HOUSING LOAN

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Home / HOUSING LOAN

Housing Loan

For most people, owning a home is one of the most significant accomplishments they will ever realize, and it is also an expensive endeavour. Living such a dream life requires a lot of work on the buyer's part, and the only way to fit the home into their budget is by taking out a Home Loan.

A home or housing loan is a sum of money a person borrows, typically from banks and other lending institutions. Depending on the loan's terms, the borrower must repay the loan balance plus interest ranging from 10 to 30 years in Easy Monthly Instalments, or EMIs.

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Banks and Housing Finance Companies (HFCs) offer home loans of up to 75% to 90% of the property’s value depending on the credit profiles of their loan applicant, subject to the caps on the LTV ratios set by the lenders and the RBI.

Types Of Home Loans

  • Home Purchase Loan is offered for buying ready-to-move-in properties, under-construction properties and pre-owned homes/resale properties. helps you buy a residential plot and build a house on it within a given time frame
  • Composite Loan can be availed for buying a plot and building a house on it. The first disbursement in composite loan is made towards plot purchase. Subsequent payments depend on the stages of construction of the house.
  • Home Construction Loan is offered to individuals for house construction. The disbursements depend on the stages of construction of the house.
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  • Home Renovation/ Improvement Loan is for meeting home renovation costs of an existing house. The interest rate for a home renovation/improvement loan and a regular home loan are usually same.
  • Home Extension Loan is for those requiring funds to extend or add more space to their existing house. In this, lenders usually lend 75% – 90% of the construction estimate, depending on the loan amount and LTV ratio.
  • Bridge Loan is a short-term home loan suitable for individuals planning to buy a new house with the sale proceeds of their existing house.
  • Interest Saver Loan is a home loan overdraft wherein the borrowers’ home loan account is linked to their bank account. Any amount deposited in the bank account over and above the EMI is considered as a prepayment towards the loan, thus, saving on the interest amount.
  • Step Up Loan allows borrowers to pay lower EMIs during the initial years of the loan tenure and have the provision of increasing the EMI amount over time. This makes the loan affordable for young professionals who have just started their career.

Home Loan Eligibility Criteria

Home loan eligibility differs across lending institutions and loan schemes. However, a common set of housing loan eligibility criteria is given below:

  • Nationality: Indian Residents, Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs)
  • Credit Score: Preferably 750 and above
  • Minimum Age: 18 years with some lenders setting the minimum age of 21 years
  • Maximum Age: Usually 70 years at the time of loan maturity with some lenders extending the tenure till 75 years of age
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  • Work Experience: At least 2 years (for salaried)
  • Business Continuity: At least 3 years (for self-employed)
  • Minimum Salary: At least Rs. 25,000 per month (varies across lenders & locations)
  • Loan Amount: Up to 90% of property value

Note: Apart from the above parameters, your home loan eligibility also depends on the property you are buying and the location of the property.

Documents Required For Home Loan

Identity Proof Documents: Copy of any one (PAN Card, Passport, Aadhaar Card, Voter’s ID Card, and Driving License)
Age Proof Documents: Copy of any one (Aadhaar Card, PAN Card, Passport, Birth Certificate, 10th Class Mark-sheet, Bank Passbook, and Driving License)
Address Proof Documents: Copy of anyone (Bank Passbook, Voter’s ID, Ration Card. Passport, Utility Bills (Telephone Bill, Electricity Bill, Water Bill, Gas Bill) and LIC Policy Receipt.

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Income Proof Documents:

Income Documents for Salaried Income Documents for Self Employed
Copy of Form 16 Business License Details
Latest Payslips Proof of Business Address
IT returns (ITR) of past 3 years ITR of last 3 years
Investment Proofs (if any) Balance Sheet and Profit & Loss Account Statement of the Company/Firm

Property-related Documents: NOC from Society/Builder, detailed estimate of the cost of construction of the house, registered sale deed, allotment letter, and an approved copy of the building plan.
Documents Required for Non Resident Indian (NRI) Applicants
Proof of Identity: Passport with VISA stamps / PIO Card
Proof of Address: Government document mentioning the current overseas address

Proof of Income Documents:

Income Documents for Salaried Income Documents for Self-Employed
Salary Certificate/ Latest Payslips (in English) Latest ITR, Bank Statements of Overseas Account and Balance Sheets and P&L Accounts audited or certified by a C.A.
Latest bank statements showing salary credits NRE / NRO account (if any) A copy of Continuous Discharge Certificate (CDC) for applicants employed in the merchant navy
Work Permit/ Employment Contract / Appointment Letter / Offer Letter (Duly attested by employer/ Consulate / foreign office / embassy in case it is in any other language) Business License & Address Proof / License of Professional Practice (for Doctors, Consultants, etc.)
Form P60/P45 and latest employment contract (for salaried) Registration Certificate of Establishment (For Shops, Factories & Other Establishments)

Property Documents:

  • Original title deeds tracing the title of the property
  • Encumbrance Certificate
  • Agreement for sale/ sale deed/ detailed cost estimate from the Architect/ Engineer for property to be purchased/ constructed/ extended/ improved
  • A copy of approved drawings of proposed construction/ purchase/ extension
  • Receipts for payments made for buying the dwelling unit
  • ULC clearance/ conversion order, etc.
  • Receipts for investing the margin money through normal banking channels from the NRE /NRO account(s) in India
  • Latest tax paid receipt
  • Allotment letter from the co-operative society/ association of apartment owners

Other Documents:

  • Credit Bureau Report (in case available in the country where you are residing)
  • If any previous loan from other Banks/Lenders, then Loan A/C statement for the last 1 year

Note: The above list is indicative and your lender might ask for additional documents.