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General Questions

On the following factors tenure of Home Loan is decided:-
(i) Age of the applicant:
Private Banks give a tenure, where installments of EMIs end by the age of 60 years. In someprivate banks after taking deviation under special circumstances loan tenure can be extended up tothe age of 65, whereas in case of PSU banks the tenure extends upto the age of 70. However the tenure cannot extendedbeyond 30 years of tenure and total installments of 360 EMIs.
(ii) Loan Eligibility:-
Lesser tenure means lesser loan amount and greater tenure means more loan amount. However thumb rule of age criteria and 30years of installments cannot be violated.
(iii) Age of the property:-
Sometime in case of very old properties Bank don’t give longer loan tenure considering longevity of Property.

Fixed rate of interest: –
In this case home loan interest rate is fixed and does not change as per the guidelines or instructions of RBI. However, some banks use a clause called ‘Force majeure,’ where the Bank under unforeseen circumstances converts the fixed rate of interest into floating rate.
Floating rate of interest: –
Under this scheme the rate of interest goes up or down depending upon changes in MCLR.

(i) Income of applicants:-
Clubbing together income of applicant and co-applicants decide their EMI paying capability and the amount of loan which can be sanctioned to them.
(ii) Existing Loan:-
If the applicant has existing loan then its EMI liability reduces the loan eligibility for new loan being sanctioned.
(iii) Market Value of the property:-
No bank gives loan amount more than market value of the property for which home loan has been applied. Home loan amount extends from 75% to 90% of market value of the property rest of the money has to be paid by applicant.
(iv) Tenure of the Home Loan:-
If home loanis applied for lesser tenure than the loan amount will be less and in case of greater loan tenure, the home loan sanctioned will be more.

Co- Applicant is essential in case a home loan is applied in private banks whereas it is not essential criterion in case of PSU banks. Co-Applicants can be spouse or blood relatives of either the applicant or co-applicant. Number of co- applicants can be extended up to four in certain cases.

Fixed rate of interest: –
In this case home loan interest rate is fixed and does not change as per the guidelines or instructions of RBI. However, some banks use a clause called ‘Force majeure,’ where the Bank under unforeseen circumstances converts the fixed rate of interest into floating rate.
Floating rate of interest: –
Under this scheme the rate of interest goes up or down depending upon changes in MCLR.

Home Loan can be repaid by cheque or draft in favour of Home Loan account and by transfer of money through internet banking in home loan account. However the final payment done to close the home loan account should be made in the branch from where the loan has been parked.

Following factors help in making choice:-
(I) Existing rate of interest:-
Lower rate of interest should be preferred.
(II) Past performance of interest rate: –
Track record of interest rate should be incoherence with rate changes brought by RBI. The performance can be evaluated by observing annual movement of interest rate.
(III) Processing fees:
Lower processing fees (including legal and valuation fees) are better for the applicant. Sometimes greater processing fees wash away benefits of lower interest rate.
(IV) Prepayment Penalties: –
Some banks charge pre-payment penalty on either partial or full pre- prepayment. Such penalties or limitations on prepayment are harmful to the interest of home loan customer.

(1) Legal Charge:
This charge is taken by the Bank and paid to empaneled lawyer for him/her to check legality of title by going through complete chain of the property papers. They also check authenticity of the property papers to avoid fraud.
(2) Valuation Charge:
This charge is levied by the bank and paid to empaneled architect. Empaneled architect checks whether the construction work has been carried out in accordance to the various clearances and approved Maps or not.
(3) Processing Fess:
This fee is levied by the bank to carry out processing of the home loan. This charge varies from bank to bank and depends also on loan amount.
(4) Stamp papers: In order to get the agreement done between bank and the applicants stamp papers are utilized. These stamp papers are purchased by the applicant and few stamp papers also utilized to create equitable mortgage on the property.

In this product the amount of money paid by applicant from their own source and its proof can be provided satisfactorily, then up to 90% of this amount can be refunded back to applicant as home loan. However it should fulfill all the requirements regarding individual income, clear legal title of the property and due clearance from empaneled architect of bank.

(1) Under section 80C of income tax act, maximum amount of Rs.1.5 lakhs of principal paid and under section 24B Rs. 2 lakhs of interest paid can be claimed for tax benefit.
(2) Under section 80C, Tax benefit of Rs. 1.5 Lakhs can be claim for payment of stamp duty in the year of purchase.
(3) Under section 80E of income tax act first time home buyer to get relief of Rs. 50 thousands. However to avail this benefit the loan amount should not excessed Rs. 35 lakhs and value of the property should not be more than Rs. 50 Lakhs

A Bank never gives loan equivalent to market value of the property. It always funds only 75% to 90% of the market value rest amount of 25% to 10% is paid by the applicant in order to purchase the property. The amount of money paid by the applicant for purchase of property is called the margin money. Margin money depends on loan amount and bank policies.

What if the seller has an exciting home loan on the property being sold?
In such case some banks fund the home loan applied by the applicant and this is called, `Seller balance transfer’. Whereas some banks ask for guarantor or tell the seller to transfer his/her home loan to their bank.

Pre-EMI is the interest amount paid on the part of loan amount which has been disbursed and this period during which only interest is paid is called moratorium period.

Under sub- venation scheme interest on the loan amount disbursed is served by the builder either for fixed period or till possession of the flat.

If property is mortgaged with Bank and the applicant has already made payments of twelve or more EMI’s of the home loan, then he/she can avail top up loan. This loan is as good as personal loan and will be released in name of the applicant. So it will be better to say that this is a personal loan having benefit of long tenure, low EMIs and low interest rate of Home loan.

Power of attorney is executed in case of NRI and Defence personnel. In these two cases as the indual is not present to execute loan documents or sale deed so the authority is given by him/her to any indual if his / her. This document should always be registered in ordered to have legal sanctity.

In case of takeover of existing home loan, if any pre-payment penalty is  levied  then that amount can be also funded as part of the home loan.

Agreement to sell or builder buyer agreement is done between seller / builder and purchaser/ allottee which also specifies terms and conditions for sale as well as states amount and method of payment.   This is essential part of property chain.