Home Loans
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What is a Home Loan?
Owning a home isn’t just a keystone of wealth; it’s what gives us and our families stability and emotional security. Suppose you’re hesitant about buying a home because you feel that getting a home loan is a daunting task. Don’t worry! Applying for a home loan in Chennai is a straightforward process.
A home loan is a loan disbursed by a bank or financial institution (lender) to an individual specifically for buying a residential property. Here, the lender holds the title to the property until the loan is repaid in full, along with interest.
Types of Home Loans
Home purchase loans
These are the most common type of home loans in Chennai that is granted to individuals and they are granted for the purchase of an apartment
Home construction loan
This type of loan is granted to individuals for the construction of a house on a plot of land that the applicant already owns.
Home Expansion/Extension Loan
This loan is granted explicitly to individuals who want to expand their current home to include a new construction, such as an additional floor, room, bathroom, etc.
Home Improvement Loan
Existing homeowners who lack sufficient funds to renovate their existing home can apply for this loan to upgrade their home with a new paint job, electrical wiring, waterproofing, etc.
Home conversion loans
Using this type of home loan in Chennai, an existing home owner can add to their existing loan so that they can purchase a new house. This type of loan is only applicable to existing homeowners.
NRI Home Loans
These home loans in Chennai are specifically designed to provide non-resident Indians with financing so that they can purchase a home in India.
What are the Documents required for a Home loan?
- Completed Loan Application
- 3 Passport size photographs
- Proof of identity (photocopies of Voter’s ID card/ Passport/ Driving
- Proof of residence
- Property tax receipt/ Passport/Voter’s ID card)
- Proof of business address for non-salaried individuals
- Statement of Bank Account/ Pass Book for the last six months
- Signature identification from present bankers
What is the process for getting a Home loan?
Applying for a Home Loan
With the Home Loan Application form and the Required Documents to be submitted.
Home Loan Sanction
The Bank Official will determine the financial eligibility, and they will value the property.
Home Loan Disbursement
Signing the home loan agreement and the Loan Disbursement
FAQ's
Do you get a tax benefit on the loan?
Yes. Resident Indians are eligible for certain tax benefits on both principal and interest components of a loan under the Income Tax Act, 1961.
What is Pre-EMI Interest?
Prior to full and final disbursement and commencement of EMI, you pay pre-emi interest on the portion of the loan disbursed to you. Pre-EMI interest is payable every month from the date of each disbursement up to the date of commencement of the EMI.
Can I make my friend a co-borrower?
Banks do not allow co-borrowing between friends. It is only a family member who can be your co-applicant in your home loan application. Even between family and relatives, banks have reservations in granting loans. For instance, a married woman would find it difficult to avail of a home loan making her unmarried sibling a co-applicant. Banks generally prefer lending to spouses as co-borrowers.
Do my age and occupation matter?
Your age and your income are the primary criteria for the bank to decide your credit eligibility. For instance, a bank would be more willing to a younger person, earning a stable monthly salary. Such profiles have lower risk exposure.
Can I transfer the loan multiple times?
You can change your lender multiple times, in case it helps you reduce your loan burden. However, too much shifting is not advisable as it sends across a wrong impression. Also, kept in mind must be the fact that banks charge a free on loan transfers.
Can a partnership firm be converted into private limited company?
A borrower does not have to pay a penalty on pre-payment after the Reserve Bank of India in 2013 directed financial institutions to waive charges for loans taken on floating rate of interest. However, banks still charge a penalty on transfer if you have taken a home loan on a fixed rate of interest.
How many directors can be appointed?
The answer is no. Banks generally offer only 80 per cent of the total worth of the property as loan. Further, the amount you could borrow from the bank is decided only after banks carry out a technical valuation of the property. If you are asking for a loan of Rs 30 lakh while it is worth only Rs 25 lakh according to the bank’s estimates, it would offer you only Rs 20 lakh as loan.
What are the requirements with regard to the company’s name?
Banks charge a late-payment fee upon each such occurrence. In case of an unfortunate event owning to which you are not able to repay your loan, the bank will have the right to possess the property and auction it to recover losses.
What is Director Identification Number (DIN)?
Banks do not allow co-borrowing between friends. It is only a family member who can be your co-applicant in your home loan application. Even between family and relatives, banks have reservations in granting loans. For instance, a married woman would find it difficult to avail of a home loan making her unmarried sibling a co-applicant. Banks generally prefer lending to spouses as co-borrowers.
What are the statutory compliances required for a Pvt Ltd ?
In case you have a poor credit score, you will find it difficult to get a home loan. However, you can improve your chances by getting a co-borrower. The co-borrower needs to be a family member like your spouse or parents. Ideally, you should choose a co-borrower who has a regular source of income and good credit history to bolter your chances of a successful application.