debts.

Income Tax Returns:

For the past 2 or 3 years, depending on your employment type (salaried or self-employed).

WHY CHOOSE BUILD FINANCE FOR HOME LOAN?

At Buildmyfinance, we are dedicated to simplifying the process of finding the right home loan that suits your needs. Here’s why you should choose us:

Wide options:

We offer a wide range of home loan options for you to compare and choose the one that best suits you.

Simplified Comparison:

Comparing loans from different banks and reviewing their terms and conditions can be a daunting task. We streamline this process, providing an easy-to-use platform for side-by-side comparisons.

Direct Application:

Once you've made your choice, we guide you to the respective bank's website to initiate the application process and complete formalities.

At Buildmyfinance, we aim to make your journey to a successful home loan as smooth and transparent as possible, helping you find the perfect home loan tailored to your unique requirements.

Don't Choose Wrong

Frequently Asked Questions (FAQs) for Home Loan

What exactly is a home loan?

A home loan, commonly known as a mortgage, is a financial product issued by banks and financial institutions to assist people buy homes. It enables borrowers to obtain a loan for the purchase of a home and repay it over a certain length of time with interest.

What kinds of home loans are available?

Fixed-rate loans, adjustable-rate loans, FHA loans, VA loans, and more options are available. Each type has its own set of characteristics and eligibility requirements. Choose the perfect home loan with Buildmyfinance.

How can I find out if I'm eligible for a home loan?

Lenders' eligibility criteria vary, but common factors include your income, credit score, age, job status, and the value of the property. It is best to confirm the qualifying conditions with the specific lender. We, buildmyfinance can help you with this.

What is a down payment, and how much should I put down?

A down payment is a part of the purchase price of a property that you pay in advance. The amount required is normally between 3% and 20% of the property's value, however this might vary based on the lender, loan type, and your eligibility.

How is a house loan's interest rate determined?

Home loan interest rates are affected by factors such as your credit score, loan amount, loan length, market conditions, and the lender's rules. Fixed-rate loans have a fixed interest rate that does not alter over time, but adjustable-rate loans do.

What documentation is required to apply for a house loan?

Evidence of identity, evidence of address, proof of income, bank statements, property paperwork, and a completed loan application form are all commonly requested documents. Certain documents may be required by lenders.

Can I acquire a home loan even though I have a low credit score?

While a good credit score is normally desired, certain lenders may make home loans to people with lesser credit ratings, often at a higher interest rate. Improving your credit score is critical for obtaining better loan terms.

Can I prepay or foreclose on my mortgage?

Yes, most lenders accept house loan prepayment or foreclosure. Prepayment entails making additional payments against the principal of your loan in order to reduce the outstanding balance. Paying down the entire loan amount before the original loan period is referred to as foreclosure. Some lenders may impose prepayment penalties, so read the fine print.

What is the duration of a home loan, and how does it affect my EMIs?

The loan tenure is the length of time it takes to repay the house loan. Shorter loan terms result in higher EMIs but cheaper overall interest payments. Longer repayment terms lessen the EMI burden while increasing the overall interest expense.

What are the tax advantages of a home loan?

Borrowers in several countries, including India, can benefit from tax breaks on house loans. These advantages frequently include deductions for principal repayment and interest paid, lowering your overall tax liability. However, tax rules are subject to change, so consult a tax professional for the most up-to-date information.

What happens if I fail to make my mortgage payments?

Failure to make mortgage payments on time may result in legal action, such as foreclosure, in which the lender may seize the property to recoup the outstanding amount. If you are experiencing financial issues, it is critical that you engage with your lender to explore alternate solutions.

For more info please contact our team of experts

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