Taking a home loan in India is a complicated process. One has to find many things in one place, such as the right loan offer, best interest rate, various processing charges, dozens of documentation, a good lender, the long-term procedure, and many more things. But with the help of proper knowledge about housing loan in India and their various aspects, one can make this process simplistic and secure. Read this article thoroughly and learn the most critical factors about housing loans and avoid hurdles while approving the loan.
What is the Housing loan eligibility criteria?
Finalizing the amount of home loan, you need for your house is easy, but are you eligible for that loan? Before the bank approves your loan, they check the person’s financial status, whether they would be able to repay the loan. They check the per annum income, age to check how many years are left of your job), the capability of the repayment of the loan, job stability, credit, and saving the history of the person. After evaluating all the aspects, the bank approves the loan.
Sometimes they use slabs also to offer the loan of 36/48/54 times the gross monthly salary. For example, if a person is working with 20,000 in a month, they will get a loan of 36 times their salary. From 20,000 to 1,00,000 monthly wage will get a loan of 48 times their gross monthly salary. If you have a salary of more than Rs.1 lakh per month, then you will get 54 times the loan of your gross monthly salary.
The amount of the loan would be around 75 to 85% of the home value. In that, one has to submit 15 to 25% of the house’s down payment to purchase.
What are the requirements of documents in housing loans?
One will require many documents for the home loan in India that are given below:
- Photo ID proof – Aadhaar card
- Passport size photographs
- Photocopy of PAN card
- Address proof ID
- Age certificate or any other age proof document
- Bank statements of last six months
- Property Title deed copy
For salaried person
- Salary slips of last six months
- 6 Form of last three years
For self-employed or business holders
- IT returns a copy of the last three years
- Copy of audit balance and P and L statement of last three years
An individual has to fill the form of the lender with all the given documents. After that, the lender will examine the application and property papers and tell you how eligible you are for the loan with the charges of T and C. The process of loan approval might take the time of 1 or 2 weeks. Once the bank approves the loan, it will send you a sanction letter with all your loan details.
How to reduce some charges by lenders?
One should remember that the lower home loan interest rate in India of 0.25 to 0.50% can save you interest of lakhs. As many lenders offer
- Free accidents insurance
- No penalty amount
- Free property insurance
- Discounts and lower home loan interest rate
And many more without asking for definite property identity. Here your bargain techniques will help you save lakhs on your loan.
What are the benefits of taxes in housing loans?
Tax benefits are the most impressive things about taking home loans. They can benefit the buyer in two ways:
Self-occupied property
If someone buys a property to live with the family that is self-occupied property, will be benefited with following tax benefits:
- Under section 80C, they will repay up to Rs.1 lakh in every financial year.
- Payment up to Rs.1.50 lakh with interest every financial year. This amount is subtracted from the total gross income.
Let out Property
If you take a loan for your second house for rent, you will get the following advantages.
- Repayment of Rs.1 lakh under section 80C
- The interest payment is not fixed up to Rs.1.50 lakh; it is deductible from the total gross income.
What is the importance of having insurance and the provided amount of collateral?
The lenders ask for some collateral or security money of their loan to guarantee at least two people or any insurance. These aspects are used when the owner could not pay the loan. The bank will also provide home loan cover for insurance in case of your sudden demise. This insurance is chargeable and will add on to your EMIs.
The best way to build up your house is to take a home loan in India. Every person dreams of buying the property once in their life. Although it is a very long process, if you keep these given facts in your mind, they can make this loan process manageable.
