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Following is a compilation of FAQ’s pertaining to home loan rates, fees, procedure, disbursement, documentation etc.

What are the types of housing loans available?

Some of the popular home loan types available freely with most banks and non-banking financial companies (NBFCs) include:

Home Purchase Loans

It is the most common type of home loans available for the purchase of a new house or apartment. Usually 80 to 85% of the market value of the property is provided in the form of a loan. Depending on each financial institution’s policies, the loan tenure period, interest rates and methodologies (fixed or floating) vary. It is generally inclusive of the cost of the flat, deposits and charges, stamp duty and registration fees.

Land Loans

Such loans are given for the purchase of land or empty plot for the purpose of residential activity, construction or investment. Lands loans are not available for buying an agricultural plot of land. Land loans offer a loan-to-value (LTV) ratio of up to 70% in most cases.

Home Improvement / Extension Loans

This type of loan is extended to support the costs of repairs, construction and renovations in your property. You could take a Home Improvement loan for constructing a new room or balcony or for taking care of your painting, flooring or plumbing expenses.

Bridge Loans

Bridge loans extend timely financial help for those who possess a property but don’t have the time to wait for someone to buy it before purchasing another one.

Balance Transfer

Balance Transfer is a facility offering the customer a choice to transfer the outstanding balance of the loan availed from the existing provider to another for better terms & conditions.

Top up Loan

In case you had already taken a home loan of Rs.55 lakhs, five years ago for a term of 15 years. The current outstanding on your loan is Rs.30 lakhs and you want to carry out major renovation in your house and are in need of financial assistance. You need not opt for a Personal Loan at high interest rates. You could choose a Top-Up Loan at lower interest rates with tax benefits, without asking for any additional security. There are however certain terms and conditions that must be met before taking such a loan.

Loans to NRIs

Almost all the major financial institutions extend financial assistance, subject to certain eligibility criteria to meet the special needs of NRI’s, who wish to purchase a house in India.

Who can apply for a housing loan?
Indian citizens, including NRIs, with a steady source of income, can apply for a housing loan from housing finance companies and banks.
How much can a person borrow?
Loans can cover anywhere between 70% - 90% of the basic cost of the property. This is nothing but the loan-to-value (LTV) i.e. the ratio of the loan to the value of an asset purchased. The LTV varies, depending upon the financial intermediary and the purpose of the loan.
How do banks/ financial institutions decide the loan amount that should be given?
They determine loan eligibility largely by the applicant’s income and repayment capacity. Other important factors include the applicant’s age, qualification, number of dependents, spouse's income (if any), assets & liabilities, savings history and the stability & continuity of occupation. The Credit Score of the applicant usually considers the above and hence plays an important role in the eligibility for the loan.
How does Qualitas assist a flat purchaser in procuring Housing Finance?
All projects at Qualitas are pre-approved for the grant of home loans by leading housing finance companies and banks. The Qualitas Client servicing team liaises with all the leading Housing Finance Institutions for project approvals, processing the loan, documentation and disbursement of loans. We try and get our customers that maximum financing possible. Since we have long associations with financial institutions, we ensure that the loan process is hassle-free for the customer.
What is an EMI?
Equated Monthly Installment ("EMI") is the amount comprising of portions of the interest and the principal loan amount, which is payable by a borrower to the lender every month. In the initial years of the loan, the interest component is much larger than the principal component, while towards the latter half of the loan, the principal component is much larger. To arrive at EMI, your bank will consider several parameters such as Principal amount, Repayment period and Rate of interest. EMI payments start once the loan has been fully disbursed. EMI remains constant throughout the repayment period. A break up of your EMIs over the entire loan term can be found in your amortization schedule. It’s important to go over your amortization schedule regularly to keep a track of any changes in interest rate or loan tenure made by the bank. You can calculate your loan EMI using our EMI Calculator.
What are the documents required at the time of applying for a housing loan?

The standard list of documents mandatory for all loan applicants is as follows:

  • Photographs
  • Proof of age
  • Identity papers
  • Proof of residence

For Salaried individuals:

  • Latest salary slip
  • Last two years form 16 or equivalent
  • Bank statements reflecting wage credits for the previous six months

For Self-employed individuals:

  • Certified copies of Balance Sheet
  • Profit and Loss Statement
  • Tax challans/tax returns for the past three years

For Partnership/Private limited companies:

  • The Articles of Association
  • Partnership deed and details about the firm
  • For NRI's
  • Latest salary certificate specifying, name (as it appears in the passport)
  • Date of joining
  • Passport number
  • Designation
  • Perquisites and salary
  • Photocopy of labour card/identity card
  • Photocopy of valid resident visa stamped on the passport
  • Photocopy of monthly statement of local bank account
  • Property related documents
What is a fixed-rate housing loan?
A fixed-rate housing loan is a loan where the rate of interest is constant, i.e. doesn’t fluctuate during the entire term of the loan period. This allows the borrower to accurately predict future payments. However, the disadvantage is that, in case the interest rates fall due to a change in the business environment, they don’t benefit from it. Also, these loans tend to be -2.5 percentage points higher than the floating rate home loan.
What is a floating interest rate housing loan?
A floating interest rate loan is a loan where the interest rate payable is linked to a base rate which varies with the changing market conditions. MCLR (Marginal Cost of Fund based Lending Rate) is the internal benchmark rate for banks, used for benchmarking floating rate loans effective from 1st April, 2016. MCLR is based on cost of funds for banks and is derived as sum of marginal cost of funds, negative carry on account of CRR, operating costs of banks and tenor premium. MCLR is closely linked to repo rate.
What are the repayment period options?
Repayment period options range from 5 to 30 years.
What are the charges for availing a housing loan?
Processing Fees are payable to the lender on applying for a loan, it can either be a fixed amount not linked to credit and can also be a percentage of the loan amount. Franking Charges are also applicable, as per prevailing rate fixed by the Government Authority.
What security is required for a housing loan?
The property purchased is the primary security and is mortgaged to the lending institution till the entire loan is repaid. It is extremely important for you to ensure that the title to the property is clear, marketable and free from encumbrance. There should not be any existing mortgage, loan or litigation, which is likely to adversely affect the title to the property. Additional security such as life insurance policies, shares, bonds, fixed deposit receipts, national savings certificates can also be offered, as per the requirements of the institution.
Do lending companies require guarantors?
Yes. Many lending companies require one guarantor or a co-applicant.
When can one take disbursement of loans?
Loans are disbursed after property appraisal, legal documentation (original agreement for sale/lodging receipt) and all relevant procedures are completed. Submission of proof to check if the applicant has paid the borrower's contribution to the vendor/builder/developer is also an important aspect.
Do financial institutions accept joint loan applications?
Yes, but this policy varies from bank to bank.
Can I repay my loan ahead of schedule?
Yes, you can repay the loan ahead of schedule by making lump sum payments towards part or full prepayment, subject to the applicable prepayment charges.

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