Owning a home... this is the common dream for every men to own a home at their monetary capacity. May be we can't afford full liquid amount to purchase or construct a house, But we can get assistance from financial institutions to full fill our "owning home" ambition. Applicant aged above 18 years with stable income is able to avail loan irrespective of income source (Not unauthorized).
The first step you need to take is to make sure that you qualify for a housing loan. At the beginning, lenders will assess your eligibility for home loan on the basis of your income and repayment capacity. The other important considerations include age, financial position, number of dependents, spouse’s income and stability of income.
It is advisable to get your home loan pre-approved before you select your home. Pre-approval helps you fix your exact budget and makes your home search focused. Pre-approvals even help negotiate better and close deals faster. You can also check with the lender about the availability of good properties in your preferred location. In fact, there are some projects that are approved by the lender, which not only relaxes the number of property documents needed by the lender, but also assures you of the quality of the projects.
As defined by the regulator, most lenders provide a housing loan ranging from 75 to 90 percent of the cost of the property depending on your loan value. Therefore, if the property is valued at Rs 50 lakh by the lender, you can avail a maximum loan of Rs 40 lakh (80% of the property cost for loan amount up to Rs. 75 lakh), depending on your home loan eligibility. If you include a co-applicant, his/her income can be considered by the lender to increase the loan amount. The co-applicant may be your adult child, parent or spouse. The balance payment towards purchase of the property is expected to be contributed by you. Most lenders require 10-20% of the home's purchase price as a down payment from you. It is also called 'one's own contribution' by some lenders. The rest, which is 80-90% of the property value, is financed by the lender. If you acquire a plot of land with your own investment, then lender will sanction 100% of estimated cost of project to construct the house.
Even though the lender calculates a higher eligible amount, it is not necessary to borrow that amount. Even a lesser amount can be borrowed. One should try to arrange the maximum of down payment amount and less of home loan so that the interest cost is kept at minimal. For instance, if the property is valued at Rs 50 lakh and you have been sanctioned a home loan of Rs 35 lakh, your contribution will be the balance Rs 15 lakh. You can use a housing loan eligibility calculator to check your eligibility for home loan.
The cost of your housing loan is also a factor to take into consideration while assessing its suitability. The cost will include the interest payments, processing fees, administrative charges, prepayment penalties, etc. Ideally your home loan should have zero prepayment charges for adjustable/floating rate loans. You should also be able to convert your loan to a lower rate by just paying a nominal fee. When considering a home loan, ensure that there are no hidden charges. As per the regulator, lenders need to transparently disclose information about fees and charges on their website.
You need to submit required to documents to process your loan:
KYC DOCUMENTS:
These include your identity and address proofs. Some documents that you can submit for this requirement include a valid passport, voter ID card, Aadhaar card, etc.
CREDIT/INCOME DOCUMENTS:
These documents help the lender assess your loan eligibility.
If you are employed, you can submit your salary slips of the last 3 months
if you are self-employed or businessman, you can submit income tax returns along with computation of income of the last 3 years.
if you are agriculturist, you can submit agriculture income certificate from authorized revenue authorities.
PROPERTY DOCUMENTS:
These documents include the agreement to sell, the title deeds, Link Deeds, Plan Approvals etc. The lender does a due diligence on the property based on these documents.
Before considering of your application, lenders will check your credit score on some credit information companies like CIBIL, Highmark, Equifax etc.
Home loans are supported with government subsidy schemes like PMAY (interest subsidy)
I hope you know very well that home loan's principal and interest will reduce your tax amount. (Know Tax Exemption slabs)
I think this is enough to get a better plan to have your dreamed home with benefits. Best of luck.
Hello, welcome to my blog, Smart Investor. I'm Satyanarayana, a banker & blogger, Investor from Visakha -patnam, India. You can read more about SML here.
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