What is the Process of Home Loan in India?

Today millions of people rely on home loans to buy their dream house. Since not everyone is aware of the right process to acquire a home loan, therefore, a lot of home loan applications get rejected. To ensure your home loan application does not get rejected by the lenders, it is important to be well versed with the bank’s criteria to sanction home loans. In addition to this, an applicant should also know his/her financial obligation towards the bank to avoid a financial slowdown in future. Read on to know more about the home loan and the right procedure to acquire a home loan in India.

Step 1: Your home loan procedure begins with the formal application to the bank. This can be done by visiting the bank, filling up the home loan application form and providing all the supporting documents based on which the bank will determine your home loan eligibility. Most banks will generally ask you to furnish a copy of the following documents:-

  1. Proof of identity

  2. Proof of address

  3. PAN card

  4. Employment details

  5. Proof of income

  6. Bank statement

  7. Educational qualification

Step 2: The second step of your home loan approval process will include the payment of non-refundable processing fee that an applicant needs to provide to the bank. This amount is used to initiate and maintain the home loan process. Recently, banks are waiving the processing fee to attract more home loan buyers. You can even negotiate with the bank’s representative and try to avail this benefit. As not every bank in India waives off the processing fee, you need to ask your bank about this benefit in advance.

Step 3: The step three of the home loan application process includes scrutinizing of your documents and the evaluation of the loan amount you are eligible for. You are required to meet the bank’s representative multiple times so that they can measure your repayment capacity. After the personal interaction, the bank’s representative will visit your office and residence to confirm information that you provided to the bank. 

Step 4: The evaluation of your repayment capacity is important. It may either approve or disapprove your home loan application depending upon how satisfied the bank representative is from your repaying capacity.

Step 5: At this stage, the bank begins to draft your offer letter with the following details:

1. Applicable interest rate

2. Mode of payment 

3. Loan term

4. Fixed or floating rate of interest

5. Terms and conditions associated with your loan scheme

You are required to submit the signed copy of the letter to the bank if you agree with all the terms. An acceptance copy is a duplicate adaptation of the offer letter that you must provide to the bank for their records. Administrative fees, if charged by the bank is deposited at this stage.

Step 6: After the distribution of the offer letter, followed by your acceptance, the bank will verify the property, before disbursing the loan amount. For this, you are required to submit the original copies of the title deed, no objection certificate (NOC) and other supporting documents that the bank may ask for. The bank will conduct a legal check of your property to ensure that the title is clear and there is no dispute associated with the property. In case of an under-constructed property, a technical evaluation will be conducted in which the location of the property, quality of construction and progress of the project will be checked. Once all the formalities are completed, your home loan amount will be disbursed by the bank.

Note: A home loan is a secured loan wherein your property is the collateral. Which means that the bank can claim your home if you’re unable to pay off home loan amount on time.

Features and Benefits of using Home Loan Calculators

Buying property is once in a lifetime investment for many. But instead of squandering all your savings to buy your dream home, you must apply for a home loan to keep your stash safe. There are many banks in India that offer home loans at attractive interest rates for minimum 5 years to maximum 25 years of tenure. If you are planning to get a home loan but don’t know how to get started, we advise you to use the home loan calculator to calculate the EMI (equated monthly installments) in advance by providing the principal amount you want to apply loan for, the expected loan term and the interest rate at which the loan is being offered.

Home loan calculator is an online tool that allows people to calculate loan EMI in advance by filling in the principal loan amount you wish to avail, loan term and the rate of interest at which the lender is offering you the loan. The online EMI calculators are user-friendly, easy to use and quick to perform. They give instant results with graphical representation. EMI calculators are different for each type of loan, which means to calculate a home loan EMI, a home loan calculator should be used, for a car loan, a car loan EMI calculator is used and so on.

The features of home loan calculator include:-

1. Quick process and instant results: A home loan calculator delivers instant results without wasting a minute of your time. It saves you from physical excursion by eliminating the need to stand in long queues at the bank. Calculating loan EMI using a pen and paper can take you hours. But with an online calculator, you can make the same calculations with just a click of the mouse.

2. Zero cost: Home loan calculators are free of cost and are easily available on the bank’s official website and also on several third-party websites. Using home loan EMI calculators, you can make as many searches as you want with different principal amounts, loan terms, rate of interests and processing fees so as to get appropriate EMIs that you can easily pay without disturbing your monthly budget. In the EMI calculator, you can either use the slider to adjust the values or type-in the numbers manually if you want to enter more specific values. Once the value is changed either using the slider or manually, the online calculator will recalculate the EMI amount.

3. Accurate: The results you get from the home loan calculator are 100% accurate and reliable. It is way better than using pen and paper to calculate the EMI of a home loan.

4. Saves times: Home loan calculators allow individuals to save a lot of time that would otherwise be spent in visiting different banks, standing in long queues and talking to the bank’s representatives individually. 

5. Amortization table: Apart from calculating EMI, home loan calculators also provide amortization table that shows you how your loan will progress with time. In addition to this, home loan calculator will also provide a pictorial representation of each and every data points like principal outstanding, time remaining, interest rate, etc. 

All in all, home loan calculators have made the life of borrowers simpler and convenient. It has also eased the loan getting process to a larger extent and reduced the bank visits significantly. An EMI is an equated monthly installment payable to the bank or other financial institutions every month till the time the entire loan amount is fully paid. Finding the EMI in advance using online calculator will help you manage your finances in a better manner and fix your future expenditures carefully.

Opening a Demat Account To Invest in Mutual Funds

Mutual fund (MF) has become one of the choicest investment options these days owing to the affordability, high returns, and easy options to liquidate. However, there are many people who are still perplexed about the concept of MF. To help such individuals, here’s a detailed view into the world of mutual funds:

What is Mutual Fund? 

A mutual fund is a type of online investment wherein the money from several investors is collected and further invested in different funds that fit your financial goals. The primary advantage of investing in the mutual fund is that you can start investing in MF from Rs 500 and go higher gradually. The second thing that woos more customers towards MF is that there are fund managers who invest your money accordingly, so you need not worry about anything, just sit back and watch your investments grow with time. 

Is it important to open a Demat account to invest in mutual funds? 

It is not mandatory to open a Demat account to invest in mutual funds. Instead one can invest in mutual funds online with the help of three lucrative ways:-

1. Through Asset Management Company (AMC) Websites: There are many companies which allow individuals to invest in mutual funds online. For this, you need to first visit the particular website, download and fill up the scheme form from the website and submit it with the required documents such as PAN card, KYC letter. In addition to this, you must also apply for the personal identification number (PIN) to instigate easy transactions online. Once you receive the folio number along with the PIN, you can easily do other transactions in the folio with the help of your bank account. If you want to invest in other types of funds, you need to repeat the same method again. This is one of the easiest ways to invest in MF and this service comes absolutely free of cost.

2. Via Brokers Online: There are a number of online brokers associated with the mutual fund's exchange platforms. Amongst several brokers, there are few big-scale brokers who are associated with the NSE or BSE, the most popular MF exchange website. To begin with, all you need to do is to visit the online trading platform of the particular broker, select the scheme you want to invest in. The extent of your ownership will be directly credited to your Demat account. In case you do not have a Demat account, you can go for a SIP and invest the amount. The charges associated with this process are not too expensive and vary from one broker to the other. 

3. Independent Online Portals: Some independent online platforms are also available where investors can buy and sell MFs at no added expenditure. To start investing with this method, you simply have to sign up on any of these platforms, fill the form available on the website, take a printout of this pre-filled form, sign it, and send the form with the attached copy of PAN card and KYC acknowledgment letter. Upon completing this process, you can purchase MFs from various fund houses. These portals are in partnership with the top-notch banks across the country for superior online payments service. Apart from offering the service at no additional cost, these portals also work hard to provide an affable, pleasant experience to the investors. On top of it, these portals also help you keep a close eye on your funds and provide an appropriate research and testing platform to help investors build an ideal MF portfolio.

So now that you know the right ways to invest in MF, you may initiate your research and start investing!