ALL ABOUT HOME LOANS

About Home Loan

Banks and Nbfc institutions offer home loans for the purchase of the property. You can also buy/construct/renovate/extend your house with this money and repay it gradually within the chosen time period. Home Loans are secured against the property, and if you fail to repay, the lender can take over the property from you and sell it to recover the dues.

The eligibility for a home loan depends on an applicant's income, credit history, property value and location. Based on these factors, the maximum loan amount is calculated.

Top Banks Offering Lowest Home Loan Interest Rates 2021

Here's a list of top banks offering lowest housing loan interest rates in India. You can compare and apply online for the best home loan.

List of Banks/NBFCs	Interest Rate	Processing Fee
State Bank of India (SBI)	6.70%-6.90%	NIL
LIC Housing Finance (LIC)	6.66% - 7.90%	For loan amount below INR 1 Crore - 0.25% of the loan amount + AT or INR 10,000 + AT. whichever is lower Loan Amount Above INR 1 Crore to Up to INR 15 Crore - INR 20,000 + AT
PNB Housing Finance Ltd (PNBHFL)	7.20% - 8.90%	INR 10,000 + GST
HDFC Ltd	6.70% - 8.00%	Salaried & Self-employed Professionals - INR 3,000, + Taxes Self-employed Non-professionals - INR 5,000 + Taxes Self-employed non-professionals - Up to 1.50% of the loan amount or INR 4,500, whichever is higher, + GST
ICICI Bank	6.70% - 7.55%	INR 3,000 + GST
India Shelter Finance Corporation	12.99%-18%	2%-3% of the loan amount (Including GST)
Axis Bank	7.75% - 8.55%	Up to 1.00% of the Loan amount subject to minimum of INR 10,000 + GST
Bank of Baroda	6.75% - 8.25%	Upto 0.50% of the loan amount or Max INR 7,500 + GST
Bank of India	6.85% - 7.75%	0.25% of the loan amount, subject to a minimum and maximum Of INR 1,500 and INR 20,000, respectively
Citibank	6.65%-7.40%	Up to 0.40% of the loan amount + GST
IDBI Bank	6.95% - 10.05%	Up to INR 5,000 + GST For inward BT irrespective of the amount & PMAY proposals – Nil
Kotak Mahindra Bank	6.60% - 7.20%	Zero processing fee for online application and Upto 1.25%
Piramal Capital & Housing Finance (PCHF)	9.65% Onwards	0.10% - 0.25% of the loan amount + GST
Tata Capital	9.25% Onwards	0.50% of the loan amount + GST
Punjab National Bank (PNB)	7.00% - 7.60%	0.35% of the loan amount, subject to a minimum and maximum of INR 2,500 and INR 15,000, respectively

Note - Please note that there are different types of charges which a borrower has to pay upfront. These charges are not negotiable and processing/application fee is one of them. So, do check all these details before applying for the loan.

Grab the lowest rate deal to ensure a greater reduction of the home loan EMI.

Types of Home Loans

Check out below the different types of housing loans that banks & NBFCs to individuals in India.

·         Home Purchase Loan

·         Land Purchase Loans/Plot Loan

·         Home Construction Loan

·         Home Improvement Loan

·         Home Conversion Loan

·         Home Extension Loan

How to Apply for a Home Loan Online?

Wish Experts guide you through the process of selecting a home loan with lowest interest rate as per your eligibility. The process is much simpler as compared to visiting different lenders offline. 

Steps to follow to Apply For a Home Loan

 

You need to provide the following details in the form given at the top on home page:

 

After the submission of the form, another form appears where you have to mention property details such as property value, applicant's gender, residence address, PAN number, and then click on 'Get Quotes'. Subsequently, you'll get a list of banks where you are eligible for a home loan.

Loanpao.com has partnered with WhatsApp to enable consumers to apply online for a home loan. This is the first ever facility where a consumer can apply for a loan on WhatsApp just like chatting with your friends. You just need to answer a few basic questions and the chatbot will show you a list of options. The simplicity of the process makes it for a pleasant user experience. 

Features & Benefits of Home Loan

• Interest rate starting from 6.70% per annum
• Special rates for women borrowers
•  Fixed EMI for the entire loan tenure
•  Interest subsidy available via PMAY CLSS scheme
• Tax exemptions up to INR 1.5 lakhs and INR 2 lakhs on principal and interest portion, respectively, throughout the loan, even if the money is used for home renovation/extension/reconstruction 
• Option to take top-up loan for the above purposes
• Home loan balance transfer facility
• The maximum tenure is up to 30 years

• The loan amount depends on the outstanding balance of the existing home loan subject to LTV ratio
• Processing Fee - 0.35% of the loan amount plus GST onwards
• Availability of substitute income documents - ITR or annual turn over 
• Importance of additional income in loan eligibility.

• Co-borrowers of the loan can also avail tax benefit if they are co-owners of the property.

What is the eligibility criteria for Home Loans?

Home loan eligibility is based on income, age, credit score, property value and location, etc. The table shows general eligibility criteria at all banks/NBFCs.

Parameters	Salaried	Self-employed
Age	Should be between 21-60 years	Must be between 21-65 years
Income	Minimum income of INR 1,80,000 p.a.	Minimum income of INR 1,80,000 p.a.
Current Experience	2-3 years of current job stability	3 years of current business stability
CIBIL Score	720 or above	720 or above

How much loan amount can you get based on your salary?

Lenders calculate the maximum loan amount eligibility based on your salary. Only 50% of your net take home salary is considered for calculating the eligibility which means you can get a higher loan amount if your salary is high. The existing loan EMIs, if any, can also impact your home loan eligibility. If a home loan applicant is already paying an EMI, that will be deducted from the 50% of the salary and the remaining amount would decide your maximum loan amount eligibility.

Lenders calculate Fixed Obligations to Income Ratio (FOIR) based on your existing EMIs and net monthly income. The percentage of FOIR should be 75% or less. For instance, if your in-hand salary per month is INR 1,00,000 and you are currently paying a car loan EMI of INR 6000 and personal loan EMI of INR 10,000 and you want to know how much loan amount you can get for a home loan, your FOIR would be:

Your disposable income for a new loan is: INR 50,000 - INR 6,000 - INR 10,000 = INR 34,000

FOIR = Sum of existing obligations/Net take home salary*100

= ((INR 6000 + INR 10,000)/ INR 1,00,000) * 100

= (INR 16,000/ INR 1,00,000)*100

= 16% 

So, lenders will approve the loan amount having monthly installment of INR 34,000 or less even for the longest tenure. Other factors such as your credit score help you fetch a better deal from the lender.

Loan to Value Ratio

A home loan is not financed to the extent of the property cost. So, as a borrower, you should be fully aware of the loan you are likely to get for the property you wish to buy. Most lenders, especially banks follow the loan to value (LTV) ratio as shown below.

Loan Quantum	LTV
Upto INR 30 Lakh	Upto 90% of the property cost
Above INR 30 Lakh - 75 Lakh	Upto 80% of the property cost
Above INR 75 Lakh	Upto 75% of the property cost

Check the Home Loan EMI Calculator?

You shall check the home loan emi calculator in advance to get an idea of the monthly installment amount applicable. The calculator computes the EMI based on the loan amount, Interest Rate and tenure. The calculator is available online to make it easy for you. Just enter these three variables at their respective space in the calculator and see the EMI flashing on the screen. You will even get to see the total interest payable to the lender over the loan tenure you opt for. 

Documents required for a home loan?

The documents required to apply for a housing loan are a bit different for salaried and self-employed applicants. Below are the documents you need to submit along with loan application form: 

Documents required for Salaried

•  Filled home loan application form

• Identity Proof- Aadhaar Card/ Passport /PAN Card/ Voter ID Card /Driving License

• Address Proof - Passport/Aadhaar Card /Utility Bill

•  Residence Ownership Proof - Property Documents/Maintenance Bill/Electricity Bill

• Income Proof - Latest 3 months Salary Slips and Form 16

• Job Continuity Proof - Current Employment Certificate /Current Job Appointment letter (if more than 2 years)/Experience Certificate (including your previous job certificate or appointment and relieving letter)

• Bank Statements - Latest 1 year statement where your salary is getting credited

• Property Documents - Copy of agreement executed / Sale Deed, Share Certificate, Latest Maintenance Bill, List of documents & sanction letter given by Existing Banker (If applicable)

•  Advance Processing Cheque

•  Investment Proof - Fixed Deposit/Shares/Fixed Assets, etc.

• Passport size photograph/s

Documents required for Self-Employed (Professionals and Non-Professionals)

• Filled home loan application form
• Identity Proof - Aadhaar Card/ Passport /PAN Card/ Voter ID Card /Driving License
•  Address Proof - Passport/Aadhaar Card /Utility Bill
• Residence Ownership Proof - Property Documents/Maintenance Bill/Electricity Bill
• Income Proof - Latest 3 years Income Tax Returns including Computation of Income, Profit and Loss Account, Balance Sheet, Audit Report, etc.,
• Business Existence Proof - 3 years old Saral Copy /Shop Establishment Act /Any Tax Registration Copy /Company Registration license
• Bank Statement - Latest 1 year bank statement both current and savings.

• Property Documents - Copy of agreement executed / Sale deed, Share certificate, Latest maintenance bill, list of documents & sanction letter given by existing banker (If applicable)
• Advance processing cheque
• Investment Proof - Fixed Deposit/Shares/Fixed Assets, etc.
• Passport size photograph/s 

Please note that income proof is the most important document to get a home loan approval. If you do not get your salary in a bank account, you can not apply for a home loan. Only a few NBFCs will consider your application. But they will most likely approve the loan at a higher rate of interest. Recently, the Union Cabinet declared 10 per cent reservation for economically weaker upper castes recently and now ministry might bring in another surprise for the middle class people of India. The finance ministry might increase the tax exemption limit under Section 80C of the Income Tax Act. 

Why choose Loanpao.com?

Home loans are available at almost all top banks/NBFCs , so choosing one might be a little time-taking. Loanpao.com helps you in selecting the best lender based on your requirements. Here are the reasons to choose Loanpao.com:

1.    Online Marketplace - Loanpao.com is an online marketplace for loans with unbiased suggestions.

2.    Instant Quotes from Top Lenders - You get instant quotes from top banks and NBFCs.

3.    Expert Advice - You get expert advice from experienced Wish Experts.

4.    Transparent Process - Experts are there to answer any query related to your home loan application.

5.    End to End Service - You get 100% assistance for the loan application

6.    Free CIBIL Score and Report - Loanpao.com gives you free CIBIL score and CIBIL report with your home loan application.

Frequently Asked Questions (FAQs)

Here's a list of questions that people ask with respect to home loans. 

How Is The Rate Of Interest, Processing Fee, Pre Closer Fee Determined on Home Loan?

Unlike personal loans, every bank has a single rate of interest for all customers and it does not vary from customer to customer. The Fixed rate of interest will be slightly higher than the Variable rate of Interest. So it depends on which option you choose. 

What is Home Loan?

Home Loan is a secured loan given by a bank against the security/hypothecation of an underlying property. In the event of failure to repay by the borrower, the bank can, subject to laws of India, attach/sell the underlying property and recover the principal amount and any outstanding interest thereon. A home loan can be availed for buying an under-construction property, resale property or even to construct a house on a vacant piece of land.

How Is My Loan Eligibility Calculated?

Loan eligibility is dependent on primarily the following factors:

1.     Cumulative net monthly salary of the applicant and co-applicant.

2.     Quantum of loans and credit card outstanding that you already have. Typically a bank will not give a loan if the total EMI obligation (including the current home loan that your are trying to apply for) exceeds 50-60% of your total net take home salary.

 

3.     Loan to asset Value (LTV) ratio of 75% which means that the customer has to fund the remaining 25% through his savings or any other source.

Pre closure Vs Part Payment?

Pre closure means that a customer wants to close the entire principal outstanding amount at one go. Whereas part payment means that a customer wants to repay only a certain portion of the outstanding amount. Please ask our advisor for more details on this when you loan is being processed. 

Is Preclosures / Part Payments Allowed in Home Loan?

Home Loan preclosures are allowed without any extra charges as long as the mode of repayment you have chosen is Floating rate of Interest and not a fixed rate of interest. Regarding part payment, some banks may have a restriction on the number of times you can do a part payment per year and also the amount that can be part paid in a year. Please ask for clarifications to our or the banks’ loan advisor on all these factors before signing the loan document. 

What is the process of bank loan?

Listed below is the process of applying for a personal loan at the branch of the financial lender: Visit the branch of the financial lender. Procure the personal loan application form and enter all the required details. Submit relevant documents that prove one's income, age, address and identity. 

Is Form 16 needed for home loan?

Lenders who are only interested in verifying the applicant's repayment capacity, accept Form No 16 as proof of one's income and do not insist on your income tax return. Form No 16 has details of the salary paid and tax deducted from it. From Form No 16, the lender comes to know about your employer.

How is loan amount calculated?

Divide your interest rate by the number of payments you'll make that year. If you have a 6 percent interest rate and you make monthly payments, you would divide 0.06 by 12 to get 0.005. Multiply that number by your remaining loan balance to find out how much you'll pay in interest that month.

What are the advantages of loan?

Advantages

•  You can often borrow larger amounts of money than with an unsecured loan.
• You can also take longer to pay secured loans back, up to 25 years.
• Interest rates are often a lot cheaper than personal loans because the risk of retrieving the money by the lender is lessened by the asset providing security.

 What are the key features of a loan?

CHARACTERISTICS OF LOANS

• Time to maturity. Time to maturity describes the length of the loan contract. ...
• Repayment Schedule. Payments may be required at the end of the contract or at set intervals, usually on a monthly or semi-annual basis. ...
• Interest. Interest is the cost of borrowing money. ...
• Security.