Home Loan

Buying a house is a dream for many and involves a lot of financial planning. Roxyment Home Loans makes it simpler for those who want to realise this dream.

We at Roxyment Group Home Loans offer you Home Loan solution and information to either purchase/construct a new home, or renovate an existing one.

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Types of Home Loan

1) Loans for Purchase of Land - Several banks offer loans for land purchase. Purchasing a land is a flexible option, the buyer can save funds and construct a house whenever his finances allow or just have the land as an investment. Up to 90% of the cost of the land is given as loan by lenders.

2) Loans for Home Purchase - The most popular type of home loan is the loan for purchase of a new or a pre-owned home. This loan is also commonly available and is offered by many banks in different variants. The interest rate is either floating or fixed and generally ranges anywhere between 8.40% and 11.25%. Also, 90% of the total amount is offered as a loan by many banks.

3) Loans for Construction of a House This loan is specially designed for people who want to construct a place according to their wishes rather than buying a pre-constructed house. The approval process for this type of loan is different for it takes into account the cost of plot also. The most important clause when applying for a home construction loan is that the plot must have been purchased within a year for the plot cost also to be included in the loan amount. The loan amount is decided based on a rough estimate of the construction cost. The amount may be disbursed at one go or in multiple installments. Popular home construction loans include the schemes offered by Bank of Baroda, UCO Bank and Canara Bank.

4) House Expansion or Extension Loan - Want another balcony or an additional bedroom? No worries, some banks also offer loans for house expansion including alteration of current structure and construction of new rooms. HDFC Home Extension loan and house renovation loan offered by Banks are popular in this category.

5) Home Conversion Loans - People who have already availed a home loan and have purchased a house with it but want to move to a new house can opt for home conversion loans. By transferring the current loan to new house, borrowers can fund the purchase of the new home and also need not repay the previous home loan. Though it offers convenience, this segment of home loan is also very expensive.

6) Loans for Home Improvement - Renovation and repair works like external and internal repair, painting, construction of overhead water tank and electrical renovation certainly will make your house look better. But if you lack the finances for repair and renovation, banks like Union Bank of India, ICICI Bank and Vijaya Bank offer specialized home improvement loans.

7) Balance Transfer Home Loans - This option can be availed when an individual wants to transfer his home loan from one bank to another bank owing to reasons like lower interest rates or better services offered by the other bank. This is done to repay the remaining loan at a revised, lower interest rates offered by the other lender.

8) Bridged Loans - Bridged Loans are short term loans that are designed for existing homeowners who are planning to purchase a new property. It aids borrowers to fund the purchase of new house until a buyer is identified for the existing property. This type of loan usually requires the mortgage of new house with the bank and is extended for less than two years. Several banks like Vijaya bank and HDFC Bank offer bridged loans.

Features and benefits of home loans vary for different lenders and loan schemes. Some of the common ones are listed below:
1)Lower Interest Rates: A home loan is a long-term commitment, thus, interest rates play an important role in deciding not only the loan amount, but also the tenure of repayment. Banks and financial institutions offer reasonable and attractive interest rates to make home loans more affordable than personal loans.
2)Flexible Loan Tenure: Home loan repayment period is usually of up to 30 years, though this depends on the lender, the chosen loan scheme and repayment capacity. Since the tenure is too long, lenders provide their borrowers with the option to prepay or foreclose their outstanding amount whenever they are in a condition to do so. Borrowers can also choose their loan tenure, if they are able to convince the lenders of timely loan repayments.
3)Tax Benefit for Interest Amount : A home loan EMI (Equated Monthly Instalments) has two components – interest amount and principal amount. The interest paid for the year can be claimed as deduction up to a maximum of Rs. 2 lakh under Section 24 of the Income Tax Act, 1961.
4)Tax Deduction on Principal Repayment: The principal component of a home loan EMI paid for the year is allowed a tax deduction under Section 80C of the Income Tax Act, 1961. The maximum amount that can be claimed is up to Rs. 1.5 lakh. But to claim this deduction, the purchased property should not be sold within 5 years of possession.
5)Additional Tax Deduction on Home Loan: Home loan borrowers get additional tax deduction of up to Rs. 50,000 and Rs. 1.5 lakh under Section 80EE and Section 80EEA, respectively. To claim the tax benefit under Section 80EE, the home loan amount should be Rs. 35 lakh or less, the value of the property should not exceed Rs. 50 lakh and borrowers should not own any other house on the date of the sanction of loan. To claim tax benefit under Section 80EEA, the stamp value of the property should not exceed Rs. 45 lakh and the borrower should not own any other house on the date of sanction of loan.
6)Easy Balance Transfer Facility: Home loan balance transfer is a facility in which the outstanding loan amount with one lender can be transferred to another lender, which offers a lower interest rate or better loan terms. The new lender pays off the entire outstanding loan amount to the previous lender. After this, the borrower pays the EMIs at the new rate to the new lender.
7)Top-up Loan Facility: There may come a time when you would need money over and above your existing home loan. For such situations, lenders offer a top-up loan facility. It is an additional amount that you can avail over and above your existing home loan. The facility is not offered to all the borrowers as various factors like borrower’s repayment capacity and past credit records are taken into consideration before doling out this benefit. 

Banks and Housing Finance Companies (HFCs) offer home loans for different purposes. So before applying for any type of home loan, assess your requirements in order to get a suitable home loan scheme. Some of the types of home loans available are as follows:

  1. Home Purchase Loan is the most common type of home loan availed usually to buy ready-to-move-in properties, under construction properties and pre-owned homes/resale properties. As per RBI guidelines, lenders can offer loan-to-value (LTV) ratio of up to 75-90% of the property value.
  2. Composite Loan is a perfect financing solution for individuals who want to buy a plot of land either for investment or for building a house. In this type of home loan, the first disbursement is made towards the purchase of plot. The subsequent payments depend on the stages of construction of the house.
  3. Home Construction Loan is available for individuals who want funds for the construction of a house. The loan is granted only if you own a plot of land and plan to construct a house on it. Just as in composite loan, here too the disbursement depends on the stages of construction of the house.
  4. Home Improvement Loan can be availed to fund home renovation and home repairing expenses of the existing house. The interest rate for this loan is same as that for a regular home loan. However, its loan tenure is shorter than the regular home loan.
  5. Home Extension Loan is for those who require funds to add more space to their abode. Under this loan type, financial institutions usually lend 75-90% of the construction estimate, depending on the loan amount and LTV ratio.
  6. Bridge Loan is a short-term home loan and is suitable for individuals who wish to buy a new house with the sale proceeds of the existing home. The loan helps in covering the gap between the purchase of a new house and the sale of an existing house.
  7. Interest Saver Loan is similar to home loan overdraft facility. In this, the borrowers’ home loan account is linked to their bank account. Any amount deposited in the bank account over and above the EMI amount is used as prepayment towards the loan, thus, saving on the interest amount.
  8. Step Up Loan is a type of home loan in which borrowers pay lower EMIs during the initial years of the loan tenure. However, there is a provision of increasing the EMI amount over time. This makes the loan affordable for young professionals who just start their career.

Home loans are sanctioned either at fixed interest rates or floating interest rates. Read below to find out more about it.

What is Fixed Rate Home Loan?
In case of fixed rate home loans, the rate of interest applicable at the time of loan disbursal remains constant during the loan period. And because of the unchanged interest rate, the loan EMIs also remain constant. A disadvantage with fixed rate home loan is that its interest rate is usually 1% - 2.5% higher than the interest rate for floating rate home loan. Furthermore, at any time during the loan tenure if home loan interest rate decreases, the fixed interest rate will remain unchanged, giving you no benefit of the reduced EMIs.
What is Floating Rate Home Loan?In case of floating rate home loan, the interest rate does not remain constant during the loan tenure. This kind of interest rate comprises two parts – index and spread. The index is the benchmark rate (such as Base Rate, Marginal Cost of Funds based Lending Rate (MCLR) and Repo Rate) that reflects general market conditions. And spread is the additional amount that a bank adds to cover the credit risk, profile mark-up, and so on. The spread varies from one lender to another and usually remains constant throughout the loan tenure. Index, however, alters as per RBI policies and other external factors, causing the home loan interest rates to change. An increase in the index can lead to an increase in home loan rates and the EMIs, and vice-versa.
Floating interest rate home loans are cheaper compared to fixed interest rate home loans. Also, RBI mandates no prepayment or foreclosure charges for individuals borrowing a floating rate home loan. The only problem with a floating rate home loan is that its EMIs change with the change in the interest rate, which can create difficulty in planning expenses in advance.
Home Loan Interest Rates Offered by Popular Lenders Home loan rate of interest, in case of most lenders, ranges between 8.20% and 13% p.a. These rates are liable to change as per RBI’s directives and lenders’ policies.

Name Of Lander Interest Rate
Axis Bank 8.55%-9.40%
Bajaj Housing Finance Limited 8.85% onwards
Bank of Baroda 8.15% - 9.15%
HDFC Bank 8.20% - 9.00%
LIC Housing Finance Ltd. 8.10% onwards
ICICI Ltd. 8.55% - 9.40%
Note:Interest Rates offered by Banks, NBFCs and HFCs are subject to change as per the directives of RBI and lenders’ discretion.

An EMI calculator is an online tool that helps calculate the monthly instalments to be paid during the entire loan tenure. Paisabazaar.com brings you a free-of-cost home loan EMI calculator so that you know the EMI in advance in order to take an informed decision regarding the affordability of your home loan. Additionally, the home loan EMI calculator is an effective tool for comparing different loan options available in the market. At Paisabazaar.com, you can check your home loan eligibility and also check and compare various available home loan deals.
To use the calculator, the details required are – principal amount, interest rate and loan tenure. If done manually, this calculation can be lengthy and time-taking; however, Paisabazaar's home loan EMI calculator gives instant results. To calculate your Home Loan EMI, click here

Besides the interest amount, there are several other fees and charges that your lender might levy from the time of applying for the home loan till you repay it entirely. Here are some of the charges:

  1. Application Fee is charged by lenders to cover all the preliminary expenses that they bear for conducting verification.
  2. Processing Fee covers the cost of credit appraisal and depends on the borrowers’ credit profile, income and the home loan scheme. Also, not all lenders levy processing fee.
  3. Administrative fee is charged by those lenders who split the processing fee into two parts. The part charged after the loan sanction is known as the administration fee. Citibank is one of the banks to levy administrative fee.
  4. Foreclosure/Prepayment Charges are levied when a borrower prepays the home loan either fully or partially before the end of loan tenure. Earlier, lenders used to charge prepayment penalties and foreclosure charges on home loan. But RBI banned lenders from charging individuals with prepayment penalties on floating rate home loans. As far as fixed rate home loans are concerned, some lenders levy these charges.
  5. Repayment Mode Related Charges are levied when borrowers request their lenders to change their existing repayment mode during the loan tenure. The fee usually goes up to Rs. 500 per instance (swap) and varies from one lender to another.
  6. Rate conversion/switching fees are charged when borrowers request their lenders to switch or reduce their existing interest rates due to various reasons. The fee varies from one lender to another and usually goes up to 2% of the outstanding principal amount.
  7. CERSAI Charges (Central Registry of Securitisation Asset Reconstruction and Security Interest) is central online security interest registry of India. Potential lenders visit CERSAI website to check whether the pledged property is not claimed by some other lender. For this process, the lenders pay a nominal fee, which they later collect from borrowers.
  8. Overdue Charges on EMI are levied when a borrower misses or delays timely payment of loan EMIs. It attracts penal interest rates on the outstanding dues or overdue instalment over the prevailing loan interest rates. Therefore, borrowers must pay loan EMIs on time.
  9. EMI Bounce Charges are levied when you fail to make timely loan payment due to insufficient funds in your bank account. Lenders usually levy Rs. 500 on such defaults which may vary from one lender to another.
  10. Legal Fee is usually included in the processing fee but some lenders charge it separately when they engage firms to scrutinise borrowers’ legal documents.
  11. Franking Fee, commonly referred to as stamp duty fee, is a tax levied by the state government on any form of monetary transaction involving the transfer of rights of a property. The amount varies from one state to another, and depends on state laws, type of property, etc.To get more details on costs associated with home loan.

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Home loan eligibility is a set of conditions defined by lending institutions that applicants must fulfil to get the required loan scheme. It differs across lending institutions and loan schemes. Some of the factors that influence home loan eligibility include age, repayment capacity, work experience and credit score. A common set of housing loan eligibility criteria is given below:

Home Loan Eligibility Criteria
Nationality Indian Residents, Non Indian Residents (NRIs) and Persons of Indian Origin (PIOs)
Credit Score 750 or above
Age Limit Minimum – 18 years
Maximum – 70 years
Work Experience At least 2 years
Business Continuity At least 3 years
Minimum Salary At least Rs. 25,000 per month (varies across lenders & locations)
Loan-to-Value (LTV) Ratio Up to 90% of property’s value

Note:The values in the table may vary from one lender to another.

Home loan application forms usually have a checklist of documents that applicants need to submit to their lenders. These documents are usually same for all lenders; however, a few specific requirements may vary depending on the chosen loan scheme, purpose of the loan and individual credit profile. Some of the common documents required for getting a home loan are:

  • Duly filled in and signed home loan application form
  • Passport size photographs, as required
  • Proof of Identity: Copy of any one (PAN Card, Passport, Aadhaar Card, Voter’s ID Card and Driving License)
  • Proof of Age: Copy of any one (Aadhaar Card, PAN Card, Passport, Birth Certificate, 10th Class Mark-sheet, Bank Passbook and Driving License)
  • Proof of Residence: Copy of any one (Bank Passbook, Voter’s ID, Ration Card. Passport, Utility Bills (Telephone Bill, Electricity Bill, Water Bill, Gas Bill) and LIC Policy Receipt
  • Proof of Income for Salaried – Copy of Form 16, latest payslips, IT returns (ITR) of past 3 years and investment proofs (if any)
  • Proof of Income for Self Employed: Details of ITR  of past 3 years, Balance Sheet and Profit & Loss Account Statement of the Company/Firm, Business License Details and Proof of Business Address
  • Property-related Documents: NOC from Society/Builder, detailed estimate of the cost of construction of the house, registered sale deed, allotment letter and an approved copy of the building plan

The above list is indicative and your lender might ask for additional documents.

Home loan balance transfer is a facility that allows home loan borrowers to transfer their outstanding home loan to a new lender for lower interest rate or better loan terms. Almost all lenders offer the home loan transfer facility to their customers. Paying your loan EMIs regularly is one of the factors that help you enjoy loan transfer facility. But before going for home loan balance transfer, carry out a cost-benefit analysis. Calculate the difference between the interest rates offered by the two lenders, the amount of the loan left unpaid and the remaining tenure.
Home loan balance transfer is not an ideal option if the outstanding loan amount is low, if only a few repayment years are remaining or the difference in the interest rate is leading to negligible savings. Also, do not forget to consider processing fee charges, which the new lender would be charging for balance transfer.

Home loan prepayment is when a borrower prepays his/her home loan partly before the end of the loan tenure. Loan prepayment helps in reducing the loan principal amount, which subsequently reduces the EMI amount. If the borrower has no issues with continuing with the on-going EMI amount, he/she can request his/her lender to reduce the loan tenure instead of reducing the loan EMI.
Home loan foreclosure, on the other hand, is when a borrower fully repays the home loan in a single payment instead of paying in instalments before the end of loan tenure.

Earlier, lenders used to charge prepayment penalties and foreclosure charges on floating rate home loans. But now RBI has mandated all lenders to not levy loan foreclosure and prepayment charges on floating rate housing loans when individuals pre-close the loan. However, on fixed rate home loans, some lenders still levy these charges.

SBI to refund home loan amount if builder delays project
9th january 2020 - To give boost to the real estate sector and help homebuyers who are stuck with undelivered projects, the State Bank of India (SBI) launched a homebuyer finance guarantee scheme under which the bank would refund the entire loan amount if the developer misses the project deadline. The validity of the refund scheme will be until the occupation certificate is procured by the builder. The ‘Residential Builder Finance with Buyer Guarantee Scheme’ can be availed for projects where the home price is up to Rs. 2.5 crores. The scheme also allows developers to take a loan between Rs. 50 crores and Rs. 400 crores, after fulfilling due diligence by the bank.
ICICI Bank, Bank of Maharashtra cut MCLR, HDFC keeps rate unchanged
7th january 2020 - This month, HDFC Bank keeps Marginal Cost of funds based Lending Rate (MCLR) unchanged on loans for all tenors. ICICI Bank and Bank of Maharashtra, on the other hand, have reduced MCLR by 5 bps and up to 45 bps, respectively across all tenors. The one-year MCLR of ICICI Bank has reduced to 8.20% from 8.25%. The state-owned Bank of Maharashtra has reduced its one-year MCLR to 8.25% from 8.40% earlier.
HDFC slashes home loan interest rate by 0.05%
4th january 2020 - After SBI, it is now HDFC bank that has slashed its benchmark lending rates by 0.05%. HDFC home loans are linked to Retail Prime Lending Rate (RPLR) on which its Adjustable Rate Home Loans (ARHL) are benchmarked by 5 basis points with effect from January 6, 2020. The new rates will now range between 8.20% and 9%.
SBI home loan gets cheaper by 25 bps
30th December 2019 -The State Bank of India (SBI), India’s largest bank, slashed its repo rate linked lending rate by 25 basis points (bps). The bank currently offers home loan at 8.15% p.a. but from January 1, 2020, the housing loan rate will be 7.90% onwards. The new rate of 7.90% factors in a premium of 10 basis points over the external benchmark-based rate of 7.80%. The 7.90% rate is applicable only to women borrowers who get rate concession of 0.05% from the bank. This implies that other home loan borrowers will have to pay at least 7.95%.
HDFC lowers lending rates by 10 bps
14th October 2019 - HDFC has reduced its lending rates by 10 basis points (bps). The change in rates is applicable to both new and existing borrowers, effective from 15th October 2019. After the rate cut, HDFC home loan interest rate currently stands at 8.25% p.a. for salaried borrowers.
RBI cuts repo rate by 25 points
4th October 2019 -In today’s Monetary Policy Committee (MPC), the repo rate has been reduced by 25 basis points (bps). Before the rate cut, the repo rate was at 8.40%. After the rate reduction, the revised repo rate is 8.15%, which is the lowest since March 2010. The committee has also made the decision to go on with an accommodative stance as long as it is necessary to revive economic growth.
Key Takeaways for Housing from FM Nirmala Sitharaman's Press Conference
14th September 2019 - To tackle the current economic slowdown, the Finance Minister Nirmala Sitharaman announced a few relief measures with a focus on reviving the housing sector. Firstly, the government has planned to relax the current External Commercial Borrowing (ECB) norms to ease the financing of homebuyers who are eligible under Pradhan Mantri Awas Yojana (PMAY) scheme. Secondly, the interest on house building advance will be reduced and linked with 10-year G-Sec bond yield. Lastly, the government will provide financial aid of Rs. 10,000 crore along with investors such as LIC who are expected to contribute approximately the same amount for housing projects which are non-NPA and non-NCLT and are not worth positive in affordable and middle-income category to be set up. The aim of this move is to help real estate developers finish the incomplete units.
Govt. contributes Rs. 20,000 crore to fund stalled housing projects
14th September 2019 - The Union Finance Minister, Nirmala Sitharaman, in her 3rd press conference announced that a “special window will be set to provide last mile funding for housing projects which are non-NPA and non-NCLT projects and are net worth positive in the affordable and middle-income category.” The minister announced that the government will give Rs. 10,000 crore towards the special window. Besides government, other investors such as LIC and Sovereign Funds will also contribute about the same amount for the eligible real estate projects. Through this aid, an estimate of 3.5 lakh of middle-class homebuyers are expected to benefit as the real estate developers will be able to complete their projects that are stuck on account of ‘last mile’ cash shortage.
ICICI Bank slashes MCLR by 10 bps
5th September 2019 - ICICI Bank has reduced its Marginal Cost of funds based Lending Rate (MCLR) by 10 basis points (bps) across all tenors. After the rate cut, the 1-year MCLR has fallen to 8.55% and the overnight MCLR has dropped to 8.30%.
Government’s Urban Affordable Housing scheme inches closer to target
31st August 2019- Pradhan Mantri Awas Yojana - Urban (PMAY-U) is nearing its target of meeting the ‘Housing for All’ aim in urban areas. Under the scheme, which is to be completed by 2022, has sanctioned over 88 lakh houses till now. A total of 2.99 lakh houses have been sanctioned as part of 865 proposals from 10 states. With the approval of above fresh proposals, cumulative sanctions of houses under PMAY-U is now 88.16 lakh against a validated demand of 1.12 crore.

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