A guide to availing of Home Loans in a hassle-free manner

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Owning a house is a dream for the majority of Indians. With the real estate rates sky-rocketing, the home loan industry has gained popularity. Almost every bank and non-banking financial company (NBFC) offers credit in India. They have attractive options at perusal to lure new customers.

However, the application process for home loans is not that simple. Following are some of the pitfalls that you must avoid for getting the loan in a hassle-free manner:

1. Bank and loan scheme: It is always better to read on the loan schemes before choosing one. Meticulous research not just provides you with specific details about different plans but also helps you understand the advantages and disadvantages. This will assist you in determining which credit is worth it and the right lender.

2. Monitor the credit report:One of the essential criteria for every lender is the credit report. It is a history of your previous debts that includes credit card and utility bills, mobile bills, and existing EMIs. The lender checks not only if you are paying them on time but also if there are any dues. The credit score should fall within the range 700-900. If your score is near the said limit, there are more chances of your loan getting approved. Also, track for typos on the report as that could dent your opportunities to get a loan. You can request your credit report from CIBIL agencies.

3. Choose between floating and fixed rates: When lenders offer a housing loan, you have the option to select between floating and fixed interest rates. Some lenders have a clause stating changes in fixed interest rates periodically. There are times you may have to pay extra on floating rates, which may have been offered at lower rates initially. So, make a wise decision. Use the for better results.

4. Note the additional charges:Most of the home loans cover only 80 per cent of the credit amount while you must manage the remaining 20 per cent. Then you need to consider the extra charges such as the processing fees, documentation expenses, pre-closure and foreclosure expenses, default penalties, and so on.

5. Documentation procedure:When you submit the housing loan application, you have to furnish some documents as well. Before assimilating the papers, it is better to use the bank-evaluator to check if the intended property is pre-approved by them. The standard property documents are:

  • Property development plan
  • No Objection Certificate (NOC) from the developer
  • Property Deed
  • Agreement copy between the developer and you
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The other generic list of files required by the lenders are:

  • Seller’s property registration certificate
  • Power of Attorney that converts leasehold to freehold
  • Mutation certificate from the applicable municipality
  • NOC from the lender in case of the outstanding loan on the property
  •  

You have to provide additional documents if the lenders find these inadequate. They are land use, completion and occupancy certificates, and so on. The basic ones apart from the property areage, income, employment, ID, and address proofs.

6. Affordable homes:Owning a home is a dream come true for everyone. However, a housing loan is not everyone’s cup of tea. Avoid taking the credit that is beyond your financial capacity. You have to think about aspects like massive down payment, EMIs, etc.

7. Interest rates:Housing finance are available in floating, fixed, and mixed-rate packages. Fixed rates remain the same until the end of tenure. Floating rates fluctuate. Mixed rates offer a combination of two. Choose what works for you as it will determine your monthly instalments and overall interest amount

Karan is CA by Qualification with the rare distinction of being awarded All India Rank 22. He is also the founder of this website and is an expert in helping people save Taxes legally. He can be reached by booking an appointment for Tax Advisory Service.