Federal Bank Home Loan

Table of Contents

• Federal Bank Home Loan Interest Rates
• Eligibility Criteria for Federal Bank Home Loan
• Federal Bank Home Loan Schemes
• Types of Federal Bank Home Loans
• Federal Bank Home Loans for NRI
• How to Apply for Federal Bank Home Loan
• Document Checklist for Federal Bank Home Loan

Introduction

Federal Bank, also known as the Travancore Federal Bank, was established during the British rule. Today, it is known to be a bank with one of the strongest and most stable foundations. It offers rich and feature-laden housing loan products under the name ‘Federal Housing Loans.’ These home loans are not only flexible but are also capable of catering to the express requirements of the average Indian of today.

Federal Bank home loans offers:

• Funds to purchase a new property or build or construct a new house
• Funds to renovate an existing house
• Loans on the current house or property which helps meet any financial obligations
• House warming loan which helps take care of house warming expenses of a new house

Federal Bank Home Loan Interest Rates

Interest Rates are as of 2019:

Eligibility Criteria for Federal Bank Home Loan

Federal Bank makes sure that the borrower meets all the criteria for availing the loans before lending loans to him or her. To avail a home loan from Federal Bank, the borrower should be at least 21 years old or more. Also, the borrower should notbe more than 65 years of age. All borrowers who are either salaried employees, businessmen or any other type of professionals are eligible to avail home loans from Federal Bank.

The bank imposes several other criteria besides the age limit in order for a borrower to be eligible to avail the home loan. These criteria include:

• A borrower’s net monthly salary

The net monthly salary is the salary the borrower gets after all deductions like PF, ESI, and gratuity. The net salary of the borrower is one of the most important deciding factors for how much loan he or she gets. This criterion determines whether the borrower is capable of repaying the loan after having paid all of his or her living expenses.

• Salaried or Self-employed

Before approving the loan, Federal Bank checks whether the borrower is a salaried individual or self-employed, and to which industry or service sector he belongs. It also looks at a borrower’s history to determine his or her employment and income. Federal Bank requires that an individual, whether salaried or self-employed, has a minimum income history and job security.

• Co-applicant

Having a co-applicant for the home loan increase the borrower’s eligibility to avail a home loan from the Federal Bank. This is because it improves the borrower’s capabilities to repay the loan. The co-applicant or co-borrower must have a good CIBIL score, a stable income and low commitment for being eligible.

• Legal Papers

The legal papers of the property of the borrower should conform with records and must be released by the bank’s legal unit.

• CIBIL Score

The borrower should have a good credit history and CIBIL score to be eligible for availing a home loan from Federal Bank. The borrower’s credit history, as well as his or her credit score, is the most important factor in determining the eligibility.

Federal Bank Home Loan Schemes

The rate of interest on different home loan schemes offered by Federal Bank varies from one customer to the other and is usually dependent on the profile of the applicant as well as the facilities offered. It is also dependent on the type of scheme and other scheme related charges which includes the overhead cost, credit risk premium, and tenor premium. All the rates including base rates as well as final rates are not constant and are subject to change upon the discretion of the bank.

Types of Federal Bank Home Loans

Federal Bank offers different types of home loans to construct new houses, loans to purchase plots or lands, loan against properties and house warming loans. These home loans are different in nature and offer different benefits and features to the customers.

Home Loans

Customers or borrowers who wish to construct new houses can avail home loans from the Federal Bank. The borrower can avail loans up to 85 % of the total cost of the construction project. The maximum amount that can be availed is INR 15 crore along with a margin of 15 to 20 %. The repayment period for these types of loans can be extended up to a maximum of 30 years, and the mortgage on the land or the building can act as security. Any resident of India who is either self – employed or salaried, or is running his or her own business is eligible to avail this loan.

Likewise, Federal Bank also offers loans to its customers or borrowers to either purchase plots or renovate their existing houses. In the case of purchasing a land or a plot, home loans can be availed from the federal bank at up to 60 % of the plot price. The maximum period for repayment of such loans is 5 years. Borrowers can also avail home loans by using their properties as security against the same.

Federal Bank Home Loans for NRI

NRIs are people who stay outside India for education, business or other financial needs. Federal Bank provides home loans for this section of the population. These loans come with faster approval rates. They also come at competitive or special interest rates. NRIs looking to build their own houses within the country are eligible to get loans up to 85 % of the total cost of the project with minimal paperwork.

Furthermore, NRIs are eligible to get loan amounts up to INR 1500 Lakhs from Federal Bank. Additionally, they also get longer or extended periods of repayment. These repayment periods can sometimes be extended up to 20 years.

Also, all the repayments can be done through easy EMIs. These loans can either be used to build or construct houses from scratch, purchase lands or plots for the same, or even renovate or furnish existing houses. However, all NRIs must still deposit security for all the home loans they avail. The security for these types of loans is usually the mortgage of the land and building.

NRIs can also avail additional home loans for friends or other people who they know and are working in some of the top companies or MNCs in the country. These home loans can also be used to purchase lands or plots or even construct houses.

Home Loan Eligibility for NRI

For an NRI to be eligible to apply for home loans from Federal Bank, he or she should have attained a minimum age of 21 years and should not be more than 60 years old. Also, he or she should have lived outside the country for at least a year if the said person is a salaried individual, and for at least three years if the NRI is self – employed. Furthermore, an NRI who applies for a home loan from Federal Bank can get a maximum loan amount of up to INR 1500 lakhs, and the sanctioning of this loan amount is subject to his or her repayment capacity and income.

For loans up to INR 30 Lakhs, there would be a margin of 10 % along with an LTV ratio of 90 % . For loans starting from INR 30 Lakhs and going up to INR 75 Lakhs, the margin is 20 % and the LTV ratio or Loan-To-Value Ratio is 80 %. And for home loans above INR 75 Lakhs, there would be a margin of 25 % and an LTV ratio of 75 %.

When availing home loans from Federal Bank, NRIs have to keep the following in their mind:

• Firstly, the loan repayment should be done only in the Rupee currency and not in any other foreign currency. An NRE or NRO account, operated from India can be used for the same. Also, the receipt can be used against the EMI in case the property is rented out.
• Secondly, just as with resident Indians, NRIs can also avail tax benefits under Sections 24 and 80c for different home loan schemes from the Federal Bank. The maximum tax exemption for NRIs under the scheme would be INR 2,00,000 for the interest accrued and a maximum of INR 1,50,000 for the principal amount, under Section 80c. Also, in case of a joint application where both the applicants are NRIs, there are separate tax benefit facilities for both the NRIs under the scheme.
• The third point to keep in mind for NRIs to avail home loans from Federal Bank is the restriction in the number of properties he or she can own within the country. According to the Government of India, an NRI can own up to a maximum of two houses in India. That is, NRIs can own only two residential properties in India as per the rules of the Government. This holds true even if the properties are rented out. Also, while NRIs can own any number of commercial properties within India, they still, however, cannot own any type of land meant for agricultural purposes.

How to Apply for Federal Bank Home Loan

There are certain procedures to be followed when applying for home loans. These procedures are different for salaried individuals as compared to self-employed individuals.

Like most banks, Federal Bank also requires a set of documents to be produced before applying for home loans. Once the documents have been verified, only then would the loans be approved.

To apply for a home loan, a salaried individual should generally follow these steps:

• He or she should fill all the relevant details including employment details, financial details, as well as personal details in their respective sections in the application form.
• Next, he or she must estimate the EMI to be paid each month by using any of the EMI calculators that are available online.
• Thirdly, he or she should provide all the relevant documents of the property that he or she wishes to choose as security for the loan.
• Once this is done, he or she should then move on to paying the processing fee for the loan and uploading scanned copies of all the relevant documents required for availing the loan facility from the bank.

In case you are a self-employed individual, then you can apply online for a home loan through Federal Bank by logging into the bank’s their website. The borrower is expected to  fill in all the relevant details required for the bank to process the home loan and submit the application form. If all the details match with the given criteria, then the bank will approve the loan and intimate it through an email.

Document Checklist for Federal Bank Home Loan

Various documents are required for applying for a home loan through the Federal Bank. These documents may vary from one individual to the other depending on whether the said individual is salaried or self-employed. In general, however, these documents will suffice for different types of individuals to avail home loans from the bank.

In addition, businessmen or people running their own business must produce the balance sheet or profit and/or loss statements of the last three years of their businesses.