A Comprehensive Guide to Home Loans: Understanding Eligibility, Terms, and Repayment Options
For individuals belonging to all categories, be it salaried class, businessmen, professionals, self-employed individuals, or pensioners, owning a home remains a life long dream. Fulfilling this dream often requires financial assistance in the form of home loans. Here, we are providing you with all the details required to apply and get approval of home loans.
Eligibility Criteria:
- Salaried Class:
– All applicants, above 18 years
– Type of job/ Service: Regular employees of Central Government, State Government, Public Sector Undertakings, Government or Government-aided Educational Institutions, and MNCs/Reputed Companies with a minimum experience of 2 years.
– Documents required: Salary statement from the existing employer for at least the last 3 months. - Businessmen, Professionals & Self-employed Individuals:
– All applicants, above 18 years
– Employment Experience: Minimum experience of 3 years.
– Documents required: Proof of business continuity and financial stability. - Pensioners:
– All applicants, above 18 years
– Pension Income: Pensioners must have adequate income to service the loan.
– Documents required: Proof of pension income.
Purpose of Loan:
Home loans can be availed for various purposes including:
– Purchase of a new house/flat
– Construction of a new house/flat on owned land
– Purchase of a plot and construction thereon.
– Purchase of a flat under construction or semi-finished property
– Additional construction or renovation in existing property
– Takeover of existing home loans
– Reimbursement of costs incurred for purchase/construction of a house/flat
Amount of Loan:
Loan eligibility is determined based on the Net Take Home Pay (NTHP) criteria, which ensures that borrowers have sufficient income to service the loan. The quantum of loan depends on the applicant’s gross annual income:
– Gross Annual Income up to Rs. 15 lakhs: Take home income should not be less than 40% of the gross annual income.
– Gross Annual Income above Rs. 15 lakhs: NTHP should be a minimum of Rs. 50,000 per month.
Margin and Repayment Period:
The margin requirement varies based on the loan amount:
– Loan up to Rs. 30 lakhs: 10% margin
– Loan above Rs. 30 lakhs to Rs. 75 lakhs: 20% margin
– Loan above Rs. 75 lakhs: 25% margin
The repayment period for general home loans is a maximum of 30 years, while for takeover or balance transfer, it can be extended up to 30 years including the period already run in the existing institution.
Holiday Period and Repayment Type:
The holiday period, during which the borrower is exempt from repayment, varies depending on the purpose of the loan:
– Purchase of house/flat: NIL holiday period
– Construction of a house on owned land: Maximum 18 months
– Purchase of plot and construction: Maximum 24 months
– Flat under construction in larger projects: Maximum 36 months
Interest Rate, Processing Fee, and Security:
Interest rates and processing fees are subject to prevailing market conditions and lender policies.
Insurance and Additional Options:
Borrowers are required to insure the financed property at their own cost, with the policy renewed annually without any gap.
In conclusion, home loans provide a vital means for individuals to realize their homeownership aspirations. Understanding the eligibility criteria, terms, and repayment options is crucial for making informed decisions and ensuring a smooth borrowing experience. Before proceeding, it is advisable to compare offerings from various lenders and seek expert advice to choose the most suitable option tailored to individual needs and financial capabilities.