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Tuesday, October 19, 2021

Home Loan Information!

Generally you take home loan for purchase of house/flat, plot or construction/renovation. Many times home loans are also taken for the enhancement or repair of the house. Here we are giving you all the necessary information about the home loan.

How much loan can you take?
Before starting the process of home loan, assess how much you earn and how much loan banks can give according to that. Your ability to take a home loan depends on your ability to repay it. It depends on your monthly income, expenses and family's income, assets, liabilities, stability in income.

Banks first see whether you will be able to repay the home loan on time or not. The more money you have in your hands every month, the more your home loan amount will increase. Usually, a bank or lending company sees whether you will be able to give 50 percent of the monthly income as home loan installment or not.

The loan amount also depends on the tenure of the home loan and the rate of interest. Apart from this, banks also fix upper age limit for home loan.

What is the maximum home loan you can take?
A down payment of 10 -20 percent of the cost of a house or flat has to be made. This is your own contribution.

After this, the loan is available up to 80-90 percent of the value of the property. It also includes charges like registration, transfer and stamp duty.

Even if the lending institution approves you a higher amount as a home loan, it is not necessary that you take the entire amount as a loan.

While buying a property, you should make maximum down payment so that the loan burden is minimized. Keep in mind that the bank lending you the home loan charges you a lot of interest over a long period.

Is it necessary to apply for home loan?
Yes, co-applicant is necessary in most of the cases. If the property is in the names of two people, then in that case both of them must be included in the home loan as well. If you are the owner of the property then any person from your family can be the applicant.

What are the documents required for home loan approval?
A checklist of documents to be attached is included in the home loan application form itself. Along with this, you have to put a photo.

From legal documents for buying a house, the bank has to give you the salary slip (office attested and self-attested) along with identity and residence proof and the bank statement for the last six months along with Form 16 or Income Tax Return.

Some home loan institutions also ask for life insurance policies, share papers, NSCs, mutual fund units, bank deposits or other investment documents as pledge.

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What is Home Loan Sanction and Issuance?
According to the papers given by you, the banks decide whether to give you the loan or not. The home loan amount also depends on this.

If the bank has accepted your application and has decided to grant the home loan accordingly, then the sanction letter contains information about the home loan amount, tenure and interest rates etc. It also contains information about the terms and conditions of the loan.

When the loan amount is actually in your hands, it is called disbursement. This actually happens after the technical, legal and valuation related process is completed.

You can decide to take a loan less than the amount in the sanction letter. At the time of getting the loan, you have to provide allotment letter, photocopy of title deed, sale agreement and encumbrance certificate.

From the day the loan amount came in your hand, interest is charged on it.

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