Home Loans

What is Home Loan?

A Home loan/ house loan/ housing loan is essentially a sum of money borrowed from a financial institution such as bank or an NBFC, in order to purchase a house/plot of land. In addition you can also raise a home loan in order to repair, make extensions to or renovate a residential property. Generally, home loans come along with an adjustable or fixed rate of interest and certain re-payment terms as per the current house loan rates.The re-payment of a loan is done in Equated Monthly Installments [EMIs] according to the terms of the housing loan scheme.In order to approve your home loan, the bank or the lending financial institution will take the concerned property as a security in case the lender fails to re-pay the loan or in case of wilful default.

A home loan also called a housing loan, has become one of the most common type of loans, with multiple banking institutions offering competitive loan rates for homes.The home loans are among one of the largest selling products of banks and they also ensure a very long-standing fruitful relationship with a lender as they help them fulfil the dream of buying their ideal home at cheap home mortgage rates. Before taking a home loan from any bank, it is important to compare interest rates as many of the institutions claim to have the lowest home loan interest rates. At Finbucket, we are a home loan mortgage company and he strive to help you own your dream home. We understand that the cost of renovating/buying a new house will be a challenging amount to deal with for you. This is where bank financing home loan wil play a pivotal role in helping you achieve your goals.

Loan Term

5 Years to 15 Years

Maximum Loan Amount

50% – 80% of Property Value

Interest Rates

10% – 18%

Eligibility for Home Loan

How much loan can I take?

Before approving and disbursing, home loan agencies will check and determine your total eligibility . The housing loan eligibility depends mainly on your repayment capacity . The repayment capacity of a particular candidate depends upon a number of factors which include monthly disposable / surplus income , assets, liability, stability of income. as a rule of thumb, the higher the disposable monthly income , the higher the loan amount you will be eligible for.The Banks for home loan ideally assume that 50% of disposable income is available for repayment. In addition to this, the tenure and interest rate will alos play a part in the amount of housing loan approved for you.In addition to this, the housing lenders will require you to pay a 10% -20% down payment as a down payment from your side. The remaining 80-90% of the cost of the housing is financed by the bank. Given below are some of the crucial criteria for a home loan:

Factor	Criteria
Age	Applicant should be 21 years old to be eligible for to avail best home loans offered by various banks. The repayment of home motgage should be done by the age of 60 or 65
Employment	The loan applicant should have the ability to service the interest charges as per the borrower’s earning capacity is very vital. The borrowers of home refinance loan should: Have a salaried employment proof or be self-employed (Professional/ Non-Professional) Have been in business/employment for a minimum of 3 years in which the current employer should account for the past 1 year.
Income	A minimum income varying between ₹ 5 – 7 lakhs would be required. This depends on the nature of employment i.e. salaried or self-employed. In order to avail refinancing home funds via loans, applicants should have a minimum income varying between ₹ 5-7 lakhs, the minimum amount in order to apply for home loan will depend upon the type of employment.
Residence	In order to find home loan at the lowest interest rate on home loan and fulfilling the criteria for a home loan, the applicant should have at least 1 year of stay at the current residence. This acts as an indicator of stability with respect to finances and employment. Though this is an indirect indicator in the housing loan scheme, it is one of the factors which becomes pivotal for consideration by the best lenders for home loan across the market.
Credit Rating	Credit score/ Credit Rating also known as CIBIL is obviously one of the deciding bank criteria for homeowner loans. A credit score of 750-900 is considered a good CIBIL for availing home loans in India. The CIBIL is essential in order for the approval and also determining the rate of interst and the disbursal amount for the conventional home loan.
Parallel debts channel	In order to fully sanction the loans for homes, the loan banks also take a look upon the outstanding credit sututation of the applicant. This means in order to full sanction the current home loan, banks will see if you have other home loans, personal loans , car loans in-progress which helps determine the lending capacity of the applicant. Based on the information of previously taken loans, all the best home mortgage lenders calculate the loan quantum eligibility accordingly. Housing lenders perform this check in order to ensure that loan applicants will be able to pay the monthly house loan EMI.

BENEFITS OF HOME LOAN

Interest

Home loan repayments are typically done via a system of Equated Monthly Installments or EMIs. Home Loan EMIs also comes inclusive of the interest you are required to pay on the principal amount. There are many bank housing loan institutions like Bajaj Finserv who offer home competitive loan low rate of interest products. Mortgage Loan lenders like local mortgage brokers generally charge a high rate of interest which ultimately makes your home loan options all the more expensive.

You can get income tax exemption on Home Loan interest, up to a maximum of ₹ 2 lakh for a house that you live in. This means that you can’t claim deductions on a house that is still under construction. When you claim interest deduction, the total interest amount is deducted from your income, so the total amount of taxable income is reduced. Income tax exemptions on the interest rate of home loans can be availed up to a maximum of ₹ 2lakhs for a house that you are currently residing in. Income tax deductions cannot be availed for a house under construction.

Principal

The section 80C of the Income Tax Act dictates that you are eligble to claim repayment of your prinicipal amount of up to ₹ 1,50,000 . While filing your tax returns, the principal on your home loan EMI can be mentioned and the amount so mentioned will be deducted from the taxable income

It’s important to note that if you’re claiming a principal deduction, you won’t be able to sell your house for 5 years. If you do, the principal amount will be added to your taxable income again.

Stamp Duty and Registration

In case you are paying stamp duty and registration fees for the home loan, these expenses can be claimed as deductions on your income tax for that particular Financial Year in accordance with the Section 80Cof the Income Tax Act. The maximum stamp duty and registration that can be clained is ₹ 1,50,000

Pre-Construction

To claim tax benefit on interest on Home Loan, you’ll have to wait till the year your house is completed. However, you can still avail of pre-construction interest deductions in that year as well.

In order to avail this benefit, you have to calculate the amount that was paid as interest while the construction of the house was ongoing and include it in the tax returns for that particular year.

In addition to this, the interest claimed here will be clubbed with the rest of the interest deductions therefore, the pre-construction and current interest deductions in now way can extend beyond a total of ₹ 2 lakhs

Additional Benefits

If you have applied for a housing loan scheme along with an employed co-applicant who is also the co-owwner of the proposed house, both of you can claim the deductions for the same loan on your individual incomes. Interest deduction and prinicipal repayment up to the maximum amounts can be claimed by both people individually.

CLAIMING THE DEDUCTIONS

Ownership Details

Only homeowners are eligible to tax deductions, so you’ll have to provide proof of ownership. As per the regulations only the homeowners can avail the benefit of tax deductions and in accordance with the same, they have to furnish proof of ownership.

Completion of Construction Date

As mentioned above, you can apply for tax deductions only on a completed house . You will have to present a date of construction and claim pre-construction interest later.

Interest and Principal Details

Your bank should be able to give you a certificate like the Provisional Interest Certificate provided some banks against your Home Loan. This is used to calculate your interest and principal every month for that financial year and decides the amount that will be deducted from your taxable income. Your bank financing housing loan should be able to furnish a certificate like the Provisional Interest Certificate as a proof of the house mortgage interest rates .

WHY ONE SHOULD GO FOR PERSONAL LOAN?

The world of Real estate has always presented investors with a wide array of oppurtunities for fruitful investment. The high stature of real estate in the market even though highly prfitable, has resulted in a sky-rocketing of the prices of property across India. The buying property/plots has become an extrememly expensive affair. In order to cope with the same, the number of home loan applications per day have seen a significant rise and customers are taking more and more housing loans.

• Real estate’s rising prices is one reason for borrowers availing home loans, another major reason behind this is that property transactions are generally hefty as compared to other days to day financial transactions. It isn’t necessary that a home buyer will have the entire financing at his disposal in order to buy a property/plot of land. From here is the home loans step in and build the gap between property seller and buyer.
• Banks chip in to pay on behalf of property buyer in return for a particular rate of interest. The general rule is 80-20 which means that banks offer only 80% of the value of a home to customers and the rest 20% is to be borne by the property buyer. This situation is one of all parties win as it is beneficial for both banks, as well as, for the property buyers, banks make profits charging on interest rates mortgage, while buyers become equipped with the purchasing power to buy the property and pay the amount over a fixed amount of time.
• Under the housing loan schemes, the eligibility for certain types of Tax Exemptions which can be utilized to save up on the income tax amount that individuals have to pay each year. Under section 24 of the Income Tax Act, tax benefit can be claimed on up to ₹ 1,50,000 out of the interest component of your home loan. If you are residing in the property on the mortgage loan, an exemption of up to a maximum of ₹ 1,00,000 can be claimed on the principal amount of home loan as well.

DOCUMENTS REQUIRED FOR HOME LOAN

Documents to be submitted differ according to the eligibility requirements. The following, however, are commonly requested for from all the applicants :

• The application form which has to be signed and affixed with the specified number and size of photographs.
• Proof of identity (Copy of Passport/Voter ID/PAN Card/Driving License).
• Proof of Address (Copy of latest Electricity Bill/Telephone Bill/Property Tax Receipt/Voter ID/Passport).
• Last 6 months’ Pass Book/Bank Account Statement.
• Business proof in case of non-salaried individuals.
• Statement of Personal assets and liabilities.
• Identification of signatures from present bankers.

Documents Requested from Guarantors	Identity and address proof. 2 passport sized photos. Proof of business. Statement of Personal assets and liabilities. Identification of signatures from his/her present bankers.
Additional Documents Requested from Salaried Applicants:	Salary certificate from the employer (original). Copy of ITR or Form 16 for last 2 years.
Additional Documents Requested from Non-Salaried/Self-Employed/Professionals/Other IT Assesses	Copy of challans proving that Advance Income Tax has been paid. Copy of ITR/Assessment Orders of 3 years.

TOP BANKS THAT OFFER HOME LOAN IN INDIA

India has a list of private and public sector banks that offering home loans. First time loan-applicants might be a bit confused while selecting bank for home loans . Every bank offering housing loans has merits and demerits to it’s housing loan scheme.Public sector banks are considered to be more stable as compared to private sector banks in that they are less likely to go bankrupt in the long run.Private Sector banks on the other hand, have promopt and faster customer service and processing times in comparision to public sector banks.

One of the most popular strategies that customers employ is to avail home loan from the bank where their salary account or savings account is hosted. Lending Banks already have the information with regards to the KYC details ,as well as, financial particulars which greatly facilitates the housing loan approval procedure.

Many surverys have been conducted across the country to figure out the best home loan agencies offering housing loans at the lowest home loan interest.The conclusion yields 5 names which were ever-present in these surveys:

• State Bank of India
• ICICI Bank
• LIC Housing Finance
• HDFC Bank
• Axis Bank

SBI is a very trusted brand because of its public holding and HDFC despite being a private lender is popular since it is basically aimed at offering housing finance to customers in India. Obviously in order to effectively compare mortgages and zeroing in on a mortgage lending institution,
applicants would look for the most reputed banks for home loan. The housing loan is essentially a long -term offering product and it is advisable to choose a well established instiution with a wide customerbase. in order to have a secured loan.

In addition to banks for home loans, institutions like NBFCs or Non-Banking Financial companies offer home loans to applicants .These companies too, offer home loan to customers. The differentiation factors which play part in the difference for banks and NBFCs is essentially the elgibility guidelines for NBFCs which are slightly flexible in comparision to banking institutions.Also, the loan amount sanctioned by an NBFC is generally greater than that sanctioned by any bank, public or private. Whether it is public or private bank, the loan amount which an NBFC is able to sanction for applicants will be significantly higher.There are some Top NBFCs in India that offer housing finance to customers in India are India Bulls Housing Finance, Dewan Housing Finance, Reliance Capital, Shriram Transport Finance, Muthoot Finance, LIC Housing Finance.

WHY FINBUCKET FOR HOME LOAN

• Finbucket is emerging as a leading portal for financial services where different home loan offers from various banks can be compared at one place. You can easily apply without having to visit any lending institutions.
• Compare the best offers to identify he right lender to deal with.
• To find out the lowest rates, you can make real-time home loan comparisons.
• Finbucket monitored interest rates on daily bases and always remain updated to reflect the latest changes made by the financiers.
• Through Finbucket you can even avail exclusive discounts and deals for huge savings as we have the collaboration with leading financial institutions and banks.
• Browse user reviews to gain insights on service provided by various institutions.
• Apply online for the chosen home loan product directly through the FinBucket website.
• Receive end to end guidance from a dedicated customer care team for smoother processing leading to quick disbursal of money.
• Get regular status updates via emails and SMS for easy processing of your home loan.

How to apply for Home Loan

In 4 steps you can easily apply for home loan in no time

• Firstly, you have to fill a simple application form which will demand your basic personal information given on the site.
• We already have a coordination with 30+ banks/NBFC to get your application to them.
• Compare interest rates by your own and choose the best one for you.
• We will send you an e-approval that your loan application is accepted within 24-48 hours and amount will be credited to your account.

Apply

Fill simple application form

Coordinate

We are coordinating with 30+ banks / NBFCs to get your application.

Rates

We get the best rates for you.

Approval

Loan is approved and amount credited.

HOME LOAN INTEREST RATES

Banks	Floating Interest Rates	MCLR Rates	Action
SBI	8.35% – 8.70%	8.00%	Apply Now
Axis Bank	8.35% – 11.75% *	8.25%	Apply Now
HDFC LTD	8.35% – 8.60% *	8.15%	Apply Now
ICICI Bank	8.40% – 8.85% *	8.20%	Apply Now
Bank of Baroda	8.35% – 9.35%	8.35%	Apply Now
DBS Bank	8.40% to 8.45% *	8.20%	Apply Now
Bank of India	8.45% – 8.60%	8.30%	Apply Now
Canara Bank	8.45% – 8.65%	8.45%	Apply Now
Yes Bank	9.35% to 10.50% *	8.80%	Apply Now
Indian Overseas Bank	8.55% to 9.05%	8.55%	Apply Now
Karnataka Bank	8.60% to 8.90%	9.20%	Apply Now
Oriental Bank	8.45% to 8.55% *	8.45%	Apply Now
Syndicate Bank	8.60%	8.50%	Apply Now
Citi Bank	8.60% to 9.10%	8.05%	Apply Now
Kotak Mahindra Bank	8.50%	8.60%	Apply Now
Corporation Bank	8.75%	8.75%	Apply Now
United Bank of India	8.55%	8.75%	Apply Now
HSBC	8.65% to 8.75%	8.05%	Apply Now
Federal Bank	9.59% to 9.84% *	8.90%	Apply Now
Allahabad Bank	8.75% to 9.25%	8.45%	Apply Now
Central Bank of India	8.30%	8.30%	Apply Now
UCO Bank	8.55% to 8.70%	8.45%	Apply Now

FACTORS THAT INFLUENCE YOUR HOME LOAN INTEREST RATE

MCLR (or Base Rate)

It is the minimum rate set by the Reserve Bank of India (RBI). Banks offering housing loans are prohibited to grant and approce a loan to applicants at a reate below a specified base rate.This is done to make credit markets more transparent, and to ensure that banks pass on the lowest cost of funds to their customers.

Repo Rate

It is the rate at which the RBI lends money to banks in the event of any shortfall. It is a financial instrument used by the central bank to control inflation (i.e. when the repo rate is raised).When the RBI raises or lowers the repo rate, this will have an effect on the interest rate on banking products such as loans and mortgages.

Reverse Repo Rate

The rate at which the RBI borrows money from the commercial banks is termed as Reverse Repo Rate. It is a financial instrument used by the central bank to control the money supply. Increasing reverse repo rate will lead to decreasing money supply in the country, and vice-versa. An increase/decrease in the reverse report rate will have a direct impact on lending rates.

Cash Reserve Ratio (CRR)

Cash Reserve ratio (CRR) is a fraction of the total deposits of customers which banks have to hold as reserves (either in terms of cash/deposits) with the RBI. This is done to ensure that banks do not run out of cash/money while meeting payment demands of their customers when they need money.

Statutory Liquidity Ratio (SLR)

Banks are obligated to maintain a certain percentage of their”Net Demand and Time Liabilities”(NDTL) in the form of liquid assets such as cash, gold etc. This ratio between liquid assets and NDTL is called the Statutory Liquidity Ratio (SLR). The maintenance of the SLR restricts the banking institutions from pooling more money into the economy. This, again, has an impact on lending rates.

Benchmark Prime Lending Rate (BPLR)

In today’s world the BPLR or the Benchmark Prime Lending Rate(BPLR) has lost it’s relevance.But it is important to understand what it means because all retail loans were once linked to the BPLR. The loans which are sanctioned before the base rate was introduced in July 2010 is applicable under BPLR. The BPLR is the rate at which banks lend money to their credit-worthy customers. It was introduced to ensure transparency in the pricing of loans, according to the loan worthiness of applicants

TYPES OF HOME LOANS

Land Purchase Loan

The kind of loans disbursed banks lending home loans and housing finance companies in order to putchase a land or plot for the construction of home(s).This land can be used for residential as well as for commercial purpose.The term of the advancement of the loan has been deemed to be 15 years and in addition to this , thte retirement age is also taken into consideration.

Home Construction Loan

This loan is offered for the purpose of construction of your home on land or plot or for the construction of a newly acquired home. It is advisable that before going into the construction phase, the costs like financing costs, construction site, house design and financing costs should be taken into consideration as these will all contribute the home building cost.

Home Purchase Loan

Home Purchase loans are the types of loan products on housing loans which are most sought after. Opting for home purchase loan in the loan housing scheme can be utilized for purchasing a new house or buying a house from it’s the previous/current house owner. You may opt for these loans at floating, hybrid or fixed rate of interests – whichever suits you the best.

Home Improvement Loan

Home Improvement loans or home renovation loans as they are often termed, are ones which provide steady cash to finance any and all kinds of renovations in the current residence.The term renovation or home improvement will include internal and external painting of the house, repair works, electrical work, external repair work, such as the construction of overhead or underground water tanks, tiling, flooring, waterproofing etc . can all be financed by this kind of loan.

NRI Home Loan

Non-resident Indians who have left the native place due to some reason or the other and wish to return can acquire financing for their home loan with the help of this type of loan called the NRI home loan. This is a specialized loan that is advanced by banks and financial institutions to NRIs who wish to purchase residential property in India.

Home Extension/Expansion Loan

Home extension or expansion loans come handy when you wish to expand or alter the existing structure of your house by adding some extra space. This space could be added by constructing new rooms, enclosing balcony, expanding your bathroom or building a floor etc.The interest rates may be floating or fixed. A nominal processing fees of up to 1-2% maybe be charged for the same purpose.

Home Conversion Loan

In order to purchase a new house, if you already have a home loan in your name then you can opt for Home Conversion Loan if you wish to purchase and move into a new house. In the process, the purchase of a new house can be funded moving the existing loan to the new house.The non-repayment of the previous loan just gets transferred .

Bridged Loan

Those of you who have set eyes on a new house but have not been able to find a buyer for your existing residence, bridged loan offers a solution. Bridged loan offers a solution for those home-owners who have been unable to find a suitable buyer for their current residence and wish to buy a new house. Bridged loans help you in the quest for a new residence by enabling you with the funds to finance a new home while you find a prospective buyer for the current residence.

Balance Transfer Loan

Balance transfer loans can help facilitate the financing for a new house by providing a housing loan when you are dissatisfied with the services of the financial institutions facilitating your loan or you wish to pay off your debt at a lesser rate of interest. Whenever you wish to transfer your home loan from one bank to another, you can easily opt for balance transfer loan.

Stamp Duty Loan

Stamp duty loans are still not as popular and go-to option of prospective home-owners in India. These loans are designed for helping home buyers to pay off the stamp duty charges that are attached to the purchase of the property. Amount getting sanctioned under the head of the Stamp Duty Loan has to be solely used in order to write off the stamp duty charges that are incurred on the purchase of property .

8 COMMON REASONS FOR HOME LOAN REJECTION

1. Unpaid Dues

For the applicants taking a home loan the first and foremost thing for the approval of the housing loan scheme is credit history and record. Essentially, the credit history check determines whether or not timely payment of dues and loan EMIs from other loans etc . In order to steer clear of the condition, you should make a point to be punctual with the payments and not miss the deadlines on EMIs and credit card bills dues.Be aware of the credit record by being aware of your bills and repayment dues.

2. Other Debts

In case you are having multiple debts against your name, the real income calculation is done via subtracting the credit repayments from the income. If according to the lender’s analysis, your repayment capacity seems inadequate, the bank or lender may refuse to offer you a home loan.

3. Job Stability

Frequent changing in employment tends to reflect badly on the home loan application. Banks consider job stability as one of the main criteria for approving a loan for buying a home. Banking institutions giving home loans insist that the loan borrower should ideally be employed in a particular form or company for three years in order to look fit for a housing loan application. If in case the applicant’s place of employment is reputable but looks unstable, the bank lending loans do reserve the right to reject the loan application.

4. Age while Application

The application for housing loan can be rejected by the financial institutions if the loan applicant is close to their retirement age. Lender banks are averse to offer loans to such borrowers s your repayment capacity to be 0 or poor after a few years. Some banking institutions, however, might offer a short-term home loan. In case of high-value short -term loans, could lead to your monthly EMI being very high and thus negating the comfort of availing a long-term loan in the first place. Therefore, borrower’s age plays a very important role in terms of home loan rejections.

5. Loan Guarantor to a Defaulter

Being a loan guarantor to someone can sometimes be risky. Unless you are sure of the borrower’s repayment capacity, do not agree to be a loan guarantor. Without having any strong reasons for believing in that person, do not sign to be a guarantor. If the borrower defaults in his repayment, you will be held responsible to repay the loan on his or her behalf.

6. Credit Score

High Credit scores is one of the significant factors in order to approve the home loan. Ensure that your credit score is good and healthy while you’re applying for a housing loan. The credit score you possess is recorded by CIBIL(Credit Reports and Risk Mangement Solutions).

7. Previously Rejected Loan Applications

CIBIL records incidents such as rejection of loan applications. Incidents like these will become a part of your credit record and will negatively impact the credit score. Therefore, it is best to know the result from one bank before applying to another bank. By ensuring this, you will be able to correct your mistakes and not repeat the same errors while applying for the second time.

8. Income Tax Return Filing

Income Tax and Income Tax Returns have to filed each financial year irrespective of you recieving the Form-16 from your place of employment.Lending institutions also need to check for a record of filing the income tax returns for the previous two years
in order to approve the home loan.

7 EASY STEPS TO AVOID REJECTION OF HOME LOAN APPLICATION

• Review and restructure your existing loans
• Know how to Compute Debt Servicing Ratio (DSR) before home loan application. Figure out how to calculate the Debt Servicing Ration (DSR) before proceeding the house mortgage application.
• All the income will be recognized and consolidated for minimum 6 months, preferably 2 years before home loan submission
• Know precisely how to compute your new monthly mortgage repayments after refinancing
• For those in their first job, take a credit card – use it and repay on time (and in full if possible) every month.
• Complete the documentation for the home loan application i.e. prepare all your bullets for housing loan.
• Don’t submit Fraudulent Information (Pretty Obvious!)

OPTIONS FOR HOME LOAN WITH CIBIL DEFAULT

If a person has low credit scores and he or she doesn’t have enough time in hand however, he or she still has interest to take a home loan then the following options could be helpful.

High Income

If you have a high and stable source of income then banks and financial institutions will be any way willing to give you loan even if you have a defaulted CIBIL history. Especially if you are working for a renowned MNC then the prospects of getting home loan are even higher.

Spouse’s Credit Score

In case your income is just an average one and yet you need a home loan, what you can alternatively do is – add your spouse as a co-applicant. In such a case, bank looks at the total income of the couple and if found considerably enough to seek loan then the same can be sanctioned easily. However, this should be borne in mind, that even your spouse’s income should also be stable and consistent.

Collateral

The good about home loan unlike a personal one is that in this case you can easily use your property papers as collateral. This works as a security for a bank or a financial institution hence increasing your chances of getting a loan. In addition, if you repay this loan without any miss or delays, it will also help in increasing your CIBIL scores with immediate effect. Hence one can always use home property papers to take a loan.

Loans with High Rate of Interest

If nothing works then also there are many lending agencies, peer to peer groups and online financial agencies which are willing to give loans to CIBIL defaulters but with very high rate of interest. Though this is not a very wise step as it will hardly leave you any savings but if you think you have the potential to repay the loan with high rate of interest later and your need is only of the current time then you can always go for this option.

DO’S AND DON’TS WHILE TAKING A HOME LOAN

Do’s	Don’ts
Try to prepay the loan by borrowing money from parents or friends; you won’t have to pay them as high a rate of interest. DO NOT forget to pay them back.	Try to keep limits on purchase of clothes for your family. The frequency of buying clothing can be reduced to twice in a year instead of doing it for every festivity.
Planning some money for charitable purposes will put your desires in control.	Dnate some money to charity which will leave you with a tighter budget to work with and do not get lured by travelling plans and trips. Travel involves a lot of planning, expenditure and an unnecessary strain on your finance if not planned meticulously.
If you are in the IT profession, try planning for one abroad trip so that you may earn a considerable amount for some down payment.	Don’t take any loans to purchase household items or electronic items just because they are introduced in the market. If at all you have to buy it, make sure you have at least 70% money instead of going for credit card or personal loans. These loans look good at the beginning, but we usually end up paying more money than the original price.

FEES AND CHARGES APPLICABLE TO HOME LOANS

Apart from the rate of interest that is charged on home loan products there are various fees, and charges that are applicable to housing finance offered by different banks. These charges may differ in value from one bank to another, however, the types of charges remains the same for almost all banks.

Processing Fee

All banks irrespective of their stature will charge a fee for processing the home loan request. These charges vary with different banks. This fee is non-refundable and is either a specific percentage of the loan amount or a fixed amount of money. There are times when banks are willing to negotiate on the processing charges and lower this fee or waive it off completely depending upon certain terms and conditions.

Late payment charges

Almost all the banks charge late payment charges when a loan borrower is late in paying loan installment. There are times when financial crunch or some other financial liability or plain oversight might result in non-payment of home loan installment on time. This results in a late payment fee being levied by the bank.

Pre-payment charges

Most banks have stopped charging any kind of fee for pre-closure of home loans. However, some banks still charge some percentage of home loan balance as pre-payment charges. When any home loan customer repays his/her home loan prior to the stipulated home loan tenure, this fees is typically levied .

Conversion charges

Typically, home loans are offered by banks either on a fixed interest rate or on a floating rate of interest and customers always have a choice of switching between these two rates. Every time a customer applies for switching from fixed rate to floating or vice versa, conversion charges are levied by the bank. These charges are some specific percentage of the principal outstanding amount.

Legal Fee

Legal fee is charged in order to pay the lawyer who does the task of verification of property that is being bought with the loan amount. There are lots of banks which do not have in-house lawyers and as such pay fees and recover it from home loan customers.

Administrative Fee

Some banks charge administrative fee separately from the processing charges. This fee is levied to pay for the administrative cost that the bank incurs for processing of home loan application. Moreover, an administrative fee is charged by banks to compensate for the back-end administrative processes that are performed while processing of home loan applications.

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