What are the costs involved in taking a Home loan?

Buying a home depends on the funds you have available with you. If an individual does not have sufficient funds in hand to buy a home, then he can opt for a home loan to gather funds to fulfil the requirement. Any individual generally avails a home loan for either buying a home or plot of land for the construction of a house, or renovation, extension and repairs to your existing house.

A home loan comes with several other expenses than the loan EMI. You should check your eligibility for a home loan and start the application process. But, before going for the documentation you should glance through the below mentioned charges and fees you will need to pay other than the loan EMI before you get your dream home.

1. Processing Fees: The first and the most common expense, which one has to bear as a part of your Home Loan application is the processing fee. You will be asked to pay the processing fee at the time of submission of your application for your home loan. This fee is non-refundable but it varies from one lender to another. It is charged as a percentage of total home loan amount and usually varies from 0.25% to 1%. If the home loan application gets rejected, then this fee would not be refunded. Processing fee is charged by the lender to process your application, verify your documents and process all the formalities.

2. Legal Advisor Fees: When you decide of buying a home and arrange the funds by availing a home loan, you will be required to get your new house’s documents reviewed by a lawyer. They will check the title of the property along with the documents and records of the past ownership. And you will be required to pay a fee for the services rendered of a legal advisor. In other words, you have to bear this fee to get the property documents verified by a legal advisor.

3. GST Tax on all bank fees: GST is another amount that will be charged by your lender on the amount that you have to pay them as fees.

4. Stamp paper cost: Stamp Duty is a nominal expense that you have to pay for the legal documentation on which the home loan agreement will be made. It will contain a legal home loan agreement between you and your bank. Once your home loan is approved by the bank, only then you have to pay this fee to get the loan agreement. The lender will ask you to pay this fee for the loan agreement as this amount is not included in the processing fees.

5. Cost of Home Insurance Premium: You should insure your home with home insurance if you are availing a home loan to finance the purchase of your new home. Same as the other expenses mentioned above, the cost of home insurance premium has to be taken up by you only. You have to pay the insurance amount upfront post the loan approval and first disbursement by your lender.

6. Home Loan Insurance Premium: Home Loan Insurance insures you against your home loan liability. Home loan insurance is different than the home insurance. Home loan insurance insures you against your home loan liability and home insurance insures your property. The home loan insurance premium amount depends on the loan amount, tenure of your home loan and the insurance provider. Your premium amount will also reduce if your home loan tenure reduces. Home Loan Insurance acts as a guarantor if the lending bank requires a guarantor in your case. If you do not have a guarantor, home loan insurance can act like one for you.

So, before you go for a home loan, remember that it comes with several miscellaneous expenses apart from your loan EMI.

Joint Home Loan Application - Is it a Myth or Truth?

A joint home loan application is an initiative by banks that allows applicants to include a co-borrower in a home loan with whom they can share their debt-burden and apply for a larger loan amount because the income of a co-borrower will also be considered while determining loan amount eligibility. A joint home loan can be taken by a maximum of six co-applicants. Here’s a sneak peek into the details of this loan type:-

Who is a co-borrower?

Co-borrower is a person who shares the burden of a loan with the primary applicant. A co-borrower can share the loan amount with the primary applicant in any capacity. He/she doesn’t necessarily have to be a co-owner in the property however is liable to pay out the loan as per the pre-set terms and conditions. However, a co-owner of the property has to mandatorily be co-applicant and henceforth, co-borrower in the said home loan.

Who can be a co-borrower in a joint home loan application?

A joint home loan can be obtained by the primary applicant along with an immediate family member as their co-applicant i.e. the applicant’s spouse, parents and siblings can be co-applicants of a joint home loan. Mostly a father and son, unmarried daughter and father, unmarried daughter and mother, brother and brother and husband and wife joint home loan applications are considered eligible for a joint home loan. Note that usually married daughter and parent(s), two sisters, sister and brother, two friends and to-be-married couples cannot be co-applicants in a joint home loan.

List the Documents Required to apply for a joint Home Loan

To apply for a joint home loan, one needs to furnish their KYC (Know-Your-Client) details which include the address proof and identity proof of the co-applicants along with the income proof of their respective income. The proof of co-ownership of the property is also required by the bank to sanction the joint home loan application.

What is the home loan interest rate offered on a joint home loan?

Just like a regular home loan, the joint home loan interest rates vary across banks in India. But currently, all major banks including HDFC, SBI and other housing finance institutions offer joint home loans at as low as 8.30% interest rate, which is subjected to change as per the market conditions.

What is the tax benefit offered on a joint home loan?

Tax benefits on a joint home loan are aplenty. Under section 24 of the income tax act, all co-applicants of a joint home loan can claim tax deductions against interest paid. Plus, section 80 C of the income tax act can let them claim a tax deduction against principal repaid. In addition to this, when two or more persons have taken a joint home loan, every individual paying the income tax can avail the tax benefits available under the Income-tax Act, 1961 relating to the principal and interest paid in a financial year.

What is a joint home loan repayment process?

The process to repay the joint home loan is similar to that of a regular home loan. But the payment should be made through one cheque from a single or a joint account. Another way of repaying the joint home loan could be that the co-borrowers split the number of EMIs amongst them in a manner that the exact number of cheques can be issued by one borrower while the other pays the balance. The next good way out can be such that one borrower pays all the installments and other borrowers pay him their share thereafter.

7 Reasons Why You Should Not Buy Home Loan Protection with Home Loan

Buying a home has always been the biggest dream of every middle class family. It is also one of the biggest investments of anyone’s life too. The day of the possession of the home remains unforgettable throughout our lives. Most of us need and prefer to take a home loan to fulfil our dream to buy a home. Home Loan fulfils the dream of purchasing a dream home but also comes with a liability to pay it off. To make it positive, banks and financial institutions come with various schemes on home loans to make it easy for you to repay the loan. There must be something to protect it financially to ensure that your dream home always stays with your loved-ones.

Usually, the lending financial institution will ask you to opt Home Loan Protection Plan (HLPP) and many people opt for the same without even understanding the actual fundamentals of the Home Loan Protection Plan. Before proceeding to the reasons why you should not opt for a home loan protection plans or HLPP, we should understand what exactly is a home loan protection plan?

What is a Home Loan Protection Plan?

Home Loan Protection Plan is a single premium term insurance plan that covers your outstanding loan taken from a borrower if in case, you die or something happens to you before the settlement of the loan. Home Loan Protection Plan helps to provide protection to your family members as they don’t have to think about the home loan settlement policy. For instance, if your home loan amount is of Rs 40 lakhs and something happens to you with an outstanding amount of Rs 30 lakhs, then your family members have nothing to worry and Home Loan Protection Plan will settle the home loan for you.

Now let us examine 7 reasons, why you should not buy Home Loan Protection Plan in the first place:

1. It’s a onetime premium thing!

For Home Loan Protection Policy, you need to pay a onetime premium, which is the biggest disadvantage. If compared to the normal rates, the House Loan Protection Plan premium is three times the normal rates.

2. It is a five year policy

The Home Loan Protection Plan is valid for only five years and if something happens to the borrower after five years of the policy, the outstanding home loan would not be covered by them. So after every five years, you have to renew your home loan protection policy to make it valid.

3. Home Loan Protection Plan does not cover suicides and natural deaths

So, if you are taking HLPP into consideration because it covers the outstanding loan amount and keeps your family members out of the equation, then keep your eyes open. Home Loan Protection Plan does not cover natural death and suicide whereas the normal home loan payment covers these inevitable circumstances. So, in case of natural death or suicide, the borrower’s family members will be liable to pay the outstanding amount of home loan. Hence, it is advised not to opt for this plan in the first place.

4. Becomes null and void in case of foreclosure of loan

If the home loan is foreclosed by the lender before the actual date, then the borrower will not get any refund of the premium of home loan protection plan. If you took a home loan for 5 years and close it in 3 years, then you will not get any refund for the premium paid and your home loan protection plan will become null and void. Remember, if you pre-pay a part of your home loan then your home loan protection plan will reduce according to the principal amount outstanding.

5. Home Loan Protection Plan becomes null and void if home loan is transferred to a new Bank

If you want to transfer your home loan to another bank or financial institutions offering lower interest rates, then you will end up with an expiration of your home loan protection plan. Also, you will not get any refund for the premium paid.

6. A home loan insurance plan is costlier than a pure term insurance plan

The premium paid for a home loan protection plan is much higher than the premium charged for a term insurance plan of the same amount. The premium of a home loan protection plan is usually 2 to 2.5 times higher than that of term insurance policy.

7. Home Loan Protection Plan is not constant but depleting in nature

Home Loan Protection Plan provider is liable to pay only the loan outstanding amount. Whereas, term insurance plan is constant in nature and the insurance provider is liable for the payment of principal amount. For instance, if the home loan amount is Rs 60 lakhs and outstanding loan amount at the time of the misfortune causing borrower’s death is 40 lakhs, then in HLPP the liability for the HLPP provider will only be Rs 40 lakhs. Whereas, in case of term insurance, the term insurance provider will be liable to pay the principal amount of Rs 60 lakhs.

Which one is Best Gold Loan or Top up on Home Loan

You may be looking for finance to fund an expense like business expenses, renovate your house etc. To fulfil the need, the first question that will arise in your mind will be, “How to pay for it?” If you do not have enough cash available, you might think of taking a loan but, which loan should it be? While searching for the appropriate loan, you might come across the term “top-up loan” or “top-up home loan”.

Taking a home loan is the best possible way to buy your dream home. But, home loans may not be able to meet your other financial needs. If you are looking to renovate your home or meet your personal or business expenses, then a top-up loan on your existing home loan will prove to be a cost-effective solution.

What are Top-up Loans?

If you currently have a home loan and have made repayments timely, then your bank can give you the option of borrowing an additional loan, which will be equal to the amount of your current housing loan that you have paid so far. A top-up loan or top-up home loan is offered to you above your current home loan. Top-up loans provides support in case of any financial crunch that you may face while renovating or repairing your home. Top-up loans does not come with any precondition, which enables you to use the funds for any other need as well.

Eligibility

Top-up loans can be availed by existing home loan borrowers. You are only considered for top-up loan when you have started making repayment of your home loan for a minimum period, which depends on your bank. Usually, banks tend to have a minimum repayment period of 2-3 years before they consider you for a top-up home loan. Also, banks will consider you for a top-up loan only when you have a healthy credit score and a good repayment record. The chances of top-up loan can reduce, if you have a low credit score or delayed repayments on your home loan.

What is Gold Loan?

Gold has seen a good amount of capital appreciation over the years. You can use this gold to provide fund in case of any financial crunch such as medical emergency, child education, business expansion etc. If you are need of funds, you can utilise the gold lying in your lockers to fund your urgent requirement. Gold loans are one of the fastest and hassle free loans available. You can get loan against any form of gold available like gold coins, biscuits and jewellery.

Eligibility

Gold loan can be availed by mortgaging your gold for funds required to support the financial crunch. Gold loans generally come with base interest rates of 11-14%. But, the interest rates tend to vary across banks. You can consider taking gold loan if you have enough gold available with you and if you are able to get a loan at a reasonable rate. However, gold loans are granted for a short term of 1-3 years. So, you should take gold loan only if you think you can repay it in the short period of time.

Is Top-up Loan a Better Option than Gold Loan?

Top-up Loan is not required to be used necessarily for home related expenses. It can be used for any random expense as the lender holds the first mortgage on the property.

On the other hand, Gold Loan is one of the easiest forms of fund you can avail by mortgaging your gold assets.

However, both Top-up Loan and Gold Loan have different markets. If any borrower already has a home loan, then it becomes easier and hassle free to avail top-up loan if the borrower maintains a healthy credit score and has made repayments on time. There are two benefits of top-up loan over gold loan.

· Lower interest rate – Top-up Home loans are generally available at a lesser interest rate than gold loan.

· Longer tenure - Top-up home loan is available for a longer duration of time than gold loan. Gold loans are available for a short duration of time. Thus, you should be able to repay the loan in the short duration of time.

Want to Renovate Your Home - Go for SBI Home Loans

SBI Home loans are the most preferred amongst the borrowers. These are obtainable to people who either want to purchase their dream home or plan to renovate the existing one. This article delves deeper and fetches out reasons why one must choose SBI home loan over others.

1. Lower interest rates: SBI being the India’s largest public sector bank offers home loans at competitive interest rates, which are either ways lower than any other bank in India. The key reason behind this is a scale of operation. Secondly, the State Bank of India has access to cheap funds as its CASA ratio is the best amongst all banks in India.

2. Transparent & quick loan approval process: SBI follows the transparent process of home loan approval. To be precise, there are no hidden charges associated with SBI home loan. Moreover, the processing fee that is levied by the SBI bank from loan applicants is subjective in nature and can be negotiated.

3. Legal Verification: The legal verification process of SBI is much stricter than other banks and financial institutions across India. The SBI home loan is approved only after thorough verification and carefulness. The bank follows a strict modus operandi of loan approval. The sole purpose behind this is to keep the NPAs under control.

4. A wide network of branches and ATMs: SBI is India’s largest bank with a network of over 10000 branches and several associate banks situated even in the farthest part of the country. In addition to this, the State Bank of India offers a wide variety of banking products for commercial and retail customers. SBI has also forayed into the online segment to provide 24*7 banking services for State Bank's Retail and Corporate customers.

5. 24*7 customer care service: SBI is equipped with proficient customer care staff that perfectly caters to the needs of State Bank’s customers 24*7. In fact, many of the State Bank’s staff are cordial with every customer and answer their queries and complaints instantaneously. You can reach them by an e-mail or a call. Customers can also visit the bank branch to get answers to their queries or write to them to raise a query.

6. Online Loan Submission: The State Bank of India provides loan submission online. It allows customers to apply for an SBI personal loan with a click of the mouse while sitting in the comforts of their home.

7. Personalized loan schemes: SBI offers personalized loan schemes at attractive interest rates for working professionals and salaried individuals occasionally. This bank also offers low-priced personal loan schemes during major festivals for both rural and urban applicants to help them easily cope up with all sorts of financial requirement.

The State Bank of India, the largest private sector bank in the country, offers a wide range of home loan schemes to cater the needs of customers of all cohorts. SBI also caters to the NRI audience with a range of home loans. SBI home loans can be applied both online and offline only if the candidate meets the following criteria:-

1. For Salaried Individuals: He/she should be 18 to 70 years and earn a minimum 1.2 lacs per annum.

2. For Self-Employed Individuals: He/she should be 21 to 70 years of age and should be earning minimum 2 lacs per annum.

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.

Housing Loans Interest Rate Subsidy

Credit Linked Subsidy Scheme (CLSS) is aimed at providing financial benefits to the middle-income and lower-income group. Under the scheme, home loans of up to Rs 9 Lakhs are eligible for a 4% subsidy for those whose annual income is up to Rs 12 Lakh. Housing loans up to Rs 12 Lakhs are eligible for a 3% interest subsidy provided that the borrower’s income is up to Rs 18 Lakhs per annum. The scheme has been made effective from 1^st January 2017, although the guidelines came out later. Home loans sanctioned since Jan 1 will be eligible for the subsidy. However, the applicant earlier should not have a house registered in his name since the scheme is only for first-time homebuyers.

Highlights of Credit Linked Subsidy Scheme

CLSS, sponsored under Pradhan Mantri Awas Yojna (Urban), has come out as a big relief for the mid-segment homebuyers. At the same time, it encourages private builders to launch affordable housing projects in prime locations. Let us look at the key highlights of CLSS-

1. The CLSS is meant for the first-time home buyers, so those who already have a house registered in their name would not be able to get benefits of this scheme.

2. Though the operative guidelines were announced only in March 2017, loans that were sanctioned and are in process since 1^st January 2017 will also be considered.

3. To get benefits under CLSS, beneficiaries will have to apply for the same with their lenders.

4. All commercial banks, regional rural banks, housing finance companies, urban and rural cooperative banks and other financial institutions giving out housing loan are eligible to provide benefit to their customers under the scheme.

5. The amount of interest subsidy provided will be reimbursed to the lender bank from the National Housing Bank (NHB) and the Housing and Urban Development Corporation (HUDCO).

Process of Credit Linked Subsidy Scheme

To understand the process of how to get benefit under Credit Linked Subsidy Scheme, one has to know the following points first-

·      Interest subsidy is provided for the purchase/construction of the house with carpet area of up to 90 square meters for beneficiaries earning up to Rs 12 Lakhs per annum. For those earning between Rs 12 Lakhs and Rs 18 Lakhs, this limit is 110 square meters.

·        The tenure for this loan is taken as 20 years or that preferred by the beneficiary, whichever is lower.

If the beneficiary meets the income and loan eligibility criteria, he/she should apply for the interest subsidy under CLSS with the lender. The lending bank or financial institution will verify the details and if satisfied, it will grant the subsidy. The entire amount of interest subsidy is transferred to the beneficiary’s account in one go and the same amount is reimbursed to the bank from the National Housing Bank or HUDCO.

Extent of EMI Reduction under Credit Linked Subsidy Scheme

To be precise, CLSS reduces the beneficiaries’ EMIs by Rs 2,000 per month.

According to the MD and CEO of National Housing Bank (NHB), an interest subsidy of 4% on a loan of Rs 9 Lakhs will bring down the monthly EMI by Rs 2,062. Similarly, interest subsidy of 3% on a loan of Rs 12 Lakhs will reduce the EMI by Rs 2,019 per month. This calculation has been done with an average interest rate of 8.65%.

About Pradhan Mantri Awas Yojna (PMAY)

Pradhan Mantri Awas Yojna is a scheme catering to the housing needs of mid-income, low-income and economically weaker sections of India. PMAY consists of four important aspects- building homes for slum dwellers, providing financial assistance to homebuyers in the form of credit linked subsidy, providing financial assistance to private developers who wish to develop affordable housing projects and extending direct financial assistance to the EWS.

Credit Linked Subsidy Scheme is a major step towards encouraging people to buy their dream homes and giving an overall boost to the real estate sector.

Home Loans for Under-construction Property

It is no news that real estate prices are high and for a middle-class individual it has become imperative to take home loan to fund the purchase. Since it is a huge financial commitment, you need to make a wise decision about the property you are buying as well as the home loan. With a number of projects coming up at a rapid pace, under-construction homes are rising as a preferred choice among mid-segment buyers. These are priced lower than the ready-to-move homes so you can get the combined benefit of a good location as well as better home at a reasonable rate.

Home loans for under-construction projects are offered by all popular banks and financial institutions. 

Let’s talk about a few such home loans-

ICICI Bank Home Loan

ICICI Bank Home Loan is one such product that helps people own the home of their dreams at attractive interest rates along with easy terms and conditions. ICICI Bank is one of the first tech-savvy banks of the country. One can also apply through their smart phone application and ensure faster approval. They also claim to provide higher eligibility and smart EMI options. One’s eligibility is judged on the basis of various parameters like current age, retirement age, monthly income, existing EMIs, etc. ICICI Bank Home Loan EMIs can also be calculated with the EMI calculator available on their official website. ICICI Bank offers a competitive interest rate along with a maximum tenure of 30 years which will make repayment smoother for the borrowers.

SBI Home Loan

SBI is one of the most preferred home loan lenders of the country. The bank offers home loans for under-construction property, ready-to-move homes and resale homes as well as for construction of a home. The loan amount is decided on the basis of the applicant’s credit history and repayment capacity which is judged by his income, expenses, age, job stability, existing EMIs and a few other things. For properties priced up to Rs 30 Lakhs, 90% of the value can be given as a loan; for properties ranging between 30 Lakhs and 75 Lakhs, the ratio is 80% and for those exceeding Rs 75 Lakhs, the loan percentage is 75%.

Given below are a few benefits of SBI Home Loan-

·         No additional or hidden charges

·         Complete package of exclusive benefits

·         Interest rates charged on a daily reducing balance

·         No prepayment penalties

·         Low processing fees

HDFC Home Loan

Originally a housing finance company, HDFC is also counted among the best home loan lenders. It offers attractive interest rates on home loan that can be taken for the purchase of under-construction property, resale property or for constructing a home on the plot. HDFC also offers loans for extension or renovation of a house. The terms and conditions of HDFC Home Loans are very simple after one meets the eligibility criteria. Both fixed and floating rates of interests are provided on these home loans. Being a smart bank with updated technology, the home loan approval process with HDFC is quick and easy.

Comparative Interest Rates

The table given below shows the home loan interest rates offered by these three lenders to salaried individuals. Take a look-

	Up to Rs 30 Lakhs	30 Lakhs to 75 Lakhs	Above 75 Lakhs
ICICI	8.40%	8.65%	8.70% to 8.80%
HDFC	8.40% to 8.90%	8.50% to 9.00%	8.55% to 9.05%
SBI	8.40%	8.55%	8.70%

Tax Benefits on Home Loans for Under-construction Property

Apart from being cost-effective, investing in under-construction properties through home loans can also give you certain income tax benefits. Under Section 24B, an individual can claim a deduction of Rs 2 Lakhs towards the interest paid on home loan for a self-occupied property. However, if the property is not self-occupied or rented out, there is no maximum limit and the whole interest amount can be claimed for deduction. From financial year 2016-17, more tax benefits are allowed to first-time homebuyers towards interest paid on home loan under section 80EE; the deduction allowed is Rs 50,000 over and above the 2 Lakh limit.

How to Get a Home Loan against Your PF

Over the years, the Indian government has taken all possible measures to make sure every family has a roof over its head. Things have changed a lot from what it used to be- homes are offered at extremely affordable rates by the government as well as private builders; home loans have also become cheaper and convenient, one can apply for a home loan online and get instant approval as well as manage the loan account from the comfort of his home. All this is now possible because we envisioned it way before and made efforts toward it. Several progressive steps are taken by the government to make the housing scenario in India even better.

An important step was taken in 2016 when the government announced a housing scheme for the members of Employees’ Provident Fund Organization (EPFO). Under the scheme, EPFO subscribers are allowed to pledge their Provident Fund accumulations to buy a house or to build one. The monthly PF contributions can also be utilized towards the part or full repayment of their home loan or for making monthly EMI payments. This will make it easier for the middle-class buyers to purchase a home without compromising savings or cutting their monthly budget.

Let’s learn more about how the scheme works-

Home Loan against PF

There are over four crore EPF subscribers in India and it is a progressive move to assist them in buying a house. To explain in layman terms- the scheme allows you to use your PF account as collateral for your home loan. For the purpose of purchasing a house, you are allowed to withdraw funds from your PF account only after the completion of three years from the contribution. You can withdraw 90 percent of PF accumulation in your account or the cost of the real estate, whichever is lower. Earlier this amount was subject to the type of real estate you are buying. For plot purchase, the loan amount was equivalent to 24 months’ basic salary plus dearness allowance. And for buying a flat in an apartment project or for constructing your own house, the loan amount was 36 months’ basic salary and DA.

Withdrawals are possible from the PF account only if-

·         The employee is a member of EPFO for at least three years

·        The fund accumulation as well as the interest is at least Rs 20,000

It should also be noted that this amount can be withdrawn only once. This will be a triparty agreement involving the applicant, bank or financial institution and the EPFO, although the payment will be made by the EPFO directly to the lender bank. In case the allotment is cancelled, the amount has to be refunded into the PF account of the buyer within 15 days. In case the amount withdrawn exceeds the amount spent, the balance will be refunded to the PF account within 30 days of the deal. Home loan against PF can also be taken jointly but the co-applicant can be none other than the primary applicant’s spouse.

Payment of Home Loan EMIs through PF Account

Monthly instalments can also be made from your PF account towards an existing home loan taken in your name or in the name of your spouse. For this purpose, the lending institution will look at the amount contributed to the applicant’s PF account over the last three months.

Benefits of Home Loan against PF

The government is quite serious about making things more convenient for the people of India. A host of online services like linking Aadhaar to your PF account, UAN registrations etc. have been brought forward in a short span of time. Recently, the UAN withdrawal facility was also announced which would allow a member to withdraw his PF accumulation without employer’s signature. Home loan against PF is also very beneficial for the mid-segment homebuyers-

·         No need to squander your savings or cut your monthly budget to get a home loan.

·         You will get the age advantage; the older you are more will be the PF amount.

·         After 5 years of contribution, your PF money is tax-free, so you will enjoy dual income tax benefits on home loan as well as the PF account from which you are financing it.

This is a part of the ‘Housing for All by 2022’ initiative taken by the government. It aims at assisting the working generation in buying the home of their dreams in any location they want unlike the housing schemes wherein the government builds affordable homes for them. Buyers will be free to choose their home from the real estate market without any restriction. They will not only be able to take a home loan on their PF account but also repay outstanding EMIs through the same. There is no big stress to repay the amount as it is, in fact, an advance.

7 Steps to Improve Your Home Loan Eligibility

A home loan can help you buy a plot, or an under-construction or already-built property. You can also apply for a home loan for renovation, extension, or repair of your own house. A home loan comes at a low-interest rate as compared to other types of loan and also provides tax benefits to the borrower. However, banks only approve home loans for applicants that meet the eligibility criteria and have the repayment capacity to pay the instalments of the home loan. You can check the home loan eligibility calculator of a bank to make sure that you fit the bill.

If you want to improve your chances of getting a home loan from a bank, there are certain ways in which you can become a more suitable candidate. The 7 steps to improve your home loan eligibility are listed here:

1. Clear off Debt: One of the first things that a lender, bank or other financial institution, will check when they go through a credit card application is the amount of debt that the applicant has accumulated. If you have availed a number of loans such as education loan, personal loan, credit card debt, etc., the bank is less likely to approve a home loan for you. In their opinion, you have too many financial obligations that you are tied to already to be able to afford another loan such as a home loan. Consolidating the loans also help save on interest. Use a loan eligibility calculator to look at the interest outgo for all your debts and then look the same for the single loan. You can also use a home loan eligibility calculator with custom numbers that will show you clearly that you save when you opt for a single loan.
   
2. Improve Your Credit Score: Your credit score says a lot of things about how you handle money and if you have the ability to repay the home loan that you are applying for. Frequent defaulters on loan repayments or credit card bill payments have a low credit score and are considered as high-risk candidates. The banks do not approve home loans, or any type of loans, for such applicants. If you also have a low credit score, you need to improve your credit score before you apply for a home loan. One of the best ways to drastically improve your credit score is by paying off as many loans as you can. As mentioned in the earlier paragraph, you can also consider consolidating all of your loans into one by paying off all loans with the help of a single loan. Also, pay off high interest debt first such as the credit card outstanding balance as soon as possible.
   
3. Apply for a Longer Loan Tenure: A long tenure for a loan usually comes with a lower interest rate as well as a lower monthly instalment. This simply means that the borrower can easily repay the loan in small instalments every month. It will not create an imbalance in the monthly budget and will also reduce the chances of defaults of loan repayment. You can go to the bank’s website and locate the home loan eligibility calculator to check the specific eligibility criteria of the bank.
   
4. Add a Co-applicant: Individuals can apply for a home loan for an amount that depends on their income and current financial condition. To improve their eligibility and also get a home loan of a higher amount, an individual can have a co-applicant, either a spouse or a family member. If the monthly income and credit score of the co-applicant are good, it can improve the likelihood of both getting a home loan.
   
5. Provide a Guarantor: Banks like to approve home loans for individuals that can provide security or guarantor for a loan. It is favourable for the bank since the bank can forfeit the security or seek the guarantor in the case the borrower fails to repay the loan for any reason. A guarantor adds credibility to the borrower in the eyes of the lender improving the chances of getting approval for a home loan.
   
6. Purchase from a Reputed Builder in a Good Area: Most of the banks approve home loans of borrowers purchasing a property from a reputed builder. Home loans are also provided for renovation, extension, and repair of a loan as well and the bank is more likely to approve a home loan in such a case if you own the property in a good area. The banks do not approve home loans for properties in certain areas and it is best to avoid them.
   
7. Have a Stable Income: A stable monthly income is one of the most important factors that determine the loan amount a bank will approve for an applicant. If an applicant has low monthly income, he may not be in a condition to repay the loan he is applying for. The banks may approve the home loan if the borrower has the financial assets to repay the loan. However, a strong and regular source of income is desirable.

Online Tool for home loan EMI calculator

Most people take home loans when they are buying a property, and for the same they would want to calculate the EMI or Equated Monthly Instalment precisely. Doing the calculation manually is a tedious job and one can go wrong anywhere. It is, therefore, safe to use the home loan EMI calculator- an online tool that will help you learn about the EMI as quickly as possible.

The home loan EMI calculator online tool requires minimal inputs and assures customized results. 

What are the parameters that are required to use the loan EMI calculator? 

• You need to include the tenure of your home loan repayment procedure by moving the slider. 

• Also, write the loan amount on the slider tool. 

• Input the interest rate in the designated field. Since the entered area is earmarked with the percentage (%) sign, you do not have to manually input it.

• When using the EMI home loan calculator, bear in mind about prepayments. You have to choose any of the options, yes/no, which shows as the final input. 

The reasons why you should use home loan EMI calculator is that it has many advantages which include speed, simplicity of the process, free to use and experimental since it is capable of testing different interest rates along with varying tenure combinations. 

Using the EMI home loan calculator, you can easily manage home loan repayments. How? 

EMI home loan calculator is user-friendly and is particularly designed to simplify the tedious job. The calculation is performed in the shortest possible time. It is the best online tool to manage your home loans better than you had ever imagined. Now that we have discussed about EMI home loan calculator, let’s understand the formula used for calculating home loan EMI. 

The basic formula to calculate the monthly instalment of your home loan is:

E= P x r x (1+r)^n/(1+r)^(n-1)

What is P? 

P is the principal amount which is borrowed. 

What is r?

R is the rate of interest which is provided on a monthly basis. Remember that the interest rate is provided annually. To include the interest rate on a monthly basis, you should use r=(annual interest/12)x100. 

While this formula is used to manually calculate the EMI, it may not be accurate as the home loan EMI calculator. 

How the online tool works? 

The online home loan EMI calculator is a convenient and user-friendly interface. The essential inputs are loan tenure, loan amount, applicable processing fee, applicable interest rate, and along with this you have the choice of ‘yes’ or ‘no’ for pre-payment option. Then, click on the ‘’Calculate’’ button and you will get the desired result. 

What are the benefits of home loan EMI calculator? 

• The calculator helps to understand the differing financial charges like the processing fee value and total interest paid. 

• The home loan EMI calculator enables to ascertain the EMI amount in seconds. With inputs such as rate of interest, loan amount and loan term, you will know the EMI amount payable.
  
• If you know the EMI value, it will help you choose the tenure of the loan. If the tenure is small, the EMI is higher. 

• Also, the home loan EMI calculator helps you in loan management. If you have a special objective to pay off the loan before time, then the EMI calculator will help you make your choice. 

Thus, using the home loan EMI calculator serves as the best way to calculate EMIs and to know how easily and quickly you can pay off the loan.

What is floating interest rates of DHFL Home Loans?

There are several home loan providers in the market trying to mark their name in the competitive environment. One of those is DHFL which is doing great business these days. The bank belongs to the private sector but the facilities offered are one of the best in the market which make people look forward to avavil a loan from the bank. One of the major advantages that the bank provides is low rate of interest. The DHFL home loan interest rates are always at the lowest level making customers feel secured. However, the interest rates vary according to the type of the loan.

The best interest rate for loan

While there are different interest rates for different home loans, the best rate offered is 8.60% currently. This is flexible interest rate and will vary according to the market rate of interest and the margin mentioned by RBI. The effective rate of interest starts from 9%. This makes the EMI per month really low and makes it easy for anyone to afford a home at that EMI. Lower interest rate will also increase your eligibility as EMI is determined based on your paying capacity. 

DHFL home loan interest rates

Home loan interest rate for salaried and self-employed people may vary and the tenure can be 1 to 30 years. DHFL home loan interest rates usually start from 9% onwards. 

For salaried individuals

The interest for salaried individuals start from 9% per annum and that is applicable for loan amount up to 75 lacs. If you want to take a loan of more than 75 lakhs but less than 1.5 crore, the interest rate will be 9.15%. From 1.5 crores to 3 crores, the interest rate is fixed at 9.35% and for bigger amounts the interest will be 9.75%. 

For Self-Employed

For people who are self-employed,, the interest rate is a bit higher compared to the salaried employees. The interest rate for up to 75 lacs is 9.10% while for the range of 75 lacs to 1.5 crores; the rate is fixed at 9.25%. For loans over 1.5 crore and less than 3 crores, the rate of interest charged by the bank is 9.45% and for any amount more than that you will have to pay an interest of 10%. 

Apart from the home loan interest, a borrower also needs to pay a processing fee of Rs.5000 for a loan up to 30 lacs. For a loan up to 75 lacs the processing fee is Rs. 10,000 and for amount more than that the processing fee is Rs. 20,000. This is a nonrefundable amount charged by the bank and it is charged only once. There are some other charges too that depend upon the terms and conditions of the loan. 

There are several reasons why people choose DHFL as their home loan partner. One of those reasons is that the bank is a user friendly one and the interest rate is quite low too. The bank makes sure that the burden is lower for the borrower and thus tries to offer the best rate in the market. Apart from that, the processing of the loan is done quite early making it a convenient option for the borrower who wants things to be wrapped up as early as possible. The representative of the bank will guide you in every step of processing the loan and doorstep service is offered to customers who are unable to visit the branch. The documentation process is easy and hassle free and that is the reason why it has become easy to take a loan from DHFL.