HOME LOAN FAQ

  • How is the Eligibility of my Home Loan amount determined?

    Banks/ HFCs determine Loan eligibility based on following:

    1. Age of applicant & Co-applicants
    2. Regular Income through various legal sources
    3. Obligations of Existing Loans/ Credit Card Dues
    4. No of Dependents
    5. AStability & Continuity of Incomes
    6. ASavings Habits
    7. Assets & Liabilities
  • What is the maximum period of Home Loan offered?

    Home Loans are generally offered for maximum period of 30 years depending upon the age of applicants. Home Loans to certain category of borrowers may be however restricted to maximum 15 years.

  • Is there a maximum or minimum amount I can borrow?

    As such there is no limit on minimum & maximum amount of Home Loan. However most Banks stipulate minimum Rs.10.00 lakhs as it may not be economical for them to process applications for amounts lower than that. There is no upper limit for Home Loan, its depends on property value and your eligibility.

    Banks/ HFCs are governed by RBI guidelines and are required to restrict maximum loan amount to 75-80% of Cost of Property.

  • What is the Floating Rate Home Loans? What Are the Fixed rate Home Loans?

    Floating Rate Home Loans are the ones wherein the Rate of Interest is linked to the Base Rate (Reference Rate) of the Bank (NBFC). All banks are required to declare their Base rates below which Banks are not allowed to lend. Floating Rate Loans are linked Base Rate of Bank + Banks Margin. For example, Home Loan Floating rate of 11.00% is indicated as Base Rate of 10.00% + Margin of 1.00% above Base Rate = 11.00%. As the Bank alters its Base Rate from 10.00% to 9.00%, the applicable Rate changes from 11.00% to 10.00% in this example.

    Generally most of the Banks are offering Home Loans at Floating Rates as it gives them flexibility to alter the rate of interest as per their cost of funds. More than 80% of Banks' Portfolio is on the Floating Rate regime.

    In case of Fixed Rate Home Loans, The Rate of interest remains fixed over the period of loan. Many Banks also offer Fixed Rates over limited period i.e say 1 year, 3 years or 5 years, instead of entire period fixed rate loans.

    In case of Fixed Rate Home Loans, applicants do not stand to get the benefit of lower rate of interests prevailing in the market whereas in Case of Floating Rate Home Loan applicants gains when the Rate of Interest is headed lower in the market.

  • What are the fees being levied by banks on Home Loans?

    The processing fee is either a fixed amount not linked to the loan or it may be a percentage of the loan amount. The loan amount received by you can be less than the processing fee. And as for the administrative fee, 1% of the loan amount sanctioned will have to be paid. Both the processing fees and administration fees are payable upfront.

    Home Loans may also be accompanied by the following extra costs:

  • Do I have to contribute my funds while buying a Home OR Will the Bank finance entire cost of Property?

    One has to bring in his own margin/ contribution towards the total cost of property. Prevailing norms indicate Banks finance anywhere between 75-85% of Cost of Property, meaning owner's being between 15-25%.

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