|
home guide - faqs
- gated community |
| |
| |
|
|
| |
| Q1: What Is The Loan
Amount Which Can Be Sanctioned? |
|
|
| HFCs sanction loan amounts
based on eligibility depending
upon your repayment capacity
(which takes into account your
age, qualifications, assets,
liabilities, stability of
occupation, savings history) and
according to your income. The
maximum loan that can be
sanctioned varies with housing
finance companies, generally the
maximum loan amount is 80 to 85%
of the cost of your home. |
| |
| Q2: When and how can an
application be made for home
loans? |
| |
|
An application for home loans
can be made any time after you
have decided to
acquire/construct a property,
even if the property has not
been selected or the
construction has not commenced.
An application form along with
the necessary documents has to
be submitted to the respective
finance company after which they
would review the application and
decide on its status. |
| |
| Q3: How much time does it
take to get an application
processed and the loan getting
sanctioned? |
| |
| The processing of a home
loan application, if the
documents are in order takes
around fifteen days and it takes
another week for the company to
check out the property papers
and make the disbursement. |
| |
| Q4:
What is a fixed interest rate? |
| |
| A Fixed interest rate for
Home loans is one where the rate
charged by the HFC on the loan
amount is constant over the
tenure of the loan. A fixed
interest rate protects the
borrower from a rise in home
loan rates. While on the flip
side, he may not benefit if the
market rates were to fall.
Therefore, it is advisable to go
in for a fixed rate if you feel
that the rate of interests in
the market have touched rock
bottom and the rates can only
move upwards. |
| |
| Q5:
What is a floating interest
rate? |
| |
| A Floating interest rate for
home loans is a loan where the
interest rate which is payable
is linked to the market rate
e.g. the bank lending rate. The
interest rate payable by you
will also rise and fall as per
bank lending rates, which may
fluctuate. |
| |
| Q6:
What is the basis of interest
rates calculation? |
| |
| Home loans interest rate in
India is usually calculated
either on monthly reducing or
yearly reducing balance. In the
Monthly reducing system, the
principal on which you pay
interest reduces every month as
you pay your EMI. While in the
Annual Reducing system the
principal is reduced at the end
of the year, thus continuing to
pay interest on a certain
portion of the principal which
you have actually paid back to
the lender thus making EMI for
the monthly reducing system
effectively lesser than the
second system of calculating
interest. |
| |
| Q7:
What are Collateral Securities
taken by the Housing Finance
Companies? |
| |
| Collateral securities are
the additional securities taken
by the HFCs which may be in the
form of guarantee from one or
two persons, assignment of life
insurance policies, deposit of
shares and units or other
securities. These additional
securities are taken so that if
a loan is not paid back,
recourse may be taken to such
securities instead of depending
upon the mortgage of the
property which is the last
resort. |
| |
| Q8:
What are the repayment period
options? |
| |
| Repayment period options
range generally from 5 to 15
years. A 20-year repayment
period option is also provided
by a few HFC's usually at a
higher interest rate. |
| |
| Q9:
What is Pre EMI? |
| |
| Pre EMI is the amount of
loan paid in simple interest as
agreed upon with the HFC for a
property that's yet under
construction. The HFC makes the
disbursement in parts as per the
stage of construction of your
property. Once the property is
ready for possession and the
possession letter is produced to
the HFC, the final disbursement
is made. You start paying your
EMI from the month following
which the full disbursement is
made. |
| |
| Q10:
What is meant by an EMI (Equated
Monthly Instalment)? |
| |
| An EMI refers to the fixed
sum of money that you will be
paying to the housing finance
company every month against a
loan amount borrowed for a fixed
period of time. An EMI has two
components, the principal
component and the interest
component. The amount of the EMI
depends on the quantum of loan,
interest rate applicable and the
term of the loan. The loan
carrying the lower EMI for the
same tenure is the cheaper
option. |
| |
| Q11:
Can one repay the loan ahead of
schedule? |
| |
| It is possible to repay a
loan ahead of schedule. A form
of a penalty, termed as a
pre-payment penalty is payable
to certain institutions which
varies from one HFC to another. |
| |
| Q12:
How does one get a tax benefit
on the loan? |
| |
| There is eligibility for
certain tax benefits on
principal and interest
components of a housing loan
under the Income Tax Act, 1961.
Moreover, you can get added tax
benefits under Sec 88 on
repayment of principal amount.
Moreover, you can get added tax
benefits under Sec 80 C on
repayment of principal amount up
to Rs. 1, 00,000 p.a. that can
further reduce your tax
liability by about Rs. 30,000
p.a. |
| |
| Q13:
Does the property on which home
loan is taken have to be
insured? |
| |
| You will have to ensure that
the property is duly and
properly insured for fire and
other appropriate hazards, as
required by the HFC during the
period of the loan and will have
to produce evidence each year
and/or whenever required by the
HFC. The HFC will be the
beneficiary of the insurance
policy and will be an additional
cost that will add to the final
cost of purchase of the
property. |
| |
| Q14:
Does the agreement for sale have
to be registered? |
| |
| In many states
in India, registration of the
property is lawfully mandatory
the Agreement for Sale between
the developer and the home
buyer. You are advised, in your
own interest to lodge the
Agreement for Sale at the office
of the Sub-registrar appointed
by the State Government under
the Indian Registration Act,
1908 |
| |
| |
| |