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  ..HOME LOANS..(गृह कर्ज )

Housing Loans

• Eligibility

(i) Home Loan
1.You must be at least 21 years of age when the loan is sanctioned.
2. The loan must terminate before or when you turn 65 years of age or before retirement, whichever is earlier.
3. You must be employed or self-employed with a regular source of income

(ii) Office premise loan
1. You must be at least 21 years of age when the loan is sanctioned.
2. The loan must terminate before or when you turn 65 years of age.
3. You must be self-employed with a regular source of income.
4. The loan can be for the purchase / construction / extension of a non-residential property.
5. A loan for renovation or improvement will be given only at the time of acquisition of property.
6. Professionally qualified and self-employed individuals can apply.
7. A minimum of 3 year's work experience is a must.

• Loan Amount

A number of factors are taken into account when assessing your repayment capacity. Your income, age, number of dependants, qualifications, assets and liabilities, stability/ continuity of your employment / business are some of them.

However, there are ways by which you can enhance your eligibility.
1. If your spouse is earning, put him/her as a co-applicant. The additional income shall be included to enhance your loan amount. Incidentally, if there are any co-owners they must necessarily be co-applicants.
2. Did you know that your fiancée's income can also be considered for sanctioning the loan on your combined income? The disbursement of the loan, however, will be done only after you submit proof of your marriage.
3. Providing additional security like bonds, fixed deposits and LIC policies may also help to enhance eligibility.

While there is no need for a guarantor, it could be that having one might enhance your credibility with us. If so, our loan officer would provide you with the necessary details.
The final amount to be sanctioned will depend on your repayment capacity. However, what you ultimately are entitled to will have to conform within the limits fixed for each loan.
Also, when the company looks at the total cost, registration charges, transfer charges and stamp duty costs are included.

Top of the page

• Sanctioning

(i) Document
1. Passport size photograph.
2. Age verification: PAN card, Voters ID, Passport, License.
3. Bank statement for the last six months.
4. Income Documents e.g. Latest Form 16, Certified IT returns for latest 3 years.
5. Admin Fee cheque.
6. Loan Enclosure letter.

These are the documents required for sanctioning a loan. You may be asked to submit further legal documents if required by the Bank or its approved lawyers.

Do retain photocopies of all documents being submitted by you.

• Disbursement

Your loan will be disbursed after you identify and select the property or home that you are purchasing and on your submission of the requisite legal documents.

While you may be under the impression that the list of documents asked for is rather extensive, please note that it is for your own good. Each and every single document asked for will be verified and checked to ensure your safety.

This may take some time but we want to ensure a clear title and will complete all the legal and technical verifications to ensure that you have full rights to your home.

The 230 A Clearance of the seller and / or 37I clearance from the appropriate income tax authorities (if applicable) is also needed.

On satisfactory completion of the above, on registration of the conveyance deed and on the investment of your own contribution, the loan amount (as warranted by the stage of construction) will be disbursed by Bank.

The disbursement will be in favour of the builder/seller.

(i) List of documents for disbursement
Standard documents:
1. Loan Agreements
2. Disbursement Requests
3. Post-dated cheques
4. Personal guarantor's documents, as the case may be

Some documents are specific to each case.

• Repayment of Loan

(i) What is the repayment tenure?
1. Home Equity Loans - Maximum loan tenure of 15 years.
2. Office premise loan - Maximum loan tenure of 15 years.
3. Home loan - Maximum loan tenure of 30 years.

(ii) How is the loan repaid?
All loan repayments are done via equated monthly instalments (EMI).

(iii) What is an EMI?
An EMI refers to an equated monthly instalment. It is a fixed amount which you pay every month towards your loan. It comprises of both, principal repayment and interest payment.

(iv) When does the repayment start?
EMI payments start from the month following the month in which the full disbursement has been made.

(v) How is the EMI paid?
The EMI is to be paid every month through post-dated cheques (PDCs) or direct deductions from your salary. If you are opting for PDCs, then you will have to provide 36 upfront. The PDCs are to be dated on the 1st of every month. However, if you receive your salary a few days later, no problem. There are some flexibilities of dating the cheques, which depands on that financial institution's rules & regulations.

(vi) What if a PDC bounces?
In the case of a bounced cheque or delayed payment, charges and outstanding dues will be charged as per the prevailing company policy. You can replace old PDCs with new ones within 5 - 7 working days.

(vii) What is pre-EMI interest?
In the case of part disbursement of the loan, monthly interest is payable only on the disbursed amount. This interest is called pre-EMI interest (PEMI) and is payable monthly till the final disbursement is made, after which the EMIs would commence.

(viii) When do I pay PEMIs?
The first PEMI is payable by cheque by the end of the month in which the disbursement is madeand each subsequent PEMI at the end of every month till the commencement of EMI.

(ix) When does the repayment start?
EMI payments start from the month following the month in which the full disbursement has been made.

Top of the page

• Application Process

The moment you decide to buy a home, you can put in your application. Yes, you can apply for a loan even before you have selected the property.

The property need not even be in the same city where you are residing.

Should there be a change in your financial status or plans, you can withdraw your sanction within 6 months of approval

• FAQ's

Q.1 What is the minimum loan amount?
A. You can get a home loan starting from Rs. 2 lakh (Delhi, Mumbai & Bangalore Rs. 3 Lakhs). The loan amount depends on your repayment capability and is restricted to a maximum of 85% of the cost of the property or the cost of construction as applicable. Repayment capacity takes into consideration factors such as income, age, qualifications, number of dependants, spouse's income, assets, liabilities, stability, continuity of occupation and savings history.

Q.2 What are the loan tenure options?
A. You have the option of selecting a term you are comfortable with, ranging upto 20 years, provided the term does not extend beyond your reaching 65 years of age or retirement age, whichever is earlier.

Q.3 How is the interest charged/calculated?
A. There are two schemes,
1. Fixed Rate Home Loans
2. Adjustable Rate Home Loans.

If you opt for an Adjustable Rate Home Loan, the interest rate would vary with the Bank Home Floating Reference Rate. Under the Fixed Rate Home Loans the rate applicable on the date of disbursement remains fixed during the entire duration of the loan.

Q.4 How much time will it take for my loan to be approved?
A. It takes a week for your loan to be sanctioned after you have submitted all the documents.

Q.5 Who can be the co-applicants for the loan?
A. You could include your spouse as a co-applicant for the loan and we shall include his/her income to enhance your loan amount. Further, in case there are any other co-owners they also need to be co-applicants.

Q.6 Is a personal guarantor a must?
A. No, there is no personal guarantor required in most cases.

Q.7 What security/collateral do I have to provide?
A. Typically the security for the loan is a first mortgage of the property to be financed, by way of deposit of title deeds and/or such other collateral security as may be necessary. The title to the property should be clear, marketable and free from any encumbrances.

Q.8 What are the stages involved in taking a loan?
A. There are two main stages:
1. Sanction of the loan, whereby you get an approval for a specific loan amount based on the value of your property and repayment capabilities.
2. Disbursement of the loan amount.

Q.9 What are the various types of loans available?
A. 1. Home Loans
2. Land Loans
3. Home Equity Loans
4. Office Premises Loans

All of these are available on an adjustable rate or a fixed rate.

Q.10 What is a Monthly Reducing balance?
A. An Equated Monthly Installment (EMI) has 2 components, interest and principal. When the interest is calculated on monthly rests, the principal on which the interest is charged goes down every month. This results in a significant saving for the customer over the tenure of the loan.

Q.11 What is an Annual Reducing balance?
A. An Equated Monthly Installment (EMI) has 2 components, interest and principal. When the interest is calculated on annual rests, the principal reduces only at the end of the year. Therefore, you continue to pay interest on a portion of the principal that you have already actually paid back to the lending company.

Q.12 When can I apply for a loan?
A. You can apply for a home loan even before you have selected your property. The loan amount would be sanctioned or approved for you, based on your repayment capability.

Q.13 When will the loan be disbursed?
A. Your loan will be disbursed on:
1. Your identification and selection of the property.
2. Submission of the legal documents.
3. Legal and technical clearance of the property
4. Investment of your contribution towards the property

Q.14 What is an amortization schedule?
A. An amortization schedule is a table giving the reduction of your loan amount by monthly installments. The amortization schedule gives the breakup of every EMI towards repayment interest and outstanding principal of your loan.

Q.15 What are the tax benefits of taking a home loan?
A. The tax benefits on a home loan, under the Income Tax Act, are two-fold:
1. Principal repaid : Rebate under section 88 (2) of the Income tax Act is available to individuals on repayment of the principal portion as given below
Gross total income before deduction Rebate available
Upto Rs.1,50,000 20%
More than Rs.1,50,000 but not exceeding Rs. 5 lakh 15%
More than Rs.5 lakh none

Moreover, the rebate is allowed up to the maximum limit of Rs.20,000 per financial year on the repayment of the principal sums, which need not be out of income chargeable to tax of the year in which such repayment is made.
2. Interest repaid: Under section 24 of the Income Tax Act , in case of self-occupied property, deduction is allowed up to Rs.1,50,000 per annum for houses acquired or constructed with capital borrowed after March 31, 1999 as long as the acquisition or construction is completed within 3 years from the end of the year in which such loan is taken.

Q.16 Can I get IT certificates in the name of both the Applicant and co-Applicant separately?
A. As per the IT rules only one certificate can be issued for a home loan and hence one certificate will be issued in the name of both applicant and co applicant.

Q.17 When is the IT certificate issued?
A. The IT certificate will be issued at the end of a financial year. You can expect to receive your copy of the IT certificate in the month of April or May.

Q.18 How can I get the tax benefit during the year?
A. You can request for a provisional IT certificate that can be issued any time during the course of the year.

General details of Home Loans, may vary case to case


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