Buying a house is probably the biggest purchase you make in your life. Having your own home gives you tremendous stability and security, along with the freedom of personalising your living space.
Owning a home has many advantages. When you make a loan payment, you are building equity, and that is an investment. You also qualify for exemptions on your personal taxes.
However, home ownership means considerable efforts to ensure that the process moves as smoothly as possible. That's where MoneyRaksha steps in. We take you through the home loan roadmap, from start to finish, helping you make home-buying easier.
There are different types of home loans available today, catering to different borrowing needs. You can avail a:
- Home purchase loan to finance the purchase of a new house;
- Home improvement loan towards the renovation or repair of a house, which is already bought;
- Home construction loan to finance the construction of a new home;
- Home extension loan to expand an existing home;
- Home conversion loan to transfer the existing loan to a new lender;
- Land purchase loan to purchase land for construction.
Your loan eligibility depends on your income, savings history, stability of occupation, number of dependants, and the value of the property you wish to purchase. Typically, banks loan you 75-85 per cent of the value of your property. The monthly payment — EMI — is around 40 per cent of your monthly income.
Fees and charges
While acquiring a home loan, you must consider the accompanying charges and fees. At MoneyRaksha, we help you study the minute details, such as those outlined below, while comparing the cost structure across banks.
- Banks levy a non-refundable processing charge — between 0.5 per cent and 1 per cent of the loan amount — at the time of submitting the loan application.
- Some banks charge an administrative fee at the time of loan sanction.
- If the loan is cleared earlier than planned, there is a foreclosure penalty, which is generally between 1-2 per cent of the foreclosed amount.
- Banks may levy legal charges for legal and technical verification of the property.
- If there is a delay in the payment of your EMI, the bank may charge a late payment fee, which normally ranges from two to three per cent of the EMI.
- In case your cheque bounces due to lack of funds in your account, banks levy cheque bounce charges.
Most banks offer home loans which can be repaid over a period of up to 20 years (15 years for NRIs).
If you are applying for a home loan, you may be worried about the documents that you need to submit to secure the loan. We, at MoneyRaksha, verify your documents and check to make sure that they match the details that you have submitted with your loan application. Typically, you may need to submit:
- An age proof;
- An address proof;
- An income proof;
- A bank account statement for the last six months;
- Your passport-size photographs.
In addition, banks ask for specific documents, depending upon your employment status. If you are a salaried individual, you may need to submit:
- An employment certificate from the employer;
- Copies of pay slips for last few months and the TDS certificate;
- Latest Form 16 issued by your employer;
- Bank statements.
If you are self-employed, you need to provide:
- A copy of the audited financial statements for the last two years;
- A copy of the partnership deed if it is a partnership firm or a copy of the Memorandum of Association and Articles of Association if it is a company;
- The profit and loss account for the last few years;
- The income tax assessment order.
With competing home loan schemes offered by banks and lending institutions, you may be at a loss, as to which product to opt for. We advise that you compare all the offers before you find one that fits your needs. A few points that you need to consider:
- Banks quote interest rates in several ways — monthly reducing rate, flat rate, etc. Make sure you identify the right interest rate value.
- Scan for other charges such as processing fees.
- Compare the customer satisfaction ratings of each bank. This is important as you need to work with the bank for the entire period of your loan.
- The total cost of your home loan is the loan amount + total interest charged throughout the loan tenure + processing fees and other taxes.
- To zero in on the cheapest loan, compare the total amount that you need to pay to completely pay off your home loan.
The MoneyRaksha touch
At MoneyRaksha, we help you make an informed choice with all the facts at your fingertips. We offer:
- The lowest interest rates;
- Quick, customised loans;
- Easy comparisons based on cost and customer satisfaction;
- Objective information, with no jargon or fine print;
- Complete privacy of your contact information;
- Neutral advice with no biases;
- Free services.
- Fill in your requirement in the eligibility calculator to receive customised home loan quotes.
- Compare the home loan offers you receive and select the one that fits your needs.
- Your application is forwarded electronically to the bank you chose.
- The bank contacts you within one working day.
- We, at MoneyRaksha, send you email and SMS alerts to keep you updated with the status of your application.