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Home Loan Buying Process
Investing in your dream home is one of the most crucial decisions of your life. This is precisely why your research should be thorough before you get into a long-term repayment commitment with a lender. Here is a quick step-by-step guide on the process of availing of a home loan – from the point of application to the point of disbursal of the amount.
Step 1: The Application
Step 2: Documentation
Step 3: Processing fee
Step 4: Evaluation and personal discussion
Step 5: Bank investigation
Step 6: Sanctioning of loan after your creditworthiness has been established
Step 7: Assessment and valuation of the property
Step 8: Registration process/ signing the loan agreement
Step 9: Disbursement of loan amount
Home Loan Bank Information
State Bank of India
8.3% - 8.5%
Floating
3 - 30
YEARS
Rs 10000
+ GST
PNB Housing Finance
8.85%
Fixed
3 - 30
YEARS
Rs 10000
+ GST
Axis Bank
10.2%
Floating
1 - 30
YEARS
Rs 999
+ GST
LIC Housing Finance
8.4%
Floating
5 - 25
YEARS
Rs 10000
+ GST
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EMI Calculator
Loan Amount (₹)
1L
5Cr
Tenure (Years)
2
30
Rate of Interest (%)
7%
15%
Add Pre-payment

Your EMI Per Month

₹ 63,338
Loading Chart
Total Interest
₹ 2,600,546
Processing Fees
₹ 25,000
Loan Amount
₹ 5,000,000
Home Loan Documents

The lender has to assess your financial health before it decides that you are mortgage worthy. Further, it’s a sizable amount to be repaid over the long term by you and the lender must know that you will be able to service your loan diligently through the tenure.

In order to judge your creditworthiness, your prospective lender will therefore ask you to submit a host of documents. The following are the documents you need in you home loan application file.

General list of documents required:
Documents For Salaried Individuals
Documents For Self-employed individuals
Property Documents
If a flat is being purchased from the builder
If the property being purchased is located in a Cooperative Society
If you are constructing a house on own land

Putting together these documents may seem like an arduous task to you, but do go through the documentation process properly to ensure that there are no gaps from your end that may be the cause of your loan application getting rejected.

Home Loan Fees and Charges

When you are comparing lenders and checking out home loan options, you should not only look at interest rate comparisons but also the various other fees and charges. Some of these charges need to be paid upfront while you are taking the loan while other charges are levied during the tenure of your loan. While negotiating with lenders, you should have a clear idea about the various other charges so that you can negotiate well and get the maximum benefits. Here is a checklist on charges that will come in handy when you are shopping for a home loan:

Processing fee
Administrative fee
Legal charges
Stamp duty
Prepayment penalty or foreclosure charges
Duplicate statement
Delayed payment
Cheque bounce charges
CERSAI charges

While shopping for your home loan, you must clarify and negotiate on each of these charges with your lender, so that there are no nasty surprises later.

Home Loan Eligibility Requirements

A lender needs proof to establish your repayment capability. For this, it will take a thorough look not just as your income statements but also your assets and liabilities and your credit history.

The standard method banks use to assess your home loan eligibility is the application of FOIR (fixed obligation to income ratio) of a borrower. To calculate the FOIR, the lender takes into consideration all the other monthly instalments a borrower is paying including the home loan that he has applied for. However, the statutory deductions from your salary like provident fund, insurance premium payments are not taken into consideration in this calculation.

Suppose the income of a prospective borrower is Rs 50,000 per month.

He pays a car loan EMI of Rs 8,000 per month

He has just bought a gadget and pays an EMI of Rs 2,000 per month for the same

His proposed housing loan installment is Rs 15,000 per month

When all his loan installments are divided by his monthly income, the FOIR is 50% or Rs 25,000

Most lenders restrict the FOIR limit to a maximum of 50% of one’s monthly income. It means that if one needs around 50% of his income to meet his personal expenses, the other half is committed towards fulfilling his fixed obligations, including the home loan.

Frequently Asked Questions
Getting the Basics Right
Taking a Loan
After Taking a Loan