2024-01-24

Home Loans

In today’s world, there are more options available for a home loan as compared to a pizza topping. No kidding. And fancy names aren’t very helpful, for something that sounds fancy may not necessarily be good for you. Too many different names, too many different features. It gets mind boggling at times. But you never have to worry, because you have got Regrob on your side.

We have come to you with a list of questions that you must ask your lender before finalizing the home loan. It is essential to make an informed choice unless you want to get stuck and blame yourself later. So read on to find out what questions you should ask your home loan provider.

What is the amount of down payment?

In case you aren’t aware, banks usually finance a maximum of 90% of the loan amount. You have to bring in the rest, which is called margin money. Ask your lender how much money is needed to be put in by you upfront, and then go ahead with the process.

What is the disbursement process of the Home Loan?

Apart from the general home loan disbursement process which is common to all banks, ask your lender if they have any specific terms and conditions in this regards.

Can I apply for the loan even though I have not finalized the property yet

Although Regrob can assure you that yes you can apply for a Home Loan even if you have not finalized the property, you might still want to ask this to your provider. The loan amount is sanctioned on the basis of your repayment capability, so not finalizing the property would not be an issue.

Do I need a Co-Applicant? Who can be a co-applicant?

As per our knowledge, most of the banks require a co-applicant on the loan. Go ahead and ask this question to your banker. A Co-applicant can be your spouse, your parents or your son, also all co-owners of the property have to be co-borrowers without exception.

What is the maximum tenure of the home loan provided?

Ask your banker the maximum tenure for which they provide the home loan, it differs from bank to bank. Although we can tell you that home loans are usually offered for a maximum tenure of 30 years, provided the term does not extend beyond 65 years of age or the retirement age, whichever is earlier.

How will the interest rate be calculated?

Interest is calculated on a monthly basis. But you should consider this. There may be different banks who charge the same rate, say 9%. But when you compare the actual amount of EMIs, it might vary for the banks. The reason for that is different methods of computing the EMI amount. The type of reducing balance method applied or the ‘rests’ in the loan determine the effective cost. 

The ‘rests’ could be annual, monthly, quarterly or daily. The shorter is the period of ‘rest’, the better is the deal for you. When interest is calculated on monthly ‘rests’, the principal on which interest is charged reduces every month. Which means good news for you, for you save a lot of money over the tenure of the loan. Hence, always compare the EMI of different banks which offer a similar amount of loan and tenure.

What will be the securities required for the loan?

When taking a home loan, you need to provide certain collateral or securities. Ask your bank the requirements in this regard. Primary security for the loan is a first and exclusive charge of the property to be financed, by way of deposit of title deeds (Collateral security is usually not required). The title to the property should be clear, marketable and free from any encumbrances and technically approved.

What are the different types of loans provided by the bank?

Home Loan, Land Loan (for purchase of plot), Commercial property Loan, Balance Transfer, Top-Up Loan, Loan against Property, Lease Rental Discounting and etc. Ask what these mean if you are not sure, and then decide what suits your needs.Click here to read about Types of home loans available in India

What will be the processing time of your loan?

Processing time varies from bank to bank and profile of the applicant, and therefore you must ask your bank this question to know the exact time period. It usually it takes about a week, provided all documentation is complete. Self-employed persons can expect a little longer as personal visit to the premises by credit manager is mandatory for almost all banks.

What is the Income Tax benefit you can avail on your home loan?

You must ask this question, for this is important to you. If you have availed of a home loan, you can claim tax benefits on both the principal and interest components of the home loan as per the Income Tax Act. These benefits are in the form of deductions available to assesses who have taken a loan to either buy a house or build one. So be sure to ask this! Click here to read about Tax benefits on home loans.

If your own income is not enough to get the required amount of loan sanctioned, can you add the income of your family members?

Go ahead and ask your banker if you have this query. The answer is likely to be yes. Income of spouse, parents and son can be added to your income subject to their meeting age requirement.

Does the bank consider statutory expenses?

One smart question you can ask your banker before settling the home loan deal is about the inclusion of any statutory expenses. Generally banks do not cover statutory expenses like stamp duty or registration charges, any VAT or service tax to be paid as well as any other miscellaneous or legal charges. Generally all home loans are approved by considering only the cost of the property. 

Banks and NBFCs may however consider funding of statutory expenses in certain cases either under a onetime scheme or under special cases where market value of the property may support offering such a facility. Irrespective of whether you are taking a home loan under any special scheme or not, it is always a good idea to ask your banker about the loan inclusion for statutory expenses.

So that is probably going to cover most of your queries we think. You must be attentive and alert and read all documents carefully. Ask these questions and make up your mind. 

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