The real estate prices in India have gone up to a great extent. It is becoming quite impossible for people to buy a house in India without a Home Loan. Banks and other financial institutions in India have become liberal with Home Loans. There are advantages of opting for Home Loans instead of saving money to buy your house.
- You can go for purchasing your house at a younger age
- The higher Home Loan eligibility allows you to search for bigger apartments in your preferred localities.
- Banks have attractive rates of interest
- The facility of the joint Home Loan reduces your repayment burden
- You get income tax benefits when you take Home Loans for purchasing your house.
- In case of joint Home Loans, both the applicants enjoy income tax concessions
- You can improve your credit score with regular repayments of the loan
- You can invest in a long-term asset by repaying the loan amount in instalments
- Over a period, the value of the house will increase
- Banks do a thorough legal search of the property. Hence, you need not worry about the title.
Are these benefits exciting enough to opt for a Housing Loan? If yes, here’show to Apply for a Home Loan in India.
Do the basics right!
Keep the following documents ready while applying for Home Loans in India.
· KYC Documents – Same for salaried individuals and self-employed persons
- PAN Card
- Driving license
- Aadhar Card
- Voter’s ID
- Any document issued by the Government that confirms your identity
- Driving License
- Ration card
- Registered Rent or Lease Agreement
For Salaried Individuals
- Last three months’ salary slip
- IT Returns / Form 16 for the previous 2 years
- Bank account statement showing salary credits for a minimum of 6 months
For self-employed persons
- Financial statements such as Balance Sheet and P&L Statement of the last 2 years
- IT Returns for the previous 2 years
- Statement of account (both personal as well as that of the firm)
- Copy of GST Registration Certificate or other documents evidencing a continuity of business
With these documents, you can approach the banks and other financial institutions for Home Loans. It is better to avail the services of online loan service providers like http://www.mymoneymantra.com. You get access to the best Home Loan offers in the industry. You can also calculate and determine your Home Loan eligibility using the EMI Calculator available on their website.
There are two ways of proceeding further.
- Apply for a Home Loan to the banks and get a pre-approved Home Loan offer letter.
- Search for the house, finalize it, and then approach the banks for the Home Loan.
Each of these procedures has its advantages.
· The pre-approved offer – Loan first and home later
Banks give such pre-approved Home Loan offer letters to individuals and joint borrowers depending on their Home Loan eligibility. How do the banks determine the eligibility? You should have an idea of this process.
You submit your income statements and the supporting documents. The banks search with the credit bureaus and obtain your credit history. It gives them an idea about your current loan liabilities and your repayment record. A credit score in the region of 600 and above is okay for a Home Loan. These documents help your bank arrive at your repayment capacity. Usually, banks stipulate a take-home pay of around 40% in case of a Home Loan. They calculate the home loan eligibility and give you a pre-approved offer.
You can use this offer letter to arrive at your budget. The real estate developers get the confidence that you have the support of the bank. Hence, you can negotiate a good deal.
· The Second Option – Home first and loan later
You determine your budget and search for your dream home. On finding one, you go ahead with making the advance payment and obtain the sale agreement from the real estate developer. With this sale agreement in your hand, you approach the banks for finance.
The bank determines your eligibility and approves the sanction if they find you eligible in all respects.
How do banks process Home Loans in India?
- Legal Scrutiny – You have to submit photocopies of the title deeds of the house you propose to buy. The banks can ask you to provide the Encumbrance Certificate as well. They have a panel of advocates to search for the records of the Sub-Registrar’s office to determine the genuineness of the ownership and absence of any encumbrances on the property.
- Valuation – The value of the property is essential. The banks have a separate panel of engineers and evaluators who inspect the property and determine its market value. Based on this market value, the banks maintain a margin of a minimum of 20% and decide on your maximum eligibility.
- Physical verification – Once you apply for a Home Loan, the bank carries out the physical inspection of the property. They also visit your residence and workplace to verify the genuineness of your income and repaying capacity.
- Sanction of the loan: On completion of the above formalities, the banks proceed to sanction the home loan. You get a sanction letter that you have to go through and accept the terms and conditions. You have to complete the execution of the loan documents. The banks do the disbursement according to the terms laid down in the sanction letter.
- Creation of Mortgage – It is the final step of the Home Loan process in India. The borrower has to submit the original title deeds to the bank and create an equitable mortgage in favor of the bank. You need to register the equitable mortgage with the Sub-Registrar’s office.
You have seen the process of applying for Home Loans in India. Knowing this comprehensive process canhelp you acquire your dream home easily.
Also Read: How to Transfer Your Home Loan to Axis Bank?
To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.
Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers.