Home Loan
Buying a house is perhaps the most fundamental aspiration for most people. In today’s time, making this dream a reality has become really easy, thanks to the variety of Home Loan options available in the market.

So whether it is a first home that you are looking at or the second, whether it is for you and your family to live in or to simply make an investment for the future, Home Loans make it possible. So what exactly is a home loan?

A home loan is a type of loan where the consumer borrows money from a lender, to purchase a residential property and offers the same property to the lender as a security.
  1. Purchase a property within a residential development which is currently under-construction
  2. Purchase a ready property, from a builder or its current owner
  3. Purchase a plot ’ in a private development, from a current owner or from a government development authority
  4. Finance the construction of your house on a plot you already own
  5. Purchase a plot as well as finance the construction of your home on it.
Most banks lend as per the under-mentioned grid, provided the borrower can demonstrate the ability to repay the loan amount.

Loan amount % of Cost of Property
a) Up to Rs. 25 lakhs90%
b) More than Rs. 25 lakhs & up to Rs. 75 lakhs          80%
c) Above Rs. 75 lakhs 75%
You can apply for a Home Loan even before you begin the search for a property. The bank will look at your income details and give you a pre-sanction on the basis of your income eligibility. This will give you the confidence to decide on the budget that you have for your property buying decision. The final loan amount will of course be determined, once you provide the property cost and other details to the bank. They will fund a specific percentage of the property cost, subject to your income eligibility and the balance will be your margin requirement. Also refer the section on - ’How much of the property cost will the bank finance’.
Your Home Loan eligibility is determined after looking at the following:

  • Your current Income
  • The nature and continuity of your employment
  • Your current obligations i.e. the installments (EMI’s) you are currently paying, your credit cardbalance, other credit limits availed
  • Your credit history
  • The lending bank or institution will also consider which property you are buying. In the event it is a property under construction by a developer, the credibility of the developer and past performance on their projects will also determine how much the lender is willing to lend against such a property.
The purpose of having a co-applicant to a loan is to be able to club the income of your co-applicant and yourself to get a higher eligibility on your home loan. All property owners need to necessarily be co-applicants on the loan. Other members of ones immediate family may also become co-applicants to a home loan viz. spouses, parents, children& siblings. Where income from a partnership or company is considered, the partners / directors can also become co-applicants, if the policy of the lender allows.
  • Identify the property you intend to purchase
  • Determine your Loan Eligibility-┬áThis differs from lender to lender and depends on various factors like your age, income, profile, past credit performance etc. Just contact mymoneymantra and our Home Loan Specialist will help you check your eligibility across lenders. We will also help you get the best deal.
  • Apply for the Loan with the lender of your choice by filling the application form of the lender and provide all requisite documents. Our team will meet you at your convenience and help you choose the lender best suited for your requirements, completing all documentation requirements and getting your application logged in with the lender. All this at NO COST to you as our partner banks pay us for our efforts in this regard.
  • Verification/Credit Appraisal Process- The lender will verify the information and documentation provided along with checking your credit history. The lender can also ask for additional documents during the loan appraisal process.
  • Legal Document Checking - The lender will do a title search of the property to ensure that the current ownership is valid.This is done either through an in-house legal department or an external legal firm.
  • Property Valuation - The lender also gets an in-house or independent valuation for the property to determine the loan amount. For large loans, some lenders get 2 valuations done for the same property and could determine the loan amount basis the lower valuation. The valuer will also check if the building meets the approved building norms. The upkeep of the property is an important factor considered by the valuer and lender. Similarly, the future expected life of the building is normally required to exceed the tenure of the loan sanctioned.
  • Personal Discussion - The lender will normally meet or speak to the borrower during the loan appraisal process. Some of the aspects that come up during such discussions are :
    1. Details of the property transaction
    2. Income details
    3. Business / job aspects
    4. Other investments, savings, repayment capability
    5. Source of own funds for the property purchase
  • Loan Offer letter - Post verification and credit appraisal process, the lender sends an offer letter with details like loan amount, tenure, rate of interest and other terms and conditions.
  • Accept the terms and conditions of the Sanction Letter before proceeding to the next step.
  • Sign the Loan Agreement and provide repayment instructions.
  • Disbursal of Loan - Our Mortgage specialist will assist you all the way. No need to worry, as we are just a phone call away at all times. We will be happy to hear from you even after the loan has been disbursed, if you would like any help or clarification regarding your loan.
Availing a Home Loan is usually a big decision and specially one that will stay with your for a while. So take a moment to consider all possible options and scenarios before choosing your loan and your loan provider.

Use the following mantras and hopefully you will not make any regrettable decisions!

  • Cheapest isn’t always the best. Do not just go by who is offering the lowest interest rates. The cheapest may not be the best bet for you.
  • Compare. Check your loan eligibility across multiple institutions and see who is offering you the maximum funds, lowest rates, better pre-payment options, longer tenure, minimum documentation etc.
  • To fix or to float? Choose the type of interest rate you are going for with caution. Whether to go with a fixed rate or floating rate deal is a decision you need to base on the current market dynamics around interest rates as well as what you expect to happen over the next few years. Our Mortgage Loan specialists will be happy to advise you in this regard.
  • Assess all costs. The application costs such as application fee, legal fee, title search charges, valuation cost, processing fee, loan agreement stamping charges etc. vary by lender. These are significant expenses and add to the overall cost of the loan. So do not just go by just interest rates. There may be some such expenses which you need to be aware of. We will be happy to guide you all the way.
  • Know your exit options clearly. Learn about the pre-payment process. On Home Loans the regulators have made partial and full pre-payments free of cost. This is a great help to you, as you can cut your interest cost by making additional repayment as and when you have surplus funds available.
  • Service before sales. Evaluate the service performance of the lender you are going with. Cheap loans do not always mean good service.
  • Safety first. Especially in products like home loans where a security is given to the lender, you must ask sufficient questions about the nature and process of storing or retrieving your security documents. Make sure you obtain and keep a copy of the list of documents held by the bank.