1. What is the eligibility criteria for housing loan?
Generally, following conditions must be fulfilled:
- i. Minimum age of applicant: 21 years
- ii. Salaried or self-employed with regular income
2. When can I apply for home loan and steps involved in the process?
You can apply for the Home Loan even before you have selected your property or before the start of construction. You will get in -principle approval for the loan amount which will help you decide your budget and plan the purchase of house/flat.
There are two stages in the housing loan process
- 1. Sanction of the loan
- 2. Disbursement of the loan as per the progress of construction of the property.
3. Who can be co-applicant for the loan?
i) All co-owners need to be co-applicants
ii) All co-applicants need not be co-owners.
4. Can I get more than one housing loan?
Yes. Housing loans can be given to an individual provided he has the capacity to repay. The loans can be for same property (repairs/extension etc) or for different properties.
5. What are general components of Net Monthly Income to calculate loan eligibility?
The NMI is income from all sources of an salaried individual It Includes:
- 1. The NMI from the salary of applicant
- 2. The NMI from the salary of co-applicant/spouse
- 3. The income from other sources like Rent from the existing/proposed flat, Agricultural income, Income from tuitions, other business etc.
In case of self employed/professional the NMI is Annual Income after deduction of income tax divided by 12 (as per I-T return) plus other income as above.
6. How much percent of loan can be availed for the purchase of property?
Upto 80% Loan of Agreement Value only.
8. Can the EMI be reset during tenure of loan? Can I make Prepayment towards loan closure?
Yes. If there is substantial revision in the rate of interest, the facility of refixing of EMI can be granted to a housing loan account.
You can pay extra money (more than your EMI) any amount, anytime ahead of repayment schedule to prepay the loan.
7. What is difference between EMI and Pre-EMI? How is Pre-EMI calculated?
EMI – Equated Monthly Installment. This is the amount paid monthly by a borrower to the bank or any other lender. It basically has two components –
- 1. The portion of the principal amount
- 2. The interest portion for that month
Pre-EMI – Prior to final disbursement of the Housing Loan, you pay interest on the portion of the loan disbursed. This interest is called pre-EMI interest. It is payable monthly/quarterly upto the date of commencement of EMI.
9. Over how many years can I pay the loan?
You can repay the loan over a maximum period of 20 years for both Floating Rate Loans and Fixed Rate Loans. The term will not ordinarily extend beyond your age of retirement (if you are employed) or on reaching 65 years of age whichever is earlier. If the applicant’s age is about the retirement age then he may be required to take a suitable (generally single premium) Life Insurance Policy to cover the risk upto the repayment period of loan.
The Bank will help you to determine the repayment period to suit your convenience and financial ability.
10. What is floating and fix rate housing loan?
Floating Rate – A loan where the interest rate is not fixed is referred to either as a floating interest rate loan, variable interest rate loan or adjustable rate loan, It is linked to a specific index or margin eg. Above/below Medium Term Prime Lending rate (MTPLR)
Fixed Rate – It is a loan where the interest rate is fixed during the life / certain tenure of the loan.
11. What are the tax benefits available if one avails housing loan?
You will be eligible to claim both the interest and principal components of your repayment during the year.
- Interest can be claimed as a deduction under Section 24. You can claim up to Rs. 150,000 or the actual interest repaid whichever is lower. (You can claim this interest only when you are in possession of the house)
- Principal can be claimed up to the maximum of Rs. 100,000 under Section 80C. This is subject to the maximum level of Rs 100,000 across all 80C investments.
- You will need to show the statement provided by the lender showing the repayment for the year as well as the interest & principal components of the same.