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Made in Madurai                

Wednesday, October 12, 2011

Housing Loan - How to get Bank Loan for Buying House in Tamil Nadu


Everyone has the dream of purchasing property. OruAcre.com can assist you to get the Home Loans deal. “Own House” is a life-time decision & have to be taken with a lot of planning & requires supporting finances.

What is a Home Loans ?

Home Loans is a secured Loan given against the security of a house / property which is funded by the banks and Housing Finance company.

The Home Loans taken by a buyer from the bank issued against the property / security intended to be bought on the part by the Buyer giving the banker a conditional ownership over the property i.e. if the Buyer is failed to pay back the loan, the banker can retrieve the lend money by selling the property.

Types of Home Loans

There are different types of Home Loans s available to cater Buyer’s different needs.

Home Purchase Loan is purpose of purchasing a new house.

Home Improvement Loan is for the renovation or repair of the home which is already bought

Home Extension Loan serves the purpose when the Buyer wants to extend or expand an existing home, like adding an extra room etc.

Home Conversion Loan is wherein the Buyer has already taken a Home Loans to finance his current home, but now wants to move to another home. The Conversion Home Loans helps the Buyer to transfer the existing loan to the new home which requires extra funds, so the new loan pays the previous loan & fulfills the money required for new home.

Home Construction Loan taken when the Buyer wants to construct a new home.

Land Purchase Loan which is taken to purchase a land for construction & investment purposes.

Documents required in Home Loans

Generally the documents required to processing your loan application are almost similar across all the banks; however they may differ with various banks depending upon specific requirement etc.

Following documents are required by financial institutions to process the loan application:

• Age Proof

• Address Proof

•Income Proof of the applicant & co-applicant

• Last 6 months bank A/C statement

• Passport size photograph of the applicant & co-applicant

If Salaried

• Employment certificate from the employer,

• Copies of pay slips for last few months and TDS certificate

• Latest Form 16 issued by employer Bank statements

If Self-employed

• Copy of audited financial statements for the last 2 years

• Copy of partnership deed if it is a partnership firm or copy of memorandum of association and articles of association if it is a company

• Profit and loss account for the last few years

• Income tax assessment order

Check the Loan Eligibility.

Based on Personal profile and Income proof and Property which you buy.

Home Loans Process

Applying for the Loan : After you have selected your lender, you have to fill in the application form wherein the lender requires complete information about your financial assets & liabilities; other personal & professional details together with the property details & its costs.

Documentation & Verification Process : You are required to submit the necessary documents to the bank which will be verified together with the details in the application.

Credit & default check : Bank checks out the Buyer’s loan eligibility (through repayment capacity) & the amount of loan is confirmed. The Buyer’s repayment capacity is reached which is based on the income, salary, age, experience & nature of business etc. Bank also checks credit history through the Cibil Score which plays a critical role in deciding & approving your loan application. Low Credit Score implies that the bank upfront rejects your application on the basis of earlier credit defaults; on the other hand high credit score gives a green signal to your application.

Bank sanctions Loan & Offer letter to the Buyer : After the credit appraisal of the Buyer bank decides the final amount & sanctions the loan, the bank further sends an offer letter to the Buyer which constitutes the details like rate of interest, loan tenure & repayment options etc.

Acceptance Copy to the Bank : The Buyer needs to send an acceptance copy to the bank after the Buyer agrees with the terms & conditions in the offer letter.

Bank checks the legal documents : The bank further asks the legal documents of property from the Buyer to check its authenticity so as to keep them as a security for the loan amount given. The next step involved is the valuation of the property by the bank which determines the loan amount sanctioned by the bank.

Signing of agreement & the loan disbursal : The Buyer signs the loan agreement & the bank disburses the loan amount.

Charges in Home Loans

Acquiring a Home Loans doesn’t only involve the cost of Home Loans interest rates but it also includes other charges & fee accompanying at various stages of taking the Home Loans . You must consider all these charges while comparing the cost structure across banks. Following is the detailed fee structure incurred by banks at different loan stages:

Processing Charge : It is a fee payable at the time of submitting the loan application to the bank which is normally non-refundable. The fee ranges between 0.5 per cent and 1 per cent of the loan amount.

Administrative Fee : It is a fee incurred by banks at the time of loan sanction; there are few banks who have removed this fee so you must check it with all the banks.

Prepayment Penalties : When the Buyer pre-pays the loan before the loan tenure, banks charge a penalty of the pre-paid amount.

Legal Charges : Banks also incur some charges from the customer for legal and technical verification of the property.

Delayed payment Charges : When there is a delay in the payment of your EMI, banks charge a late payment fee from the Buyer.

Cheque bounce charges : Banks charges for every bounced cheque towards the loan payment because of lack of funds in your account.

Home Loans Criteria by various banks:

The Buyer’s eligibility of getting a Home Loans depend upon his/her repayment capacity & the banks establish this repayment capacity by considering various factors such income, spouse's income, age, number of dependants qualifications , assets, liabilities, stability and continuity of occupation and savings history.

Important Pointers in Home Loans to Increase your Loan Eligibility:

Credit History : Your chances of getting a Home Loans are increased if you have a good credit history which is known by banks by checking the Buyer’s Cibil score. Now it is very hard to get a loan from another bank when you already have a bad debt with one bank.

Clubbing of income : Your eligibility to take a Home Loans will augment when you club your income with your spouse’s income, bank in this case will calculate your eligibility on the basis of the clubbed income of both the applicants. You can club incomes of spouse, children & parents staying with you and having regular income.

Enhance your loan tenure : Longer is the loan tenure, lower will be the EMIs which further increases the repayment capacity of the Buyer & in turn enhances the loan eligibility.

Step-up Loan: In this type of loan EMIs remain low in the beginning & increase gradually as and when the Buyer’s spending power increases. Therefore lower EMIs in the initial years enhances the Buyer’s ability to pay & further increases the loan eligibility

Increase the down payment : You must know that in a Home Loans finances only 85 to 90% for the property & the rest amount has to be funded by the Buyer. You should increase the down payment if you have more than required amount.

Final note : The above mentioned information are general observation on home loan. For specific details kindly contact the respective banks to get more clarity.

*Conditions apply

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