Best Banks For Home Loan In India

The series of repo rate cuts by the RBI (announced in the monetary policies) during the corona-virus pandemic effect has reduced the home loan interest rates to an all time low of 10years, making it affordable for the people to purchase their dream house. The rates have fallen to as low as below 7%pa. Golden opportunity for the home buyers definitely not to be missed out for… 

A home buyer needs to compare and evaluate the following key facts of the various Banks/NBFCs to bang the best deal on a housing loan.

  

• Rate of interest (ROI)
• Processing Fees (PF) and Other processing charges 
• Loan processing time
• The funding norms for Loan to value (LTV) 
• Prepayment conditions and foreclosure charges
• Documentation and services

With the lockdown being lifted in the many parts of the city of Mumbai, we have also resumed with our physical operations . We assure safety while providing hassle free documentation at your doorsteps. With the constraints of limited working staff of the bankers, and the banks safety norms to disinfect the physical copies of the collected applications and documentations, we have temporarily revised the loan processing time by additional 7-9 working days.

Compare Home Loan Interest Rate Of The Top Banks

Interest rate offered is the primary factor for comparison of housing loans. It directly affects the EMI paying capacity of the home loan borrowers.

Besides the processing fees and the applicable charges, there are various other charges that make the total cost of the housing loan. Learn more on these charges click DON’T GET FOOLED !! MUST KNOW ALL COSTS IN HOME LOAN.

Which bank is providing the lowest interest rate on a Housing Loan?

As per the given rate chart Canara Bank among the nationalized banks & ICICI Bank among the private banks are giving the lowest interest rate for housing loan. The women borrowers can enjoy concessional interest rates on housing loans which are 0.10-0.20 paise lower to the standard interest rates. (Click to know Housing Loan Benefits For Women Borrower In India)The Covid -19 pandemic has made a strategic impact on the home loan mortgage industry of India resulting in the reduction of the housing loan interest rates to touch an all-time new low of 10years.  

Best Bank For Home Loan 

Here is a quick guide for those home buyers who are unable to decide which is the best bank for a housing loan. Although rate of interest remains the primary factor for comparison of the best bank for home loan; total costs involved, list of documents required, eligibility criteria, services provided, etc. are some of the other factors equally important to make a comparison. 

• Home buyers looking for quick services and faster disbursement of loans along with low interest rates Axis Bank or ICICI bank can be a better choice.
• Home buyers feeling secured with nationalized banks, applying with Bank of Baroda, Bank of India or Canara bank can be a preferred choice. 
• Home buyers looking only for lowest interest rates , Government banks can be a better choice.
• Home buyers earnings drawing minimum per month income or earning cash incomes, HDFC can be a preferred choice.

Home Loan Details

Home loan is a long term financial commitment of the borrower. It is a most common mode to raise the required funds to purchase a ready to move or under-construction residential property either in resale or from a builder.

Home loan gives with the benefits of extended loan terms i.e. the longer repayment tenures upto 30 years and flexible repayment options which includes zero pre & part payment charges and no locking preconditions on repayments. A home buyer has a liberty to choose among the home loan bank/NBFC of his choice. Best bank for home loan is available for every class of income earners be it professional, salaried, self-employed or even a daily cash income earner. 

A home loan comes with a choice for home buyers to select suitable interest rates for them. There are two types of interest rates:

1) Fixed Interest Rates:- In fixed interest rates, the interest rates remain fixed for the loan tenure or for the portion of the loan tenure depending upon the loan agreements of the banks. The fixed tenure and the interest rates vary from bank to banks. A home loan borrower can switch from a fixed rate to a floating interest rate anytime after the completion of the fixed tenure.

2) Floating Interest Rates:- In floating interest rates, the interest rates are not fixed and fluctuate according to the latest lending rates/base rate of the banks. The interest rates automatically get revised with the changes in the base rates of the banks. The floating rates are cheaper than the fixed interest rates and since they keep on varying i.e. fluctuating they are also referred to as variable or fluctuating interest rates.

Home Loan Criteria

Eligibility: A borrower with regular flow of income and within the age group of 21 years to 70 years. For salaried the age limit is 21yrs-60yrs and for self-employed the age limit is 21yrs-70yrs.

Loan Amount: The loan amount ranges from Rs.5lakhs to Rs.20crs.

Loan To Value (LTV): Varies from 75%-90% depending upon the loan amount and the market value of the property.

Loan Tenure: Ranges between 5years – 30years. 

Security: A property a home buyer plans to purchase, construct or renovate is taken as collateral for providing the home loan. It can be a resale or builder purchased residential property.

Interest Rates: The new home loan interest rates starts from 7%, special rates for women borrowers.

Lowest Per Lac EMI: Starts with Rs.665 for 30years.

Processing Fees: Starts from Rs.10, 000 – up-to 1% on the loan amount + applicable GST.

Other Charges: Legal charges, technical charges, administrative charges, franking & stamp duty charge, intimation to mortgage charge, etc.

Foreclosure Charges: Nil for variable interest rate home loans. Vary between 2%-5% on outstanding loan amount for fixed interest rate home loans.

CIBIL Score: Requires good CIBIL score of 750 and above.

Home Loan Products: Fixed rate home loan, floating rate home loan, home loan with overdraft facility, and home loan with saver plan. 

Types Of Home Loans: Home purchase loans, home loan balance transfers, home loan top-ups, NRI home loans, home construction loans, home extension loans, home improvement loans, home conversion loans.

Documents Required: Identity proof, Address proof, Income proof and Property papers. 

PMAY Benefits: Under PMAY (Pradhan Mantri Awas Yojana) schemes, all first time home buyers will enjoy interest rates subsidy amount up-to Rs.2.67lakhs on housing loans. 

 

Home Loan Eligibility 

A home buyer can check his home loan eligibility for the best banks based on his income, age, current obligations, property valuation and LTV. For a salaried home buyer income eligibility is calculated at 60%-65% of the monthly net income and for self-employed income eligibility is calculated at 65%-70% of the net profit of the home buyer. By adding an earning co-applicant / co-applicants to the loan application the loan eligibility of the home buyer can be enhanced. Maximum up-to 6 members can be added as co-applicants to the loan. Banks have different criteria and specifications to calculate the eligibility of the home buyers such as, gross turnover product, banking surrogate, salary multiplier, etc. Click to learn more on the banking surrogate product of ICICI bank. The other factors equally important to determine a home buyer’s eligibility includes his CIBIL score, past repayment history and track records, his work experience, income history and job continuity, income stability, employment industry, his assets & liabilities, etc. High CIBIL score and stable job & income increases the chances of loan approval of the home buyers. Find below the list of the incomes which are not considered for the calculation of income eligibility of the home buyers.

Incomes which are not considered for eligibility calculation: 

• Interest income received on the money lending business.
• Overtime income of the salaried home buyers.
• Part time income of the salaried home buyers working as a part time employee with yet another company.
• Partner’s income in a partnership firm.
• Interest income received on the fixed deposits and investments.
• Pension income. (Considered only by a few nationalized banks and NBFCs only to an extent of 50% of the pension income drawn.)
• A salaried home buyer also having a business income from only one head will be considered i.e. either salaried income or a business income.
• Cash salary, cash rentals, cash agricultural incomes of the home buyers, which is not documented by legal proofs such as, salary certificate, bank statements reflecting the cash income deposits in the account, declaration on the letterhead of the company declaring the income, profile and experience of the home buyer, etc.

Income considered for eligibility calculation

All incomes which get legally reflected in the accounts of the home buyer can be considered for calculating his home loan eligibility, namely:

• Salary, perks, incentives, bonus, gratuity, arrears, paid leaves.
• Income from other sources such as, rental income, agricultural income, etc.
• Cash income of the self-employed home buyer, if physical books of accounts are maintained provided such income is reflected in the ITR. 
• Income of the co-applicant. (A co-applicant can be salaried, self-employed or even a company). 
• If the company is the co-applicant in the loan, net profit of the company will be considered.
• Net income and profits of all the businesses of the self-employed home buyer.

Formula for calculating home loan eligibility

((Net income per month X 60% FOIR) – Obligation OR Deductions) ÷ Per lakh EMI subject to market value of the property i.e. LTV 

LTV – Market Value of the property X (60%-90%)

The lower figure between the two- i.e. income eligibility and the LTV factor of the property, will be the final home loan eligibility of the home buyer.

[FOIR means fixed obligation to income ratio, LTV means loan to value, Obligation Or deductions means EMIs of other loans if any] 

Home Loan EMI Calculator

The home loan EMI calculator makes personal budgeting easier for the home buyer as he can easily check how much EMI he can comfortably service with the help of the EMI calculator. The home loan EMI is dependent on three important factors, namely – borrowed principal amount, loan tenure and the rate of interest. Enter these details i.e. the required loan amount, loan tenure and the applied rate of interest on the EMI calculator, and the home buyer will come to know his EMI and the total interest payable till the loan tenure. 

Benefits of using online EMI calculator

• The EMI calculator exactly shows how much EMI a home buyer has to pay as his monthly loan instalments.
• It also gives an idea of the total interest payable till the loan tenure. This helps the home buyer to choose his preferable tenure for loan. For longer tenures higher will be the total interest payable and vice-a-versa. 
• It is not easy for every home buyer to calculate his EMI using manual EMI formula. Manual EMI formula is complex. This increases the chances of wrong calculations, which will misguide the home buyers in taking the right decisions.
• It saves time for the home buyer by calculating the EMIs in seconds.    
• The home buyer can make the comparison on the multiple EMIs of the different tenures of the loans and rates and choose the EMI that best suits his budget.
  

Can a home buyer apply for a housing loan during the lockdown period? 

Yes, a home buyer can easily apply for a housing loan during the lockdown period through the bank’s online application process.   

Since the banks are not fully operational because of the lockdown restrictions and the lockdown still not been uplifted on some public transports banks have constraints on physical processing of the loan and are also experiencing delays in the loan processing. However banks have made it convenient for the home buyers to apply for a housing loan through their online portals. The home buyer can make his online home loan application with the desired bank, check his eligibility, compare and evaluate the key factors such as rate of interest, processing fees, etc. of the various banks on their respective portals while also checking on the best banks for providing best services during the lockdown period. The banks have further facilitated the online processing for the borrowers by allowing them to upload and submit the documentations online. The online applications with uploaded documents will be taken up for processing and with the successful verification the loan borrower will be provided with a provisional sanction letter. The physical processing, sanction and the disbursement of the loan will be possible only after the proper upliftment of the lockdown in the city. 

Know the best home loan interest rates, home loan eligibility, home loan in Mumbai and compare housing loans of various banks online on a single platform . It is a user friendly platform providing detailed information, comparison and evaluation on the home loan process, documentation, eligibility, ongoing offers and key factors of rate of interest, processing fees, LTV, etc. from the top banks just at a single click. 

Factors to be considered by a loan borrower before applying for a housing loan during Covid-19

The pandemic that has affected almost all the sectors & trades in the country is having severe impacts on the earning capacities of the people. The lockdown has further worsened the situation affecting the pockets and the bank balances of the people. Under such circumstances providing a housing loan, at times proves risky for the banks. The home buyer therefore must remember the following important factors before applying for a housing loan with the banks especially during the period of Covid-19.    

• Since the airlines, travel industry, hotel industry, real estate builders, diamond market, gold exporters, etc. are among the worst hit sectors, a home buyer working in these critical sectors with delayed payments or no income scenario might experience rejections to their loan application.
• The home buyer working in these sectors therefore must maintain sufficient account balances, to suffice his income eligibility for housing loan. 
• Home buyers purchasing an under-construction builder property must be careful in choosing the builder project. A project near to completion or 50% completion might be a preferred choice of funding for some banks over the projects with less than 50% completion status of the category B & C builders. Funding to under-construction projects <50% completion will be subject to scrutinizing the past records of the builders which includes the timely possession of his previous projects, defaults if any, etc. 

• For the home buyers who have availed the moratorium facility for their existing loans:
  In the event of no income earned – might face restrictions towards his housing loan application until the reflection of a regular flow of income in the accounts.
  In the event of income earned / sufficient balance in the accounts – after careful scrutiny goes for approval / rejections.  

• Some banks have revised their criteria towards FOIR (fixed obligation against income ratio), capping on the loan amounts, minimum capping on the per month income of the applicant, etc. This might affect the loan eligibility of the home buyers. 

Documents required for applying home loan

Home loan processing comprises of three processes:

a) Sanction process

b) Legal & Technical process

c) Disbursement process.

Below mentioned are the list of documents required for all the 3 processes of home loan for both salaried and self-employed home buyers.

A) Documents required for sanction process

For salaried home buyers

KYC

1. Pan card copy of all applicants.
2. Latest passport size colour photographs of all applicants.
3. Residence proof – Copy of Aadhar card & electricity bill.

Financial Documents

1. Latest 4 months salary slips.
2. Latest 2 years form 16.
3. Latest 6 months salary account statements.
4. Latest 1 year bonus copy.
5. For rental income receivable
   a) Copy of registered rental agreement.
   b) 12 months latest rental credit statement. 

Other Documents

1. Bank form duly signed and all applicants. 
2. Processing fee cheque in favour of bank.

For self-employed home buyers

KYC

1. Pan card copy of all applicants.
2. Latest passport size colour photographs of all applicants.
3. Residence proof – Copy of Aadhar card & electricity bill.

Financial Documents

1. 3 years latest financials of the applicant with Saral Copy, Balance Sheet, P&L account, Capital Account – CA certified with membership no. & USDIN no.
2. Latest 3 years Form no-26 AS.
3. Latest 1 year Copy of GST returns – 3B form.
4. Latest 12 months bank account statement of the current account (if any).
5. Latest 12 months bank account statement of all savings accounts.
6. For rental income receivable:
   a) Copy of registered rental agreement.
   b) 12 months latest rental credit statement. 

Other Documents

1. Business profile on the letter head of the company.
2. Business proof – GST registration, Ghumastha or Copy of Aadhar Udoyg.
3. Copy of contract letter if any.
4. If home buyer is:
   a) Chartered Accountant – copy of COP & passing certificate.
   b) Doctor – copy of degree certificate.
5. Processing fee cheque in favour of bank.
6. Bank form duly signed and all applicants. 

B) Documents required for legal & technical process (For Salaried and Self-employed home buyers)

For resale property purchase

1. Copy of draft agreement.
2. Copy of prior chain of agreements.
3. OC / CC + approved plan copy.
4. Copy of index 2. 
5. Latest property maintenance bill. 
6. Copy of share certificate.
7. Copy of society registration certificate.
8. Property tax receipt.

For builder property purchase (with APF)

1. Documents required for technical – cost sheet & approved plan copy from the builder.
2. Documents required for legal – nill.

For builder property purchase (Non- APF)

1. Documents required for technical – cost sheet & approved plan copy from the builder.
2. Documents required for legal – copy of draft agreement from the builder.

On the basis of the draft agreement the banks seeks lawyers opinion on the non-APF project and the lawyer may demand additional documents from the builder which are:

1. Sales Deed/Lease Deed/Development Agreement of the builder/society.
2. If a development agreement is executed, power of Attorney from the Land owner.
3. Chain of agreements from the previous landowner.
4. Layout Copy.
5. Approved Layout and building plans.
6. Commencement Certificate from Municipal Council/Corporation.
7. Completion Certificate.
8. ULC Certificate for Clearance of land under ‘Urban Land Ceiling Act’1976.
9. N.A permission and Latest N.A tax receipt.
10. Property Card / 7/12 Extract.
11. 6D Extract.
12. 8 A Extract, if applicable.
13. If the land is within the Survey Limits, collect the City Survey Extract instead of the 7/12, 6D, 8A.
14. Title and Search Report.
15. Copy of bye laws and registration certificate of the society in case the society is a registered  cooperative society.
16. Index 2 issued by the sub registrar.
17. Copy of Draft sale agreement.
18. Partnership deed/MOA/AOA of the builder /Developer.
19. Marketing Brochure / highlights of the project.
20. Copies of Sanction plan with technical request.
21. Carpet and Saleable area Statement.
22. Public Notice and its objection if any.
23. APF application form.
24. Covering Letter indicating the LOD submitted.
25. Cancelled cheques.
26. Construction Schedule.
27. Payment Schedule.
28. RERA Certificate.

C) Documents required for disbursement process (For Salaried and Self-employed home buyers)

For resale property 

1. Original copy of prior chain of agreement with stamp duty duly paid & registration done along-with index 2 and Occupancy Certificate/CC.
2. Bank account statement for OCR proof.
3. Original Copy of share certificate – if issued.
4. NOC from society duly signed by chairman & society secretary.
5. Seller documents – self attested pan card copy, aadhaar card copy, 3 months bank account statement & seller verification form.  
6. Any other documents as required by the legal report and sanction conditions.
7. Latest Property tax receipt copy.
8. Copy of Society registration.
9. Copy of mortgage intimation.
10. If Seller BT – copy of Original LOD (list of document) & foreclosure letter is mandatory.
11. For CIDCO/MHADA Propert
    a) Copy of conveyance deed, original NOC & transfer letter from
    b) CIDCO/ MHADA – if conveyance deed is executed.
    Copy of tri-party agreement & lease agreement – if conveyance deed is not executed. 
12. 7-Security mandate cheques in favour of BANK.
13. Docket kit duly signed by all applicants.

For Builder Property

1. Original Agreement with index2.
2. Demand letter from Builder.
3. NOC from Builder.
4. Bank account statement for OCR proof.
5. ROC and Lien letter from Builder – if project is funded by the bank. 
6. Payment receipt from Builder.
7. Architecture report from Builder.
8. Allotment letter or Possession letter from Builder.
9. 7 security mandate cheque in favour of Bank.
10. Docket kit duly signed by all applicants.
    
    
    Additional documents if the project is Non-APF
11. Title search report.
12. Any other documents as per the legal report of the property. 

Common home loan mistakes

Selecting the best suitable home loan is crucial for a home buyer. A wrong selection of the best bank for home loan and the suitable home loan product will cost the home buyer. Following are the common home loan mistakes that a home buyer commits.

• Forget to make comparisons of offers from other banks.  
• Wrong selection of home loan products.
• Miss-out reading the fine prints i.e. the terms and conditions on the loan application form, offer documents and agreement papers. 
• Do not collect the acknowledgment copy of the submitted documents.
• Forget to take written communications from the banking representatives. 
• Trusting the verbal promises made by the sales representative. 
• Not carefully reading the offer documents and the application forms. 
• Blindly signing the lengthy loan forms and agreements as suggested by the sales representatives. Blind signatures are consent of acceptance that authorises banks to cross sell. 
• Apply for short repayment tenure on home loans to save on the interest cost and land up paying higher EMIs, which at times can be a wrong selection of the loan tenure.
• Not knowing the other charges which cost a home loan.
• Not having enough own contribution and expecting the banks to over-fund for the shortfall amount of OCR. 
• Giving up on the job to become an entrepreneur, fails to produce business continuity proof and income stability proof to the banks which are mandatory for self-employed home buyers.  

Reasons why a home loan gets rejected

The reasons for rejections of the home loan applications are case specific. Not qualifying for a loan or eligibility issue of the home buyer, property issues and non availability of documents are the broad reasons for home loan rejections. The home buyer has to be careful while applying for a housing loan. Multiple rejections of his loan applications may hamper his CIBIL score. (Know How Your Home Loan Inquiry Impacts Your CIBIL Scores)

Mentioned below are some of the reasons for home loan rejections.

• Income eligibility of the home buyer.
• Age of the home buyer.
• Low CIBIL score of the home buyer (applicant) and or the co-applicant.
• Negative profile, negative industry or negative business of the home buyer. 
• Negative FI (first information) visit of the home buyer.
• Home buyer who is a frequent job hopper.
• LTV constraints on the property funding.
• Black listed property, project, area, builder or developer.
• Builder not approved or the project of the builder is not approved.
• Loan defaults & unpaid dues of the home buyers. 
• Black listed countries such as Pakistan, Afghanistan, Nigeria, Bhutan, China, Nepal, Bangladesh, Sri Lanka, Iran, North Korea (Democratic People’s Republic of Korea), Cuba, Syria, Sudan, and Crimea Region of Ukraine, Macau, Hong Kong for NRI funding for home loans.
• Property legal issues such as unclear title, suit filed on the property, property not registered, stamp duty not paid, etc. 
• Technical issues in the property such as property valuation, illegal construction, illegal extensions, age of the property, etc. 
• Multiple funding of properties. Some banks have restrictions on funding on the number of properties of the home buyers.
• Processing fees cheque bounce. Home buyer having insufficient account balances in either of his accounts or subsequent accounts of the co-applicants towards the deduction of processing fees on the home loan.  
• End-use for the home loan top-up amount is not justified. Home buyers must hold a valid reason for applying a top-up on home loan. Valid reasons are- for children education, marriage, home renovation & repairs, business expansions, etc. According to the banking norms a top-up amount cannot be utilized for trading and investments in stock markets, mutual funds, buying a chawl property, to start new business, etc.    

Dealing with increasing interest rates

With changing economic conditions and inflation in the country the Reserve Bank of India keeps altering the repo rates for the banks. The alteration in the repo rates have a direct impact on the lending rates of the banks which further fluctuates the interest rates for home loans. With reduced repo rates home loan becomes cheaper for the home buyers and the home loan borrowers and vice-a-versa. While the hike in the interest rates is immediately implemented by the banks, the benefits of the reduced interest rates are not transferred to the home loan borrowers, and if transferred they are transferred with delays. Therefore if the interest rate of the home buyer is not changed irrespective of the reduction in the interest rates by the banks, it probably is a time for the home buyer to refinance his loan. Refinancing means transferring a high interest rate home loan to a low interest rate home loan of the another bank. Click to read more on refinancing. 

Learn the other ways to tackle the increasing interest rates of home loans, read our post Know How To Deal With The Increasing Interest Rates Of Housing Loans.

Home Loan FAQ

> What are the current housing loan interest rates in India?

Present housing loan interest rates in India range in 7.00% to 12.00%.

> What is the right time to apply for a home loan?

• The right time to apply for a loan is after identifying the property and before finalizing the property.
• Before identifying the property, apply for a pre-sanction loan to know the loan eligibility.

> Is Co-applicant mandatory for home loan? 

No. A co-applicant is not mandatory for home loan. But banks insist on having a co-applicant in the loan application. A co-applicant is the co-borrower for the loan and is equally responsible for loan repayment along-with the primary borrower.

> Who can be a co-applicant?

• The co-applicant can be a spouse, parents, children (not minors), siblings who are in blood relation with an applicant. 
• Co-applicant can be salaried/ self-employed/ pensioner/ housewife/ student and even a company.
• All property co-owners mandatorily have to be the co-applicants to the loan.

> How to increase loan eligibility?

• By adding an eligible co-applicant to the loan.
• By adding variable income from other sources such as perks and reimbursements from the company, rental income, agricultural income, etc.
• By repaying existing obligations such as a personal loan, business loan, consumer loan, car loan, outstanding dues on credit card, etc.

> What is the turnaround time for loan processing? 

• For loan sanction process (5-15 working days) 
  For salaried home buyers: 5-7 working days.
  For self-employed home buyers: 10-15 working days.

• For Disbursement (3-15 working days)

> What are the income tax benefits on home loan? 

Tax exemptions are available for:

• Principal amount repaid up-to 1.5lakhs in a year. (under section 80C of the income tax act)
• Interest paid up-to 2lakhs in a year. (under section 24b)

> Is there any Lock-In period for home loan?

There is no lock-in period for home loans with floating interest rates. For home loans with fixed interest rate lock-in periods may vary from bank to bank, which can be 1year, 3years, 5 years, 7years or 10years.

> What is better: a fixed rate home loan or a floating rate home loan?

A home buyer has to choose a home loan that best suits him. A fixed interest rate home loan secures from any fluctuations of interest rates in the markets while a floating interest rate home loan allows enjoying the benefits of reduced interest rates.

• A fixed rate home loan is preferable when a home buyer knows – there will be a significant increase in the interest rates in the near future.
• A floating interest rate is preferable when a home buyer assumes the interest rates to fall in the near future.

> Does switching from fixed rate to floating rate home loan, is allowed?

• Switching the interest rate within the bank.
  Banks allow a home buyer to switch to a floating interest rate anytime during the tenure of his fixed interest rate home loan by paying a small fee. 
• Switching the interest rates by switching the bank
  Not allowed till the lock-in tenure.
  Allowed in the lock-in period by paying a prepayment penalty which ranges from 2%-6% on the outstanding loan amount.

> What is the EMI for a 25lakhs home loan?

Per lakh EMI for 25lakhs home loan at the latest interest rate of 7.00% pa is:

•  Rs.665/- for 30 years.
•  Rs.775/- for 20 years.

Total EMI payable will be Rs.16, 633/- for 30 years & Rs.19, 382/ for 20 years.

> How to reduce home loan interest rates? 

• Make part payments towards the loan.
• Increase the home loan repayment tenure.
• Increase the per month EMI outgo.
• Switch loan to a new bank with low interest rates. 

> What is the difference between EMI and Pre-EMI?

Pre-Emi refers to the interest paid on the partial disbursements of home loan amount. The pre-EMI period is not a part of the loan tenure. 

EMI refers to a fixed amount paid to the bank towards the repayment of the housing loan. The fixed amount comprises the interest amount and the principal amount which are structured in a way that in the initial years of the loan, the interest component is much larger than the principal component, while towards the latter half of the loan, the principal component is much larger.

> Which banks give the cheapest home loan?

The Canara bank is providing the lowest interest rate for home loan which is @ 7%, followed by ICICI bank & HDFC bank. Even after evaluation the processing fees and other charges on home loan Canara bank is providing the cheapest home loan. 

> What are the stamp duty charges on home loan?

The stamp duty charge of 0.20% on the home loan amount needs to be paid to the government before taking the disbursement of the loan.

> Can a borrower apply for a top-up loan? What will be the interest rate for a top-up loan?

Yes, a borrower can apply for a top-up loan provided he has made the timely repayments of his loan EMIs. A top-up with the existing bank can be obtained with minimum documentation, but the interest rates on top-up loans are comparatively higher than the home loan rates by 0.25% – 1%.

However a top-up loan applied along-with the balance transfers to the new banks, the top-up rate will be similar to the new home loan rates.

> Can a borrower transfer his home loan to another bank?

Yes. A borrower can any time during his loan tenure of floating interest rate home loan transfer his loan to another bank. Balance transfer is done:

• To enjoy lower interest rates on home loan.
• To get longer repayment tenures.
• To shift from fixed rate to floating rate home loan.
• To apply for a top-up loan at the same rate of home loan.

> What are the charges for switching the loan to the new bank?

Switching a loan to a new bank means the loan will be treated as a fresh home loan. A loan borrower has to once again pay all the relevant charges for loan namely- processing fees (0.10%-1% on the loan amount), administrative cost, legal & technical cost, stamp duty cost of 0.20% on the loan amount, etc. 

                              

> Can a borrower repay his loan ahead of schedule? What are the charges if any?

Yes. A borrower can repay his loan ahead of schedule by making lump sum payments towards part or full prepayment of the loan amount.

No lock-in period and nil Pre & part payment charges – for floating rate home loan.

Lock-in period + pre & part payment charges applicable – for fixed rate home loan.

> What do you mean by “Power of attorney” in NRI home loans?

A power of attorney allows a person/NRI to grant another person the right to make decisions regarding the person’s assets, finances and real estate properties, in the absence of the NRI.  

> Is it mandatory to apply for mortgage intimation?

Intimation to mortgage is a new process introduced & practised only in the state of Maharashtra. It means intimating the sub-registrar office within 30 days of the loan taken by the borrower in the bank’s prescribed format. An mandatory cost of Rs.1300 towards notice of intimation is applicable to all home loan borrowers. Failure to intimate the sub-registrar will cost the borrower a penalty of 1% on the loan amount by the state government. 

> Can a home buyer apply for a home loan during the lockdown?

A home buyer can apply for a home loan during the lockdown, hassle free 

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