How to Avail Home Loan – Know About Eligibility, Documentation and Interest Rate
Buying a new home is a dream for many. And most people in India rely on getting a home loan to get the funds for the purchase. If you are a first-time homebuyer, you may be excited and nervous at the same time. You may be happy at the prospect of owning your own space where you and your family members can live peacefully for the rest of their life. Also, you may be nervous about applying for a home loan.
Going through the process may seem daunting. However, getting a home loan is not as difficult as it may seem if you do your preparation well. So, to help you avail of a home loan, we help you understand the different aspects of a home loan like eligibility, interest and the documents you must submit. So, without any further ado, let’s get right into it.
- Home loan eligibility
All lenders have specific eligibility criteria. Before submitting your application to the lender, you must check their requirements by visiting their website. Generally, the lenders decide the home loan eligibility based on several factors like:
- Current age
- Years left to retirement
- Fixed monthly obligations
- Credit score
Many lenders have the home loan eligibility calculator on their websites. It is an easy-to-use online tool that lets you know the maximum amount you can borrow based on the above inputs.
- Home loan interest rate
When you apply for a home loan, the lender’s interest rate is a critical factor to consider as it has a direct impact on the EMI amount and affordability. With intense competition among financial institutions, lenders offer loans at competitive interest rates.
It may vary from lender to lender, and it generally depends on the amount you want to borrow and whether you are a salaried employee or a self-employed individual.
For example, if you are a salaried individual and want to borrow a loan of Rs. 35 lakhs, you can get a home loan with an interest rate starting from 6.70% per annum. However, if you are self-employed, you can get a loan with an interest rate starting from Rs. 6.80% per annum for the same amount.
When choosing the right lender, don’t decide based on the interest rate alone. You must look at the quality of services, other charges involved, etc.
Like any other loan type, you must comply with the lender-specific documentation process when you apply for a home loan. It is better to check the requirements beforehand so that you can keep the documents ready before submitting the application form. This will help you avoid the last-minute hassles and delay in the approval process.
Generally, the lenders in India require the home loan applicants to submit the following documents.
- Proof of identity and residence like Aadhaar card, passport, voter ID, driving licence etc.
- For salaried employees – income proof like salary slips, ITR filed for last six months, bank account statement reflecting the salary credit
- For self-employed individuals – proof of business existence, business income proof like profit and loss account statement, personal savings bank account statement, company balance sheet duly audited and certified, company registration certificate, etc.
- Property-related documents like NOC (No objection certificate) obtained from the builder/seller, approved blueprint of the property, OC (Occupancy Certificate), NOCs obtained from the local authorities, etc.
- Application form with photograph and signature
- A cheque for paying the processing fees
The documentation process discussed above is not comprehensive, and the requirement may vary from lender to lender.
Applying for a home is not difficult; all it takes is a bit of awareness of preparation. If you get the right, the actual process may seem like a walk in the park.