Home Loans for Resident Indians

What is the maximum I can borrow?
You can avail of a maximum of upto 90% of the cost of the property, including the cost of the land. Housing Finance Institutions (HFI's) will lend upto a maximum of Rs. 1,00,00,000/- to an individual.

How will the HFI's decide the loan amount I am eligible for?
Subject to the above, your repayment capacity as determined by the HFI will help decide how much you can borrow. Repayment capacity takes into consideration factors such as income, age, qualifications, number of dependants, spouse's income, assets, liabilities, stability and continuity of occupation and savings history. HFI's will normally lend upto 40 to 55 times your gross monthly salary.

What is the rate of interest that will be charged on my loan?
The rate of interest applicable will vary from 7.25% to 8.5% depending on the HFI, the amount of the loan and the term of the loan.

What is a fixed rate-housing loan?
In a fixed rate loan, the rate of interest is fixed and does not charge over the tenure of the loan.

What is a floating rate-housing loan?
In a floating rate loan, the interest rate varies in response to the general interest rate environment.

Which is the better option - Fixed or Floating?
Ideally a floating rate loan makes sense when interest rates are high. Borrowing at a floating rate will allow you to take advantage of falling interest rates in the future. Opt for a fixed rate loan when rates are low, and there is little possibility of them falling further.

Are there any other charges applicable?
Other charges such as administration, processing etc., are applicable and will vary between 1% to 2% of the loan amount sanctioned depending on the HFI.

How is the interest calculated?
The interest calculation, of course holds the key to your cost . The uniformly followed system is to apply the interest rate at what is known as reducing balance. That is everytime interest is calculated afresh, you are assumed to have paid up a part of the principal. So interest is calculated on the unpaid part.
Therefore you must check whether the interest is being calculated on a monthly, quarterly or annual reducing balance .The difference? Consider a Rs. 20 lakh loan repayable over 20 years at an EMI of Rs. 31,137. Calculated monthly, the interest component of your loan turns out to be 30,000 for the first month. So your EMI actually pays off the entire interest for the month, and Rs.1,137 from the principal. Since the same calculations are made every month, the principal becomes lower at monthly intervals.
However if the EMI calculations was on an annual basis, the principal portion of your loan of Rs. 20 lakh would be reduced by Rs. 13,644. But the interest calculation is done only once a year that means the interest payment is a little higher . "The More often reducing balance is calculated the better you will be." So remember opt for the Monthly calculation whenever possible.
The shorter the period of the loan the higher the amount you pay each month. So pick your repayment capacity, and then work backwards to finalise your payback period . To calculate your payment plan your vendor will calculate your total liability, principal+ interest -- and then divide the figure into EMI's (Equated Monthly Instalment's). One off processing and administrative fees which will add about 2 percentage points to the cost of your loan will also have to be paid .

What are the supporting documents to be submitted along with an application?
FOR ALL APPLICANTS:
1. Allotment letter of the co-operative society/association of apartment owners.
2. Copy of approved drawings of proposed construction/purchase/extension.
3. Agreement for sale/sale deed/detailed cost estimate from architect/engineer for the property to be purchased/ constructed/ extended/ renovated.
4. If you have been in your present employment/business or profession for less than a year, mention details of occupation for previous 5 years, giving position held, reasons for change and period of the same.
5. Applicable Processing Fees.
6. Any other information regarding your repayment capacity that is necessary.
Additionally,
IF YOU ARE EMPLOYED:
1. Verifiication of Employment Form with only Part I filled in.
2. Latest salary slip/salary certificate showing all deductions.
3. If your job is transferable, permanent address where correspondence relating to the application can be mailed.
4. A letter from your employer agreeing to deduct the monthly instalment towards repayment of the loan from your salary. This will expedite the processing of your loan application.
IF YOU ARE SELF-EMPLOYED:
1. Balance Sheets and Profit & Loss Accounts of the business/profession along with copies of Individual Income Tax Returns for the last three years certified by a Chartered Accountant.
2. A note giving information on the nature of your business/profession, form of organisation, clients, suppliers, etc.

Who can be co-applicants?
Proposed owners of the property, in respect of which you are seeking financial assistance will have to be co-applicants. However, all co-applicants need not be co-owners.

What is the maximum period in which I can repay the loan?
You can repay the loan over a maximum period of 20 years. (ICICI Provides a housing loan, which can be repaid over 30 years) Repayment will not ordinarily extend beyond your age of retirement (if you are employed)or on your reaching 65 years of age, whichever is earlier.

How do I repay the loan?
You repay the loan in Equated Monthly Instalments (EMIs) comprising principal and interest. Repayment by way of EMI commences from the month following the month in which you take full disbursement. Pending final disbursement, you pay interest on the portion of the loan disbursed. This interest is called Pre-EMI interest. Pre-EMI interest is payable every month from the date of each disbursement upto the date of commencement of EMI.

What is the size of the EMI?
The EMI is 1/12th the Equated Annual Instalment. The size of the monthly instalment comprising principal and interest depends on the quantum of the loan, the interest rate applicable and the term of the loan.

What security will I have to provide?
Security for the loan is a first mortgage of the property to be financed, normally by way of deposit of title deeds and/or such other collateral security as may be necessary.

When can I take disbursement of the loan?
You can take disbursement of the loan after the property has been technically appraised, all legal documentation has been completed and you have invested your own contribution in full. Own contribution is the total cost of the property less the loan amount.

In how many instalments can the loan be disbursed?
The loan will be disbursed in full or in suitable instalments taking into account the requirement of funds and progress of construction.

The above details are subject to change. Kindly refer to the respective bodies for complete and up-to-date information or mail us at