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| Home Loans |
What
are the types of housing loans available?
Various housing loans are offered by financial institutions.
Prominent among these are:
a)Home Loans - This is the basic housing loan for
the purchase of a new home which covers cost of the flat
and parking space, deposits and charges, stamp duty and
registration charges.
b)Home Improvement Loans - For implementing repair
works and renovations in a home that has already been
purchased by you.
c)Home Construction Loans - For the construction
of a new house. d)Home Extension Loans - For expanding
or extending an existing house.
e)Home Conversion Loans - The existing loan on
a house is transferred to a new house, including the extra
amount required, eliminating the need for pre-payment
of the previous loan.
f)Land Purchase Loans - For both home construction
or investment purposes.
g)Bridge Loans - For people who wish to sell the
existing house and purchase another and need finance for
the new house, until a buyer is found for the old house.
h)Balance Transfer - To pay off an existing housing
loan and avail of the option of a loan with a lower rate
of interest.
i)Refinance Loans - To pay off the debt you have
incurred from private sources such as relatives and friends,
for the purchase of your present house.
j)Loans To NRIs - As per requirements of NRIs who
want to buy a house in India. |
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2. Who can apply for
a housing loan?
Any person, including Non Resident Indians, with a steady
source of income can borrow funds for financing the cost
of a flat from housing finance companies and banks. |
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3. Can a Non Resident
Indian avail of housing loans?
Yes. Repayment of loan should be made within a period
not exceeding 20 years out of inward remittances or out
of funds held in the borrower's NRE/FCNR/NRO accounts.
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4. How much can a person
borrow?
Loans are generally disbursed upto a maximum of 85% of
the cost of the flat. The balance 15% cost of the flat
is to be funded by the flat purchaser from his own contribution.
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5. How does Neelkanth
assist a flat purchaser for procuring Housing Finance?
All projects at Neelkanth are pre approved for grant of
home loans by leading housing finance companies and banks.
The Neelkanth sales team liase with the all leading Housing
Finance Institutions for processing the loan, documentation
and disbursement of loans. |
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6. What is an EMI?
Equated Monthly Installment ("EMI") is the amount comprising
a portion of the interest and the principal loan amount
which is payable by a borrower to the lender every month.
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7. How is the rate of
interest calculated in India?
Interest rates vary from time to time and from institution
to institution. The current trend ranges from about 9%
to 11% pa. The interest calculated either on a daily or
monthly reducing or yearly reducing balance. |
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8. What is a fixed-rate
housing loan?
A fixed-rate housing loan is a loan where the rate of
interest is constant through the entire term of the loan
period. |
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9. What is a floating
interest rate housing loan?
A floating interest rate loan is a loan where the interest
rate payable is linked to the market conditions such as
the bank retail prime lending rate and rises and falls
with the bank rate varies. Hence a borrower bears the
risk of interest rate fluctuations. Floating interest
rates offered are usually lower than the fixed interest
rates. |
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10. What is the difference
between monthly reducing interest rate and yearly reducing
interest rate?
In a monthly reducing interest system the principal on
which interest is paid reduces every month as EMI is paid.
In the annual reducing system the principal is reduced
at the end of the year, and the borrower pays interest
on a certain portion of the principal, which is actually
paid back to the lender. The EMI for the monthly reducing
system is effectively lesser than the yearly reducing
system of calculating interest. |
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11. What are the repayment
period options?
Repayment period options range generally from 5 to 20
years. |
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12. What are the charges
for availing a housing loan?
Processing Fees - payable to the lender on applying
for a loan and is either a fixed amount not linked to
the loan or may also be a percentage of the loan amount.
Commitment Fees - in case the loan is not availed
of within a stipulated period of time after it is processed
and sanctioned then some institutions levy a commitment
fee.
Prepayment Penalty - between 1% and 2% of the amount
being pre paid is charged by some institutions when a
loan is paid back before the end of the agreed duration.
Stamp duty and registration fee on a deed of mortgage.
Miscellaneous costs - such as administrative costs,
legal documentation charges, technical consultant charges.
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13. What security is
required for a housing loan?
The flat purchased is the primary security and is mortgaged
to the lending institution till the entire loan is repaid.
Additional security such as life insurance policies, shares,
bonds, fixed deposit receipts, national savings certificates
can also be offered, as per the requirements of the institution.
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14. Do lending companies
require guarantors?
Yes. Many lending companies require 1 guarantor. |
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15. What is the time
required for approval of a loan application?
About 15 - 20 days |
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16. What is the time
required for disbursement of loans?
Usually loans are disbursed within 5-7 days after completion
of verification by the institution, documentation (such
as handing over of the original agreement for sale / lodging
receipt to the lender) and completion of all relevant
procedures and only after proof that the borrower's own
contribution has been paid by him to the Vendor / Builder
/ Developer. |
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17. Do institutions
accept joint loan applications?
Yes. |
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18. What are the documents required at the time
of making an Application for a housing loan?
- Latest salary slip (proof of income for salaried
individuals)
- Photographs
- Proof of age
- Identity papers
- Proof of residence
- Bank statements for the previous six months
- For self employed, certified copies of balance sheet,
profit and loss statement and tax challans / tax returns
for the previous 3 years For partnership/private limited
companies, the Articles of Association, partnership
deed and details about the firm
- For NRIs Latest salary certificate specifying, Name
(as it appears in the passport), Date of joining,
Passport Number, Designation, Perquisites and salary,
Photocopy of labour card/identity card, Photocopy
of valid resident visa stamped on the passport, Photocopy
of monthly statement of local bank account, Property
related documents.
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19. Do lending institutions offer incentives for
housing finance?
Sometimes lending institutions offer incentives for
a specified period or under a special scheme. Incentives
could be any of the following:
- Free accident insurance
- Waiving of pre payment penalty
- Waiving of processing fee
- Property insurance
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20. Which sources, other than housing finance companies,
can give loans for purchasing a flat?
A loan for purchasing a flat can be availed of from
the following sources:
- Housing Finance Companies
- Banks
- Employer
- Insurance company
- Against Provident Fund Account , Fixed Deposits,
Post office Savings
- Against Shares and Debentures of listed companies,
government bonds and securities.
- Private parties such as relatives, friends
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