Updated: Oct 29, 2020

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Q. What is a Home Loan?

A. It is a loan offered by a bank or housing finance company, (commonly referred to as lender) to home buyers (known as borrowers) for purchase of new property, construction of house or renovation of existing property. The borrower/customer availing home loan is required to submit the title document of the property with the lender till the loan repayment is completed by borrowers.

Q. Which all property transactions are covered for home loan?

A. Individuals can apply for housing loan in below scenarios:

· For purchase of a new house or apartment from the developer or developing authority

· For purchase of house or apartment from existing owner in resale transaction

· For construction of house on pre-owned plot of land

· For purchase of plot of land for the purpose of construction of house for self-usage

· For renovation of existing house/flat

· Additional loan/Top-up loan on existing home loan

· Balance Transfer of Existing loan from one bank or housing finance company to another

Q. What is the tenure of a home loan?

A. Home loans are long term loans with a minimum tenure of 5 years and a maximum tenure of 30 years. The tenure offered to borrowers usually depends upon the age at time of loan application and loan maturity. As a thumb rule the minimum age at the time of applying for home loan, borrower should be minimum 21 years of age.The norms at the time of loan maturity are as under:

· Salaried borrowers- The maximum loan tenor is limited to 60 years or age of retirement whichever is earlier.

· Self-employed borrowers- The customer should not be more than 65 years of age at the time of loan maturity.

Q. What is the Eligibility Criteria for a Home Loan?

A. Applicants with regular source of income are eligible for home loan. Home-loan can be availed broadly by below category of customers:

· Salaried customers

· Self-Employed customers having their own business

· Salaried NRI customers working abroad.

Q. What are the basic criteria considered for home loan eligibility?

  • Income level of the applicant

  • Age of the applicant

  • Qualification & experience

  • Availability of the basic documents-Age proof, Address proof, Signature proof etc.

  • Property ownership

  • Number of dependants and earning members in the family.

  • Fixed monthly expenses

  • Repayment track of existing loans.

Q. Who can be joint borrowers in case of a home loan?

A. Immediate family members such as your parents, spouse ,siblings and children are allowed to be joint borrowers in case of a home loan.

Q. What is the maximum number of co-applicants for a home loan?

A. The maximum number of joint applicants is usually limited to 5 or 6, depending on the lender.

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Q. What is EMI?

A.EMI is Equated Monthly Instalment and is the monthly instalment which needs to be paid by borrower to lender for repayment of the home loan. The EMI includes 2 components—Payment towards Principal loan & Interest on outstanding loan. This is a monthly payment to be made by borrower to lender till the time of loan maturity.

Q. What are different modes of loan repayment?

A. There are different ways to pay off your loan such as issuing post-dated cheques for the tenure of the home loan, getting the amount deducted automatically from your salary or by issuing standard instructions to the lender for ECS (Electronic Clearing System) wherein the EMI is automatically deducted from your bank every month. In current scenario ECS is the most preferred and commonly used method for repayment of home loans.

Q. Is prepayment/foreclosure of home loan allowed?

A.Yes, the borrower has an option to pre-close the loan by making a bulk payment before the completion of actual loan tenor. Most of the banks and Housing finance companies are currently not charging any penalty or fees on pre-closure of the home loan.

Q. What is part-prepayment of the loan?

A. Instead of making the full payment of out-standing loan, borrowers also have an option of making the lump-sum payment on home loan and thereby reducing the outstanding principal.The bulk payment is adjusted towards deduction from outstanding principal and thereby helps in reducing the EMI or loan tenor as per customer choice.

Also Read: How to Save Money on your Home Loan

Q. What are the key charges associated with a home loan process?