Q1. What is a Home Loan?
Home loan is a sum of money expended by a bank or financial institution (lender) to an individual or individuals for the purpose of buying a residential property.The bank/financial institution holds the title of residential property until the disbursed loan is paid and fully along with the calculated interest.
Q2. What is the tenure of a home loan?
Home loans are generally long term borrowing instruments ranging from a minimum tenure of 5 years to a maximum of 30 years, depending on the loan amount that is assented to you along with a number of other influential factors.
Q3. What is the Eligibility Criteria for a Home Loan?
Anyone with a regular source of income whether self employed or salaried individuals/professionals can apply for home loans. The individual applying for loan should have achieved at least 21 years of age when the tenure of the loan begins and should not exceed 65 years of age at the end of the loan tenure. The lender might also take into consideration specifics such as the minimum and maximum age limits, minimum income level, etc. And these might change from one lender to another. The residential project in Dehradun or any city should be as per authorized norms.
Q5. What do banks consider when granting a home loan?
For purpose of buying a property in Dehradun or any other city. Once repayment capacity determines your eligibility to apply for home loan, lenders consider the following factors:
- Income level of the applicant
- Age of the applicant
- Qualification (stability and occupation continuity)
- Resident status (maximum limit for an Indian resident differs from that of a non-resident)
- Spouse’s income (household income is taken into account when there is a co-applicant)
- No. of dependants (it is a measure of repayment capacity)
- Credit history and score (past repayment track record)
- Status of existing loans
Q6. Who can be joint borrowers in case of a home loan?
Immediate family members such as your parents, spouse and children are allowed to be joint borrowers in case of a home loan.
Q7. What is a fixed rate home loan?
Fixed rate home loans are offered at a predetermined interest rate and these remain unchanged during the loan period irrespective of market conditions. This can be a huge benefit when market dynamicity starts affecting interest rates.
Q8. What are the key charges associated with a home loan process?
- Processing Fee- A fee is paid to the lender known as processing fee, while applying for loan. The fee paid can be either a percentage of the loan amount or a fixed amount that is paid for carrying out the loan sanction formalities i.e. the processing fees.
- Pre-payment Charges- Banks/ financial institutions might charge a penalty if the entire loan amount is paid off before completion of the loan tenure. The penalty amount also known as foreclosure/pre-payment charges could be a maximum of 5% of the loan amount that is paid off before the completion of loan tenure.
- Miscellaneous charges- Documentation, stamp duty, credit bureau report issuance charges and consultant charges are considered as miscellaneous charges by some lenders.
Q9. Is having a good credit record important for a home loan?
For a home loan, lenders want to ensure that they will get their money back. Therefore, the loan sanctioning authority will check your credit history for sure before sanctioning a home loan to you. If you have a good credit record/history you will be categorized as a low risk borrower and you may be able to get preferred (low) interest rates and waivers on various bank fees on the basis of your credit history.