Home Finance

Features

Basic Features of such type of Finance

• These are secured advances.
• Collateral is usually the property that is being funded. Existing property can also be put up as security.
• Interest rates are flexible being either Fixed, Floating or a combination of fixed and floating.
• Interest rates depend on client's profile.
• Home loan interest rates are lower when compared to unsecured personal advances.
• The advance can be used to fund property for residential or investment purposes.
• Amounts offered are higher than under other types of loans; up to 75 to 90% of the property value.
• Repayments are made in EMIs (Equated Monthly Instalments).
• Pre-payments are allowed, to reduce liability.
• They are long-term in nature; tenors usually vary between 5 - 30 years
• Non-interest charges include processing fees, pre-payment charges, inspection fees, documentation fees etc.
• Co-applicants/joint-applicants are allowed.
• They qualify for tax benefits as per provisions of the IT Act, 1961 (subject to changes).

Every lender assesses a customer differently but, by and large, the basic criteria a borrower should satisfy to be eligible for a loan are outlined below:

Eligibility

• Employment: Ability to service interest charges, as reflected in the borrower’s earning capacity, is important. Borrowers should be salaried employees or self-employed persons (professional/non-professional) OR be in employment/business for at least 3 years of which current employment should account for at least 1 year.
• Income: A minimum income varying between Rs.5 - 7 lakhs would be required. This depends on the nature of employment i.e. salaried or self-employed.
• Credit Rating: A good credit score is required (a score of 750-900 from CIBIL is considered good). Besides this, a healthy financial background is vital for approval and to determine the interest rate and loan amount.
• Current Obligation: His payment track record of any Loan which had been taken by the customer in the past, even though currently closed and EMI of any existing loan may be considered while calculating loan eligibility
• Age: The minimum age at the time of application should be 21 years. Repayments have to be completed before the age of 60 or 65.
• Security: The collateral offered by the borrower like type of property - commercial/residential or industrial and usage pattern of same.