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1.
What are the types of
housing loans available?
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Various
housing loans are offered
by financial institutions.
Prominent among these are:
a) Home Loans: This
is the basic housing loan
for the purchase of a new
home which covers cost of
the flat and parking
space, deposits and
charges, stamp duty and
registration charges.
b) Home Improvement
Loans: For
implementing repair works
and renovations in a home
that has already been
purchased by you.
c) Home Construction
Loans: For the
construction of a new
house.
d) Home Extension Loans:
For expanding or extending
an existing house.
e) Home Conversion
Loans: The existing
loan on a house is
transferred to a new
house, including the extra
amount required,
eliminating the need for
pre-payment of the
previous loan.
f) Land Purchase Loans:
For both home construction
or investment purposes.
g) Bridge Loans:
For people who wish to
sell the existing house
and purchase another and
need finance for the new
house, until a buyer is
found for the old house.
h) Balance Transfer:
To pay off an existing
housing loan and avail of
the option of a loan with
a lower rate of interest.
i) Refinance Loans:
To pay off the debt you
have incurred from private
sources such as relatives
and friends, for the
purchase of your present
house.
j) Loans To NRIs:
As per requirements of
NRIs who want to buy a
house in India.
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2.
Who can apply for a
housing loan?
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Any
person, including Non
Resident Indians, with a
steady source of income
can borrow funds for
financing the cost of a
flat from housing finance
companies and banks. |
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| 3.
Can a Non Resident Indian
avail of housing loans? |
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Yes.
Repayment of loan should
be made within a period
not exceeding 20 years out
of inward remittances or
out of funds held in the
borrower's NRE/FCNR/NRO
accounts.
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4.
How much can a person
borrow?
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Loans
are generally disbursed
upto a maximum of 85% of
the cost of the flat. The
balance 15% cost of the
flat is to be funded by
the flat purchaser from
his own contribution. |
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| 5.
What is an EMI? |
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Equated
Monthly Installment
("EMI") is the
amount comprising a
portion of the interest
and the principal loan
amount which is payable by
a borrower to the lender
every month.
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6.
How is the rate of
interest calculated in
India?
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Interest
rates vary from time to
time and from institution
to institution. The
current trend ranges from
about 9% to 10% pa. The
interest calculated either
on a daily or monthly
reducing or yearly
reducing balance. |
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| 7.
What is a fixed-rate
housing loan? |
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A
fixed-rate housing loan is
a loan where the rate of
interest is constant
through the entire term of
the loan period.
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8.
What is a floating
interest rate housing
loan?
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A
floating interest rate
loan is a loan where the
interest rate payable is
linked to the market
conditions such as the
bank retail prime lending
rate and rises and falls
with the bank rate varies.
Hence a borrower bears the
risk of interest rate
fluctuations. Floating
interest rates offered are
usually lower than the
fixed interest rates. |
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| 9.
What is the difference
between monthly reducing
interest rate and yearly
reducing interest rate? |
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In
a monthly reducing
interest system the
principal on which
interest is paid reduces
every month as EMI is
paid. In the annual
reducing system the
principal is reduced at
the end of the year, and
the borrower pays interest
on a certain portion of
the principal, which is
actually paid back to the
lender. The EMI for the
monthly reducing system is
effectively lesser than
the yearly reducing system
of calculating interest.
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10.
What are the repayment
period options?
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Repayment
period options range
generally from 5 to 20
years. |
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| 11.
What are the charges for
availing a housing loan? |
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Processing
Fees: payable to the
lender on applying for a
loan and is either a fixed
amount not linked to the
loan or may also be a
percentage of the loan
amount.
Commitment Fees: in
case the loan is not
availed of within a
stipulated period of time
after it is processed and
sanctioned then some
institutions levy a
commitment fee.
Prepayment Penalty:
between 1% and 2% of the
amount being pre paid is
charged by some
institutions when a loan
is paid back before the
end of the agreed
duration.
Stamp duty and
registration fee on a deed
of mortgage.
Miscellaneous costs:
such as administrative
costs, legal documentation
charges, technical
consultant charges.
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12.
What security is required
for a housing loan?
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The
flat purchased is the
primary security and is
mortgaged to the lending
institution till the
entire loan is repaid.
Additional security such
as life insurance
policies, shares, bonds,
fixed deposit receipts,
national savings
certificates can also be
offered, as per the
requirements of the
institution. |
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| 13.
Do lending companies
require guarantors? |
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Yes.
Many lending companies
require 1 guarantor.
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14.
What is the time required
for approval of a loan
application?
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About
15 - 20 days. |
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| 15.
What is the time required
for disbursement of loans? |
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Usually
loans are disbursed within
5-7 days after completion
of verification by the
institution, documentation
(such as handing over of
the original agreement for
sale / lodging receipt to
the lender) and completion
of all relevant procedures
and only after proof that
the borrower's own
contribution has been paid
by him to the Vendor /
Builder / Developer.
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16.
Do institutions
accept joint loan
applications?
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Yes. |
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| 17.
What are the documents
required at the time of
making an Application for
a housing loan? |
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Latest salary slip (proof
of income for salaried
individuals)
Photographs
Proof of age
Identity papers
Proof of residence
Bank statements for the
previous six months
For self employed,
certified copies of
balance sheet, profit and
loss statement and tax
challans / tax returns for
the previous 3 years
For partnership/private
limited companies, the
Articles of Association,
partnership deed and
details about the firm
For NRIs Latest salary
certificate specifying,
Name (as it appears in the
passport), Date of
joining, Passport Number,
Designation, Perquisites
and salary, Photocopy of
labour card/identity card,
Photocopy of valid
resident visa stamped on
the passport, Photocopy of
monthly statement of local
bank account, Property
related documents.
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18.
Do lending institutions
offer incentives for
housing finance?
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Sometimes
lending institutions offer
incentives for a specified
period or under a special
scheme. Incentives could
be any of the following:
Free accident insurance
Waiving of pre payment
penalty
Waiving of processing fee
Property insurance. |
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| 19.
Which sources, other than
housing finance companies,
can give loans for
purchasing a flat? |
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A
loan for purchasing a flat
can be availed of from the
following sources:
Housing Finance Companies
Banks
Employer
Insurance company
Against Provident Fund
Account , Fixed Deposits,
Post office Savings
Against Shares and
Debentures of listed
companies,
government bonds and
securities.
Private parties such as
relatives, friends.
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