A loan applicant needs to check on the following parameters when comparing home loans.
1. Purpose of loan i.e. purchase a already built home, purchase a plot & construct on it
2. Eligible loan amount, as this will govern the down payment you will have to make
3. EMI and interest rate
4. Processing fees
5. Pre-payment and pre-closure fees
6. Ratings of the customer experience by previous customers
Yes, Apart from Home purchase you can take home loan for Home Improvement Loan, Home Extension Loan, Home Conversion Loan, Bridge Loan, Home Construction Loan and Land Purchase Loan.
Registration charges, transfer charges and stamp duty costs are some of the costs in addition to the cost of the home.
Home loans are usually accompanied by the following extra costs:
0. Processing Charge/Booking fee: It is a fee paid to the lender, when you apply for a loan. It could either be a fixed amount (not linked to the loan quantum), or could be a percentage of the loan amount.
1. Pre-payment Penalty: If a loan is paid back before the end of the agreed duration, a penalty is charged by some banks/financial institutions, which could be up to 2% of the amount pre-paid (Some institutions also consider all partial payments done in the last 12 months, as part of the pre-paid amount). However, most lenders currently do not charge a pre-payment fee for floating rate loans.
2. Miscellaneous Costs: Some lenders may levy a documentation or consultant charge. This is also known as "Application fee", in some institutions.
3. Registration and Stamp Duty charges - These are to be paid at the local Sub-Registrar's Office (SRO), as Charges for transferring the rights of the property from the builder/seller, and registering it in the name of the buyer (the loan applicant).
Yes, it is good to have a co-applicant. This can help you increase the loan amount you are eligible for as the income of the co-applicant is also taken into consideration. Providing additional security like bonds, fixed deposits and LIC policies will also help in enhancing eligibility.
An equated monthly Installment (EMI) is the amount of money that is paid back to the lender on a monthly basis. It is essentially made up of two parts, the principal amount and the interest on the principal amount equally divided across each month in the loan tenure. The EMI is always paid up to the bank or lender on a fixed date each month until the total amount due is paid up during the tenure. The EMI facility helps the borrower plan his budget. The EMI is calculated taking into account the loan amount, the time frame for repaying the loan and the interest rate on the borrowed sum.
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.
Yes, under Section 80C and Section 24 tax deductions are capped at 1 lakh for the principal repaid and 1.5 lakhs for the interest repaid.
You have the option of selecting a loan tenure you are comfortable with, ranging up to 25 years, provided the term does not extend beyond your reaching 65 years of age or retirement age, whichever is earlier.
The housing finance offered to NRIs normally do not exceed 7 years. The repayment for the loan is by way of EMIs. The EMIs begin only after the entire loan is disbursed. In case of a part disbursement, you will pay only the interest amount on the disbursed loan amount every month instead of the EMI. This is known as pre-EMI.
No tax benefits are available for NRI customers unless you file returns and hence become eligible to avail the tax rebates available for home loans.
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