Home Loans – Things you should know

The main criteria are:
  • Your income and your track record of repaying previous loans – this is obtained from the Credit Bureau.
  • Your current expenses including other loans you are servicing. The amount of loan related to the property value.
  • Ownership of the property – this means that the lending bank should be comfortable that the seller has full and complete ownership of the property.
  • Getting a loan depends on the report of the local bank surveyor who will inspect the property and give his recommendation.
  • Home loan eligibility depends on your ability to pay (ie. based on your salary) and not on the age of the building. However, the quantum of loan depends on age and undivided share too, in addition to your repayment ability.

It is always better to get the property loan insured. I would rather recommend a big term plan of Insurance Policy to safeguard future problems.

The banker’s home loan interest rate differs from bank to bank because of the cost of funding.

Yes, tax benefit on repayment of housing loan is available as per section 80C of the Income Tax Act, within the overall limit of Rs 1 lakh.

The pre-EMI interest is the interest charged by the bank in respect to the loan provided by the bank for the period of disbursement of the actual loan to you and the effective starting of the EMI.

Moratorium: A period from the date of disbursement of loan, during which the borrower is not required to pay EMI but the outstanding amount continue to incur interest.

Capitalisation: It is nothing but compound interest. The interest is added to the borrowed amount and further interest accrues on that amount. This is done every month.

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