Each lender has their own requirements for the set of documents to be submitted with loan applications. Please check with individual lender for the exact set of documents. Some of the documents generally required by various lenders are as follows:
- Completed Loan Application
- Passport size photographs
- Proof of Identity: PAN Card/ Voters ID/ Passport/ Driving License etc.
- Proof of Residence: Recent Telephone Bill/ Electricity Bill/ Property tax receipt/ Passport/ Voters ID etc.
- Statements of Bank Account/ Pass Book for last 6 months to 1 year
- Statements of any investments showing financial background of borrower (fixed deposits, shares, fixed assets such as land etc.)
- Sale Deed
- Agreement for Sale
- Copy of the approved plan for the proposed construction / extension / addition
- Detailed cost estimate / valuation report from Bank’s Panel Chartered Engineer / Architect
- Allotment letter of Co-operative Housing Society / Apartment Owners’ Association / Housing Board / NOC from the Society / Association / Builders / Housing Board
- Legal Scrutiny Report, EC for the past 13 years, Property Tax paid receipt, Khata and permission for mortgage, wherever necessary
Additional Documents for Salaried Persons
- Salary Certificate & Form No. 16
- Recent Salary Slips with all deductions
Additional Documents for Non-Salaried Persons
- IT Returns filed for last several (2 or 3 typically) years
- Proof of business address
- Document describing nature of business, year of establishment, type of organization etc.
Balance Sheet and Profit & Loss Statements for the past several (2 or 3 typically) years
EMI stands for Equated Monthly Installments and represents the amount of money you have to pay each month in order to repay your loan. EMI remains the same throughout the loan period (assuming the interest rate remains the same and there are no prepayments of the loan). The EMI is applied towards paying off the principal (or loan amount) as well the interest on the loan. EMI is computed based on the loan amount, the interest rate and the loan period.
EMI is an important aspect of your loan search process. You may have a loan amount in mind and would like to determine how much you may have to pay each monthly and whether you can afford it. Or you may have a EMI in mind (based on how much you can afford to pay for your home loan each month) and would like to determine the amount of loan you can get and thereby determine the value of the house you can purchase. At Ratekhoj.com, we provide you two search options to satisfy these needs:
- Input a loan amount and get the EMI for each loan option that you are eligible for based on various lender criteria.
Input an EMI and get the maximum loan amount you are eligible for based on various lender criteria.
Fees are essentially costs to be borne by you in addition to the interest on the loan. The fees may be one-time fees or periodic fees (such as quarterly fees) and may depend on the loan amount. Fees maybe under different names such as Processing Fees, Administrative Fees, Prepayment Fees/Penalty etc. Your total cost of the loan is basically the interest paid + any fees you incur during the loan period.
- Processing Fees: Typically related to the loan application process and is charged when a loan is processed. Note that processing fees maybe refundable and maybe charged even if the loan itself is not approved. Please check with the lender before filing a loan application. It can typically be between 0.5%-1% of the loan amount and could have certain minimum and maximum amount restrictions. For example, a lender could have a processing fee of 0.5 of loan amount with a minimum of Rs. 1000 and a maximum of Rs. 10000. Processing fees could also vary based on the actual loan amount also.
- Administrative Fees: Some lenders have fees to maintain the loan which are charged periodically (such as quarterly or per annum).
- Documentation Fees: Some lenders may charge fees for preparing documents etc.
- Commitment Fees: Some lenders may charge a fee in case the approved loan is not availed by you within a certain stipulated time period.
- Prepayment Fees or Penalty: Some lenders charge some penalty or fees when you prepay part of the loan amount. This can sometimes depend on the percentage of outstanding loan amount prepaid. Typically this prepayment fees can be upto 2% of the prepayment amount. Some lenders may not have any prepayment penalty at all. This maybe an important consideration if you plan to prepay part of the loan before the agreed loan period.
Delayed Payment Fees: If your monthly payment gets delayed for any reason, some lenders may charge this fee.
The answer to this is entirely up to individual lenders who each have their own criteria to determine the maximum amount of loan you may be approved for. However, there are certain maximum loan amount restrictions that are published by individual lenders and that can provide you an idea of the maximum loan amount you can expect to get. Some examples of the conditions lenders provide as a basis for maximum loan amount eligibility are as follows:
- Max loan amount as a multiple of your income: Some lenders may specify that you are eligible for a maximum loan of some multiple of your net monthly income (NAI), gross monthly income (GMI), net annual income (NAI) or gross annual income (GAI). For example, a lender may give a maximum loan of 60 times your NAI. This can also depend on whether the borrower is Salaried or Non-Salaried, the age of the borrower, years to retirement etc.
- Ratio of EMI/NMI or EMI/GMI: Some lenders may have a limit on the amount of money you pay each month for your loan (which is EMI) as a percentage of your Net Monthly Income (NMI) or Gross Monthly Income (GAI). This is basically represented by giving a maximum ration of EMI/NMI or EMI/GMI allowed. The EMI/NMI or EMI/GMI ratios can be anywhere between 30%-70% depending on your financial background, age etc.
Absolute Maximum Amount: Lenders may also have an absolute maximum limit of the amount of loan they give for home loans such as Rs. 50 lakhs.
A floating rate home loan is one where the interest rate on the loan may change during the loan period. In other words, the rate may go up or down in the future after you have taken the loan. Typically the floating rate is based on a certain benchmark rate that is used by the lender. As the benchmark rate changes, the floating rate on your home loan also changes.
A fixed rate home loan is one where the interest rate on the loan does not change during the loan period.
Note however that certain lenders are advertising fixed rate home loans with a ‘force majeure’ clause wherein they may change the interest rate during the loan period. Any fixed rate loans have to be carefully analyzed by you for such clauses to determine the risks of clause being invoked by the lender and the rates going up even for fixed rate home loans.
It is a personal choice based on your financial situation and an evaluation of the interest rates trends in the future. Floating home rates are tied to some benchmark interest rate by the lender and the rates may fluctuate (in either direction) depending on that benchmark. Fixed rate home loans provide you with the ability to plan for a fixed amount of loan payment every month for the entire loan period. If you anticipate future earnings increases and can withstand rate fluctuations, then floating rate loans may be a choice to consider for you.
The cheapest loan option is one where the total interest paid + the total fees paid over the loan duration is the smallest amount.
It depends on the lenders, but typical times maybe between 2-3 weeks once all required documentation is provided to the lender.
The loan duration you choose has a direct impact on the equated monthly installments (EMI) or monthly payments you have to make for the loan as well as how much interest you pay for the loan over the loan duration. The longer the loan duration, the smaller the EMI and the larger the total interest you have to pay for the same loan amount and interest rate. Conversely, the shorter the loan duration, the larger the EMI and smaller the total interest you pay for the loan.
The total interest you pay over the loan period is a cost to you for taking the loan and one of the goals of choosing loan duration should be to minimize it. So you have to choose a loan duration based on how much you can afford to pay as EMI each month towards the loan based on your income and financial situation, while trying to minimize how much you would pay as the total interest over the loan period.
Most lenders have a maximum loan repayment period of 20 years with some offering even longer repayment periods.
NMI stands for Net Monthly Income. It’s basically your after tax take home income every month. Note that some lenders would also require you to deduct your other financial obligations such as monthly payments towards other loans or credit cards etc. from your take home pay to arrive at the NMI value. Typically when applying for a home loan, both your and your spouse’s income together is considered for any loan eligibility calculations. So you can use the combined take home pay of both spouses as NMI for most lenders. Some lenders also allow the addition of the income of any close family members (children, parents etc.) staying with you to increase loan eligibility.
NAI stands for Net Annual Income and is the same as above on a yearly basis.
GMI stands for Gross Monthly Income. It’s basically your pretax income every month. Typically when applying for a home loan, both your and your spouse’s income together is considered for any loan eligibility calculations. So you can use the combined income of both spouses as GMI for most lenders. Some lenders also allow the addition of the income of any close family members (children, parents etc.) staying with you to increase loan eligibility.
GAI stands for Gross Annual Income and is the same as above on a yearly basis.
NMI/NAI/GMI/GAI is used by the lenders as a measure of your ability to repay the loan. Hence they use it to determine your loan eligibility and the maximum amount of loan you can be given
Different lenders use age differently in loan eligibility determination. Most lenders lend only to people between 18 and 65 with the max age limit capped at the retirement age. Lenders also use age as a factor in determination of the max loan amount given.