1. Who can apply for a home loan?

Any India Resident, Non-resident Indian or Person of Indian Origin can apply for a home loan if they are 21 years of age at the origin of the loan and 65 years or below at loan maturity. Housing Finance Companies (HFCs) usually give home loans for properties located in India to people who are employed or self-employed, with a regular source of income.

2. When can a home loan be applied for?

An individual can apply for a home loan even before the property has been selected. The loan amount is sanctioned based on the ability to repay. This helps in planning a budget while purchasing the house.

3. How does the lender calculate eligibility?

Loan eligibility is calculated based on the ability to repay. Factors such as income, age, qualifications, number of dependants, spouse's income, assets, liabilities, stability and continuity of occupation and savings history are taken into consideration.

4. How do I repay the loan?

You can repay the loan in Equated Monthly Installments (EMIs) comprising principal and interest. Repayment by EMIs commences from the month following the month in which you take full disbursement. Till then, you only need to pay the interest on the amount disbursed.

5. What is pre-EMI interest?

Before final disbursement, you may have to pay interest on the portion of the loan disbursed. This is called pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement up to the date of EMI commencement.

6. Is there a fixed interest rate for the duration of the loan?

A rate of interest that is constant throughout the duration of the loan is known as a fixed rate loan.

7. What is a fixed rate loan?

A rate of interest that is constant throughout the duration of the loan is known as a fixed rate loan.

8. What is a floating rate loan?

A floating rate is when the interest rate on the loan changes according to the rates in the market during the period of the loan.

9. Is it better to option for a fixed or a floating interest rate?

If interest rates are falling, a floating rate loan is a better option. But when interest rates are rising, opt for a fixed rate loan, because you will then know in advance what your EMIs will be.

10. Is there a difference between monthly rest & annual rest?

On the basis of the principal at the start of every month, the interest is calculated in monthly rest. For annual rest, this is done at the beginning of every year.

11. What are the other areas of expenditure before I get a home loan?

Processing and administrative fees, pre-payment charges and delayed payment charges, legal fees, technical fees, stamp duty and registration of mortgage deed are all likely areas of expenditure.

12. Is a guarantor required?

A guarantor is insisted on by the HFC so as to ensure that the loan is paid back in full and in time. The guarantor is responsible for the repayment of the loan if the borrower is unable to do so.

13. Can I repay the loan before the set date of repayment?

You could do this, but some HFCs require a pre-payment fee to be paid. Check with your HFC.

14. How do I select my HFC?

Various considerations would help you zero down on the HFC most suitable for your loan requirements. Analyze the following points before taking your decision.

Loan amount: The minimum and maximum loan amounts vary between HFCs. Find out if the amount you require falls within this limit.

Duration: There is no lower and upper limit to the tenure of the loan. Find out if the time limit you want it for can be accommodated. This varies between HFCs. Normally HFCs offer loans ranging form 5-20 years, with some going up to 30 years. For NRIs the maximum tenure could be 10 years in some cases. Depending on your requirements, this would have a bearing on the loan you opt for.

Interest rate: This varies between HFCs. Fix a duration that you want the loan for and find out the EMI from them. Compare and identify the lowest EMI. Pre-payment: Check if the HFC charges for repaying the loan before its due date.

Flexibility: Find out whether you can change your interest scheme from fixed to variable if so desired or if there are restrictions.

Guarantor: Some HFCs require this, while others don't.

Documents required: These may vary between HFCs although there are a few standard documents like proof of income, proof of age and residence and a salary slip.

Co-owner: If there is to be a co-owner or co-applicant for the loan, the HFC has to accept the relationship between the two.

Other fees: Each HFC has different fees for administration and processing among others.

15. Can a loan be switched over if I have obtained it at a high rate of interest, but another HFC is offering a better interest rate?

You could do this. After discussing the reasons with the current HFC, they may evenreconsider the interest rate.

16. What is the maximum amount of housing loan available?

The maximum amount is 85% of the cost of the property, including the cost of land, subject to a maximum amount of Rs 1 crore.

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