Home Loan

Interest rate can significantly influence the total cost of a housing loan. As home loans are usually of higher value and longer tenure, even a slight difference in its rate of interest can lead to long-term financial implications. Therefore, when looking for a home loan, you should choose the lowest rate on offer. Getting a housing loan at a lower rate of interest will not only reduce your outgoing EMIs but also the overall home loan interest payout.

Here is the list of top 10 lenders that offer the cheapest home loans in India:

Note: Home loan interest rates as of 11th November 2021. Home loan rates in the table are subject to the credit/ risk profile as assessed by the lender on the basis of parameters such as credit scores, age and repayment capacity of the applicant. Housing loan interest rates in the table are subject to change anytime without prior notice.

Prospective homebuyers, usually, are more concerned about the home loan interest rates and tend to overlook other expenses involved in taking a home loan. These additional charges also make up the total cost of your housing loan and hence must be factored-in when deciding on an offer. Below are some of the fees and charges that may be applicable to your home loan.

• Application Fee is charged by lenders to cover all the preliminary expenses that they bear for conducting verification.
• 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 fees.
• 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 fees.
• 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 loans. 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.
• 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.
• 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.
• CERSAI Charges (Central Registry of Securitisation Asset Reconstruction and Security Interest) is the 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.
• 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.
• 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.
• Legal Fee is usually included in the processing fee but some lenders charge it separately when they engage firms to scrutinise borrowers’ legal documents.
• 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.

The Government of India offers tax benefits on home loans under the Income Tax Act of 1961. These home loan tax benefits help borrowers save a substantial amount of money every year. Below are the tax benefits that you can get on your home loan EMI payments:

Note: In addition to the Section 24(b) of IT Act, you can claim tax benefit on home loan interest either under Section 80EEA or Section 80EE.

Home loan eligibility differs across lending institutions and loan schemes. However, common set of housing loan eligibility criteria is given below:

• Nationality: Indian Residents, Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs)
• Credit Score: Preferably 750 and above
• Age Limit: 18 – 70 years
• Work Experience: At least 2 years (for salaried)
• Business Continuity: At least 3 years (for self-employed)
• Minimum Salary: At least Rs. 25,000 per month (varies across lenders & locations)
• Loan Amount: Up to 90% of property value

Apart from these, your home loan eligibility also depends on the property you are buying and the location of the property.

Home loan application forms usually have a checklist of documents that applicants need to submit to their lenders. These documents are usually the 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
•  

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

You can compare and apply for eligible home loan offers in three simple steps:

Step 1- Share Your Details

Enter personal information as well as the details related to your loan requirements.

Step 2- View Offers

As per the details shared, a list of eligible home loan offers will appear. Compare interest rate, processing fee and eligible loan amount from the list of eligible home loan offers.

Step 3- Submit the Application

Apply for the home loan offer that suits your loan requirements the best. 

Once your application is successfully submitted, you will get a confirmation of your home loan application along with a reference number for future reference. Next, our loan expert will get in touch within 24 hours to take this application forward.