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Home Loan

HOME LOAN SERVICES

What is a Housing Loan?

A housing loan or home loan, also known as a mortgage, is a financial arrangement where a lender provides funds to a borrower to purchase or refinance a residential property. The borrower agrees to repay the loan amount over a specified period, typically with interest, in regular installments. The property itself often serves as collateral, meaning the lender can take possession of it if the borrower fails to make the required payments. Home loans are a common way for individuals to afford homes while spreading the cost over several years.

At Desirenest Properties, we understand that purchasing your dream home is a significant financial milestone. To help you achieve your homeownership dreams seamlessly, we offer comprehensive Home Loan Services. Our team of expert real estate consultants in Bangalore is here to assist you every step of the way, ensuring that you secure the best financing options tailored to your needs.

Key Factors to look for while applying for a home loan:

Loan Amount :

Numerous aspects of the loan are influenced by your loan volume. It is advised to choose a loan amount that you can comfortably afford over a lengthy period of time and can bind to a long-term commitment.

Credit Score:

Your credit score is a critical factor in the loan approval process. Lenders use it to assess your creditworthiness. A higher credit score typically leads to better loan terms. Aim for a score above 700 for the best rates.

Interest Rates:

Compare interest rates from different lenders and choose the one offering the most favourable terms. Even a small difference in interest rates can have a significant impact on your monthly payments.

Documentation:

Prepare all necessary financial documents, including tax returns, pay stubs, bank statements, and other financial records. Be organised and ready to provide this information to the lender.

Loan Term:

Decide on the loan term (e.g., 15, 20, 30 years) that aligns with your financial goals. Shorter terms typically have higher monthly payments but lower overall interest costs.

Types of Home Loan in India:

Basic Home Loan:

A basic home loan, also known as a standard home loan, is a type of mortgage provided by financial institutions to help individuals purchase a new residential property. Borrowers can use this loan to buy a house or apartment. The loan amount is typically a percentage of the property’s cost, and the borrower is required to make monthly payments consisting of both principal and interest until the loan is fully repaid. The property purchased with the loan serves as collateral for the loan, which means that if the borrower fails to make payments, the lender may take possession of the property through foreclosure.

Home Extension/Improvement Loan:

A home extension/improvement loan is a financial product designed to assist homeowners in financing the expansion or renovation of their existing homes. This type of loan allows individuals to borrow money to add new rooms, renovate kitchens or bathrooms, make structural changes, or undertake other home improvement projects. The loan amount is determined based on the estimated cost of the proposed improvements. Interest rates and repayment terms for home extension/improvement loans can vary depending on the lender and the borrower’s creditworthiness.

Pradhan Mantri Awas Yojana (PMAY):

Pradhan Mantri Awas Yojana (PMAY) is a housing scheme launched by the Government of India to provide affordable housing to economically weaker sections and low-income groups. Under this scheme, eligible beneficiaries can receive financial assistance to purchase or construct a new house. PMAY offers different components, including Credit Linked Subsidy Scheme (CLSS), which provides interest rate subsidies on home loans to make housing more affordable. The scheme aims to address the housing shortage and promote homeownership among economically disadvantaged individuals in India.

Home Construction Loan:

A home construction loan is a type of loan designed to finance the construction of a new residential property. Unlike a standard home loan, where you purchase an existing property, a construction loan provides funds in stages as the construction progresses. Borrowers receive disbursements at various milestones of the construction process, and they are typically required to make interest-only payments during the construction phase. Once the construction is complete, the loan can be converted into a traditional home loan with regular principal and interest payments. This type of loan is suitable for individuals who plan to build a custom home or undertake significant construction projects.

Desirenest Home Loan Services Include: 

Loan Eligibility Assessment:

Our team of experienced financial experts will assess your eligibility for a home loan based on your income, credit score, and other relevant factors and ensure the right financial options for your planned project.

Loan Comparison:

Our team will provide you with a detailed comparison of loan options from various lenders, helping you choose the one that suits you best among the other available options. Our team will also assist you by providing recommendations according to your current need and specific factors.

Documentation Assistance:

Our team will assist you in preparing and organising all the necessary documents required for your home loan application, making it easier for you to go forward with the process.

Application Submission: Our experts will handle the submission of your loan application to the selected lender, ensuring it meets all the requirements.

Regular Updates:

Throughout the loan approval process, we’ll keep you informed about the status and any additional requirements, if needed.

Post-Approval Assistance:

Once your loan is approved, we’ll continue to support you, ensuring a smooth transition to the next stages of your home buying journey. Thus Desirenest helps you from finding the right financial options to the final buying process and make your dream of owning a home come true with little hassle or difficulty.

Conclusion :

Knowing the various types of home loans should make it easier for you to choose one that best meets your needs, but Desirenest’s highly qualified team would always welcome having your support and working with you to provide you with whatever you need to achieve your real estate goal.

Bank NameInterest Rates (P.A)
Kotak Mahindra Bank8.75% p.a. onwards
Union Bank of India8.70% p.a. onwards
Bank of Baroda 8.60% p.a. onwards
Central Bank of India 8.35% p.a. onwards
Bank of India 8.45% p.a. onwards
State Bank of India 9.15% p.a. onwards
HDFC Home Loans 8.45% p.a. onwards*
LIC Housing Finance 8.45% p.a. onwards
Axis Bank 9.00% p.a. onwards
Canara Bank 9.25% p.a. onwards
Punjab and Sind Bank 8.95% p.a. onwards
IDFC First Bank 8.85% p.a. onwards
Bank of Maharashtra 8.60% p.a. onwards
Indian Overseas Bank 9.55% p.a. onwards
Punjab National Bank 8.50% p.a. onwards
IDBI Bank 8.65% p.a.
South Indian Bank Repo Rate + 3.35% p.a. onwards
PNB Housing Finance Limited 8.75% p.a. onwards
Federal Bank 8.80% p.a. onwards
Karnataka Bank 8.75% p.a. onwards
Sundaram Home Finance 7.85% p.a.
Dhanalakshmi Bank ranges up to 15% p.a.
Tata Capital 8.60% p.a. onwards
Bandhan Bank 9.15% p.a. onwards
Aditya Birla 8.80% p.a. onwards
Reliance Home Finance 9.75% p.a onwards

Home Loan Interest Rates

Interest Rate (Monthly reducing balance)6.65% to 14%
Processing FeesVaries with bank
Loan Tenure1 Year to 30 Years
Partial pre-payment ChargesVaries with bank
Pre-closure ChargesVaries with bank

Home Loan Interest Rates till May 2018

Interest Rate is the percentage of principal amount charged, by a lender to it’s borrower for the use of money. It is one of the important feature of any Home loan scheme.There are two types of interest rates: Fixed rate of interest and Floating rate of interest where, the Banks ask the customers to choose from at the time of Home loan application. Below table help you examine the best Floating interest rates from different Banks or Financial Institutions in India as per the Home loan tenure:
Home Loan Interest Rates from Top Banks as on 09 May 2018
Bank NameFloating Interest RateMCLR Rates
SBI7.55%8.50%
Axis Bank7.60%8.70%
HDFC LTD7.55%8.60%
ICICI Bank8.10%8.55%
Bank of Baroda7.60%8.55%
DBS Bank9%8.90%
Bank of India8.45% – 8.60%8.65%
Canara Bank7.60%8.65%
Yes Bank8.95%9.70%
Indian Overseas Bank7.05%8.70%
Karnataka Bank7.89%8.90%
Citi Bank6.65%8.95%
Kotak Mahindra Bank7.50%9.05%
Union Bank7.40%8.95%
United Bank of India8.65%8.85%
HSBC7.35%9.20%
Federal Bank8.55%9.20%

Types of  Home Loans

On the basis of type of property being purchased and the home loan requirements, Home loans can be classified into the following different categories. In India, the Banks and NBFCs offer home loans under any one of the following listed variants of housing loans.
  • Home Purchase Loans
As the name itself suggests, home purchase loans are specifically given for the purchase of flats or homes. These are the most well – known type of home loan and are availed by most of the home loan borrowers. Almost all banks and Non-Banking Financial Corporations offer home purchase loans.
  • Home Loan for Construction
Home loan for construction is the loan given to customers who want cash to construct their own house on an existing piece of land. The important point is that the land for construction should have been bought within one year of availing the loan for the cost of land to be counted as part of this loan. In case the land was bought earlier than one year, then the cost of land is excluded from the loan amount. The formalities for construction loan are slightly different than those for regular home loans. The loan applicant needs to give a lump-sum construction cost estimate to the lending entity and thereafter the lender evaluates and decides to sanction or reject the loan.
  • Plot Loans
Plot loans are the loans given by banks for the purchase of land or plot. These loans are not necessarily offered by all banks or NBFCs.
  • Home Extension/Renovation Loans
Home loans for extension or renovation of home are offered to those home loan borrowers who already have a house but are looking for the further construction, extension or renovation on their existing piece of property. For example: Renovating a staircase etc.,
  • Home Conversion Loan
If an Individual has already taken a home loan for purchasing the house, but wish to shift to another house, then he/she can opt for a home conversion loan. It will help him/her in transferring the current loan to their new house.
  • Balance Transfer Home Loan
This type of loan is for the Individuals who can use the balance transfer option to transfer their home loan from one bank to another. Most people opt for this loan to avail better interest rates.
  • NRI Home Loan
NRI Home Loans are specially designed for Non-Resident Indians (NRI) who wish to purchase a Residential property in India. The requirements and procedures involved in availing this type of loan is different from the regular home loans.
  • Stamp Duty Loans
Stamp Duty Loans are the loans offered by Banks to customers to cover the stamp duty charges, which is incurred during the property purchase.
  • Bridged Loans
Existing homeowners who are willing to buy a new house can apply for a Bridged Loan, which will fund the new house. The tenure of this loan is below 2 years and it requires the borrowers to mortgage the new property with the lender until the loan is repaid.

Home Loan Eligibility

Home loans are secured advances and therefore the eligibility criteria for these loans is laid out differently by different banks. Here are some of the most important factors that feed into determining home loan eligibility criteria for almost all banks in India.

  • Age: The minimum age at the time of application should be 21 years. Repayments have to be completed before the age of 60 or 65.
  • Employment: Borrowers should:
    • Be salaried employees or self-employed persons (professional/non-professional)
    • Have been in employment/business for at least 3 years of which current employment should account for at least 1 year.
  • Income: A minimum income varying between Rs.5 – 7 lakhs would be required. This depends on the nature of employment i.e. salaried or self-employed.
  • Residence: At least one year of stay at the current residence is required to display stability with respect to employment as well as financial. This is an indirect indicator but is taken into account by almost all banks while calculating home loan eligibility.
  • Credit Rating: A good credit score is required (a score of 750-900 from CIBIL is considered good). Besides this, a healthy financial background is vital for approval and to determine the interest rate and loan amount.
  • Parallel debt channels: While sanctioning home loan to customers, banks also look into the current credit standing of the loan applicant. If a borrower has other home loans, personal loans or car loans in-progress then the lending entity calculates the loan quantum eligibility accordingly. Banks do this to make sure that the loan applicant is able to pay the minimum monthly instalment towards his/her home loan.

Every Individual’s dream is to have his/her own dream home and the best way to achieve that goal for a Middle-income household in India is to get a home loan. The government of India has schemes in place to assist house buying/building for the citizens. Nowadays, home loans are made easy. But only if all your documents are in order.

To secure a home loan, an applicant must submit a number of documents that establish their KYC, the antecedents of the property they wish to purchase, their income background etc. depending on which category of customers (salaried/professional/businessman/NRI) they belong to.

The documents required vary from bank to bank. Below are some lists of document which are most commonly required to apply for a home loan in India.

List of Property Documents Required For Applying Home Loan By All Applicants

  • Loan application form.
  • 3 photographs passport sized.
  • Identify proof (acceptable documents listed below).
  • Residence proof (acceptable documents listed below).
  • Bank Account Statement/Pass Book for last 6 months.
  • Signature verification by bankers of the applicant.
  • Liabilities statement and Personal Assets.

Documents For Guarantor (Wherever Applicable)

  • Liabilities Statement and Personal Assets.
  • 2 photographs passport sized.
  • Identity proof.
  • Residence proof.
  • Proof of business address.
  • Signature identification from present bankers.

List of Documents for Salaried Individuals

  • Salary Certificate (original) from employer.
  • Form 16/IT Returns for the past 2 financial years.

List of Documents Required for Self – Employed Professionals

  • IT Returns/Assessment Orders copies of the last 3 years.
  • Challans as proof of Advance Income Tax payment.
  • Proof of business address for non-salaried individuals.

List of Documents Required for Self – Employed Businessmen:

  • IT returns/Assessment Orders copies of the last 3 years.
  • Challans as proof of Advance Income Tax payment.

List of Property Documents:

  • Deed of Sale or Sale Agreement or Share Certificate (original) in case of a cooperative society.
  • Receipts for taxes paid for Building and Land, certificate of possession, and certified sketch of the location of property from revenue authorities.
  • Allotment Letter from Society/Housing Board/Private builder.
  • Receipts of advance payments for flat purchase.
  • Certificate of Non-encumbrance encompassing the last 12 years/30 years.
  • Receipt of land tax payment and certificate of possession issued by revenue authorities.
  • Permission letter from Appropriate Authority.
  • Approved building plan (showing floor plan for flat purchase).
  • Original No Objection Certificate issued under the ULC Act, 1976.
  • Copy of relative order if agricultural land is being converted.
  • No objection certificate (NOC) from Builder/Housing Society.
  • Detailed estimate of construction cost.
  • Letter from Society/Builder/Housing Board mentioning their bank and account details, for instalment remittance.
  • Applicable for purchase of land plot, a declaration by loan borrower stipulating the date by which to construct a house.
  • Report from lawyer as per standard format.
  • Report stating the valuation of property in standard format by an empanelled valuer.
  • Post closure of loan, documents required for handover of original Property documents.
  • Power Of Attorney for collecting original documents of Property.

In event of demise of the loan borrower:

  • Letter requesting handing over of Property documents from Legal Heir/Nominee(s).
  • Letter relinquishing the right to Legal Heirs/Nominees for Property documents handover.

List of Home Loan Documents Required for Non-Resident Indians(NRIs)

  • Document establishing KYC.
  • Salary Certificate from employer stating in English the name (as per passport), designation, passport number, date of joining, latest salary.
  • Last 3 to 6 months’ salary slips reflecting variable components like incentives, overtime, etc.,
  • Latest IT Returns (for applicants filing IT returns in the country).
  • For Self Employed NRIs, business documents like Trade License, Sponsor Agreement, Power of Attorney, etc.,
  • Copy of Passport showing the page of residence visa.
  • Proof of employment by the Government of the residing country like work permit, labour contract, etc.,
  • Documents related to the Property with cost estimates from an Indian Architect or Engineer.
  • For Salaried NRIs, income documents attested by embassy official required if there’s no documented evidence for salary credit or fund remittance to India is available.
  • Bank statements copies from overseas of the past 6 months.
  • Last 6 months’ NRO/NRE bank statement.

If applicant is unavailable in the country at the time of signing documents, Power of Attorney needs to be produced by the person acting on their behalf.

List of Documents Needed for KYC Compliance

Some of the usual documents admitted as KYC are mentioned below:

Photo Id Proof (Any One Required):

  • Passport
  • PAN Card
  • Driving License
  • Voters ID Card

Residence Proof (Any One Required):

  • Electricity Bill
  • Ration Card
  • Telephone Bill
  • Employment Letter
  • Passbook or Bank Statement with address

Proof of Age:

  • PAN card
  • Passport
  • Birth certificate
  • Driving license
  • Bank passbook
  • Marksheet from 10th class

Besides the ones mentioned above, the banks have the right to ask for any document they deem necessary to the loan sanctioning and verification process.

* GST Rate of 18% Applicable for All Financial Services Effective July 1, 2017

Pradhan Mantri Awas Yojana

The Pradhan Mantri Awas Yojana(PMAY) has been the talk of the town since it was introduced by Prime Minister, Narendra Modi on 1 June 2015. PMAY Scheme is an initiative provided by the Government of India which aims at providing affordable housing to the urban poor. The mission of this initiative is to provide housing for all by the year 2022.

Under this scheme, affordable houses will be built in selected cities and towns using eco-friendly construction methods for the benefit of the urban poor population in India. Also, under the Credit-Linked Subsidy Scheme, beneficiaries under PM Awas Yojana are eligible for interest subsidy if they avail a loan to purchase or construct a house.

Features of Pradhan Mantri Awas Yojana

  • Under PMAY Scheme, subsidy interest rate is provided at 6.5% on housing loan for the term of 15 years to all the beneficiaries.
  • Differently abled and senior citizens will be given preference in allocation of ground floors.
  • Sustainable and eco-friendly technologies would be used for construction.
  • The scheme covers entire urban areas in the country which includes 4041 statutory towns with the first priority given to 500 Class I cities. This will be done in 3 phases.
  • The credit linked subsidy aspect of the PM Awas Yojana gets implemented in India in all statutory towns from the initial stages itself.

Current Updates on Pradhan Mantri Awas Yojana

  • PMAY may get a 50 percent raise in the Upcoming Budget
  • The government’s housing for all initiative, known as Pradhan Mantri Awas Yojana (PMAY), is quite likely to get a 50 per cent raise in the upcoming budget allocation this year. This surge is driven by the government’s plan to build more than two crore houses in urban and rural areas.

The PMAY scheme is divided into two components – rural and urban.

  • In the first case, the government plans to construct one crore new housing units by the end of March 2019 and of these, 51 lakh houses need to be built by March 2018. The government has set a similar target for PMAY Urban as well.
  • Considering that the housing scheme is moving at a slow pace, allocating additional funds likely help it accomplish its goals.
  • In the previous budget, Rs. 23,000 crore was allocated for the PMAY Rural while Rs. 6,042 crore was allocated for its urban counterpart.
  • To achieve its target of constructing 51 lakh houses in rural India, the Ministry of Rural Development is working together with the government of different states.
  • Month-wise targets have been set up to complete the construction of the houses and so far, the government appears to be on track.

Eligibility Criteria for PMAY Scheme

The government will use The Socio-Economic and Caste Census of 2011 (SECC 2011) to identify and select the list of PMAY beneficiaries. The village panchayats along with tehsils will be considered for consultation of beneficiaries before making the list under the rural housing scheme. This is going to be done in order to ensure transparency of the project and also make sure that only the deserving receive the aid in housing.

  • Any household with total annual income between Rs.6 lakh to Rs18 lakh can apply for the PM Awas Yojana. The applicant is allowed to include the income of the spouse while applying for this scheme.
  • Indian citizens who are women may apply. No other demographic will be considered as long as they are women.
  • The beneficiary can only buy a new house in order to enjoy Pradhan Mantri Awas Yojana benefits. People who already own a house are not eligible to apply for this scheme. No pucca should be owned by the beneficiary or member of the family, in any part of the country.
  • People will be allowed to buy/construct new houses only. One cannot avail PMAY benefits on already built house.
  • People who belong to the low income group i.e. LIG and economically weaker sections also known as EWG in the society, may also apply.
  • Scheduled tribes and castes will also be eligible.
  • Senior citizens and differently abled will be given special priorities for ground floor housing.

Real estate agent to present the property (house) to customer.

A home loan or housing loan is the sum of money borrowed by individuals from the Banks or the Financial Institutions for a fixed period of time.

Depending on the loan’s terms, the borrower must repay the loan balance plus interest over a time that can range from 10 to 30 years in Easy Monthly Instalments, or EMIs.

Key Factors to look for while applying for a home loan:

Loan Amount

Numerous aspects of the loan are influenced by your loan volume. It is advised to choose a loan amount that you can comfortably afford over a lengthy period of time and can bind to a long-term commitment.

Credit score

A good credit score and credit history are the things to be given priority while applying for a housing loan since they make it easier to get housing loans at comparatively lower interest rates and with additional credit perks.

Rate of Interest

When a loan has a fixed rate of interest, the interest rate does not change during the life of the loan, regardless of changes in the financial market.

Repayment Tenure

Make sure to ask the bank whether you may get a loan with a shorter payback period before you choose any type of loan. Always choose a shorter term since the longer it takes you to pay off the loan, the more interest you will have to pay.

 

Documentation

Both conventional and pre-approved home loans will require specific documents from the lending institution. These records may be divided into three categories: KYC records, income records, and property records.

 

Different types of Loans in India :

1.Basic Home Loan

 

The most common loan taken by people to fulfill the ultimate desire of owning a home is a basic home loan. The lender may grant a home loan for up to 80% to 90% of the cost of the property if you fulfill the requirements for the loan.

 

2.Home Extension/Improvement Loan

A home extension loan might be useful if you currently own a house but wish to add a room or perhaps a floor to it. An existing house can also be renovated with a home improvement or renovation loan.

 

3.Pradhan Mantri Awas Yojana (PMAY)

 

Home loans with discounted interest rates are available to first-time homebuyers under the Credit-Linked Subsidy Scheme (CLSS) under PMAY.

4.Home Construction Loan

 

You may want to think about a home construction loan if you currently own land and want to build your dream house on it.



Conclusion :

 

Knowing the various types of home loans should make it easier for you to choose one that best meets your needs, but Desirenest’s highly qualified team would always welcome having your support and working with you to provide you with whatever you need to achieve your real estate goal.

 





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