One Stop Destination For All Your Home Loan Queries
Thinking of applying for a home loan, but worried about what factors will come in play before you take the first step? Don’t worry, we have you covered. Acquiring a home loan is easier than it looks, and if you’re in the market for one, just read up on these important components that constitute a home loan before you go ahead and apply for it without any worries.
What is a Home Loan?
Basically, a home loan is a sum of money provided to you by lenders when your objective is purchasing a new home. Financial institutions like Bajaj Finserv offer highly customized home loans that encompass all the possible needs of those applying for this type of loan. This way, you are free to purchase your new home without having to worry about the substantial expenses of buying a new home as well as other expenses of buying furniture and fixtures. The home loan takes care of all your requirements and offers them to you in a tidy package.
For example, Bajaj Finserv offers you an additional sum of money for sundry expenses related to your new home, like furniture and fittings, repair work, home improvements, etc. so that you can focus solely on enjoying the rewards.
Which is the best Home Loan in India?
India is a highly competitive market for financial institutions, with economically-aware customers always on the lookout for the best rates and add-on services. This creates an environment wherein finance companies, especially modern financial providers, offer consumer-friendly and more convenient loan offerings in order to satisfy customers like you.
Among these market leaders, the name of Bajaj Finserv stands out in terms of low interest rates, high loan amounts, better customer satisfaction, and advanced overall services.
Is a home loan hard to get? What should I keep in mind while applying for a home loan?
No, a home loan is not difficult to get, provided you meet the eligibility criteria and furnish the requisite documents. Essentially, your repayment capacity and current income influence your eligibility. Your age, credit score, and financial liabilities also play a part in determining whether you are eligible for the loan.
If you are looking for an easy and convenient way to verify your eligibility, try this handy home loan eligibility calculator.
Also Read : Advantages of applying for a home loan online
How does a home loan save income tax?
Your home loan is eligible for certain tax benefits. Here are some relevant points about the tax rules prevalent in each section:
- Under Section 80C of the Income Tax Act, one can avail tax benefits on principal amount of the home loan.
- A maximum tax deduction of Rs.1.5 lakh is allowed. The tax deduction is based on the payment regardless of the year for which the payment has been made.
- The amount paid towards stamp duty charges and registration fees is allowed for deduction under Section 80C.
- Tax benefit for repayment of principal loan amount is allowed after the construction of the house is complete.
Tax benefit is available on the interest that is paid towards the home loan under Section 24:
- The tax under this section is deducted on an accrual basis. Maximum tax deduction allowed under Section 24 is Rs.2 lakh.
- This can be claimed on a yearly basis even if no payments have been made during that year. If the house is not constructed within 3 years from the end of the financial year that the loan was taken, you are eligible to Rs.30,000 as deduction.
In cases where the loan is taken to repair, reconstruct or renew your house, then tax deductions would not be applicable on the interest paid. If the interest for the loan taken to purchase or construct the house has been paid before the house has been completed, then the aggregate of the amount is allowed for deduction in 5 equal instalments for 5 successive financial years.
Section 80EE was designed by the Government of India to offer tax benefits on interest paid on home loan for first-time buyers. However, there are few rules that govern the tax benefits:
- The loan must be sanctioned between 1st April, 2013 and 31st March, 2014.
- The loan amount cannot exceed Rs.25 lakh.
- The value of the residential property cannot exceed Rs.40 lakh.
- The deduction under Section 80EE cannot exceed Rs.1 lakh.
Are there different ways to apply for a home loan? If so, which is better?
Yes. There are two ways to apply for a home loan—online and offline. Both come with their own set of benefits, and you can choose from either based on your preferences:
Applying for a home loan online is very easy and offers you the comfort of completing your entire process from home. All you need to do is click here.
If you do not wish to avail the online application process, you are free to apply for a home loan by calling on 1800-209-4151.
What is the basic eligibility criteria for a home loan?
The primary factors on which your home loan is decided are:
Find out if you are eligible for a home loan in a quick and easy way here.
How much home loan can I get on my salary?
If you fall in the following brackets in the corresponding cities, you can avail a home loan between Rs.30 lakh and Rs.10 crore.
- In Delhi and Mumbai, your minimum salary should be Rs.50,000 and the minimum value of the property you wish to buy should be at least Rs.40 lakh.
- In Bangalore, Chennai, Faridabad, Ghaziabad, Gurugram, Hyderabad, Noida, Pune, or Thane, your minimum salary should be Rs.45,000 and the minimum value of the property you wish to buy should be at least Rs.30 lakh.
- In most other cities, your minimum salary should be Rs.30,000 and the minimum value of the property you wish to buy should be at least Rs.20 lakh.
If you are a self-employed individual, your maximum loan limit reaches up to Rs.15 crore.
What are the documents required for a home loan?
Depending on certain factors and on your lender, you may need to submit additional documentation.
What is the interest rate on home loans? How is my EMI calculated?
Bajaj Finserv offers the lowest current interest rate for a home loan at 8.85%. This rate is subject to change every two months.
Your home loan EMI is calculated on the basis of a simple formula:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
where P represents the loan amount or principal, N is the number of monthly instalments and R is the interest rate per month
For example, if you suppose the rate of interest per annum is 11% then the value of R will be 11/(12 x 100).
Check out your exact EMI with this home loan EMI calculator that makes arriving at the numbers as easy as a click!
Is a home loan rate negotiable? How can I reduce my home loan interest rate?
Although home loan rates are technically non-negotiable, you can always ask the lender for some sort of leeway in case the current market scenario is favourable to buyers.
Alternatively, there are certain ways to reduce your home loan interest rate directly, by way of:
- Possessing a very good credit score
- Making timely EMI payments to the lender and establishing a good level of trust
It is a good thing to remember that the best way to get the lowest home loan interest rate is by applying to a financial institution that offers the least possible rates to begin with.
How much CIBIL score is required to get a home loan? Can I get a loan if my score is bad?
The CIBIL score is calculated by the credit scoring organisation named CIBIL. This score measures the overall credit worthiness of any individual over a period of time. A CIBIL score forms the primary eligibility required of a borrower when applying for any kind of loan.
In general, a CIBIL score of 750 and above is considered a very good score, a score from 350 -750 is an average score, and below 350 would be considered a poor score.
You may be eligible for a home loan even if you have a bad credit score, although the lender will definitely charge higher interest rates.
How do I check my credit score in India?
There are four credit bureaus in India, each with a unique credit score system. You can check your score from any of these bureaus, or through individual sites that redirect you to them. The four bureaus are:
- Credit Information Bureau India Ltd. (CIBIL)
- Equifax Credit Information Services
- Experian Credit Information
- High Mark Credit Information Services
Can home loan applications be rejected?
Unfortunately, yes. Some of the reasons home loan applications can be rejected are:
- Bad credit score
- Incomplete documentation
- Misinformation in documents
- Low repaying capacity
- Lack of income
- Too many existing loans
- Not fitting the lender’s policy
Most of these factors can be kept in check by you through informed decision-making and organization.
What are the types of home loans?
The different types of home loans available to you are:
- Land purchase loans
- Home construction loans
- Joint home loan
- Top up loan
Based on your unique needs, you can apply for any of these specific loans.
What is a home loan balance transfer?
Home Loan Balance Transfer involves the process of transferring your existing Home Loan account to another lender. The reasons for a balance transfer can be to gain from lower interest rates offered elsewhere, benefit from better customer service, availability of a top up loan, and even other incentives. Bajaj Finserv offers the best rates in the industry for a home loan balance transfer at 8.5%.
When do I start paying my home loan EMIs?
To view your loan related details, including when your first EMI is due, please refer to your Statement of Account. If you are a customer, this can be done in the following manner:
Login to Customer Portal > View loan details > Click view details icon > Select loans Statement
Click here to login to the Customer Portal.
How does part prepayment work in a home loan?
Part prepayments bring down the principal amount, which in turn lowers your EMIs and the interest that you have to pay. You can part prepay your loan amount after one successful EMI transaction is complete. Additionally, you can carry out a part prepayment at no extra charges. Just ensure that your part prepayment is more than three times your monthly EMI. You can figure out your part prepayment calculations by clicking here.
For example, if your monthly EMI is Rs.2 lakh, the minimum amount of part prepayment allowed is Rs.6 lakh.
What’s more, you can also claim a tax deduction for the amount repaid. The deduction for prepayment will be the same as deduction for repayment of home loan on EMIs. The limit for deduction will also be the same.
What is foreclosure of a home loan?
A foreclosure is the full repayment of the remaining loan amount in one single payment instead of paying in EMIs. It is an existing part of your loan process in which you can repay the loan before your scheduled EMI period.
With a home loan foreclosure calculator, you can select the number of EMIs that you have already paid and the month on which you want to foreclose your loan. Through this process, it is possible to find out the exact amount you need to pay in order to foreclose your loan.
You can start the process of home loan foreclosure by downloading the foreclosure letter from Bajaj Finserv’s Customer Portal Experia, or by writing to the customer service team at firstname.lastname@example.org
If you foreclose your loan, you will be charged 4% plus applicable taxes on outstanding principal during the first 24 months of your tenor, 2% plus applicable taxes on outstanding principal between 24 months to 48 months of your tenor, and no charges at all after the first 48 months.
How does a home loan affect my credit score? What happens if I fail to repay my home loan on time?
Your credit score is likely to drop for the first few months after taking a home loan, but as long as you pay your EMIs on time, it will bounce back up.
However, if you don’t pay your home loan EMIs regularly, here are some of the negative consequences you will face:
- Your credit score will plummet
- Your bank will send regular notices and reminders
- You will face legal consequences
- In case you have a secured loan, your collateral will be repossessed by the bank
What documents should I take back from the lender after the loan is paid?
The list of documents you should retrieve after repaying your home loan includes:
- A No Objection Certificate
- All of the documents you submitted while applying
- Your security cheques
- An Encumbrance Certificate
- Legal Clearance
Now that you are up to speed with everything related to home loans, you are ready to apply for the best home loans in the business offered by Bajaj Finserv.