Here are some of the important features and benefits of home loan:
Flexibility to choose a tenure: Most banks give you the flexibility to choose your home loan tenure, which generally ranges from 15 - 30 years. The tenure you choose directly impacts the EMI you pay every month.
Comparatively cheaper than personal loans: The rate of interest on home loans is generally lower in comparison to the personal loans. This is because home loans are generally secured loans whereas personal loans are unsecured loans.
Tax benefits: You get tax benefits on both the interest amount and principal amount you pay. The interest paid can be claimed for a deduction of upto Rs 2 lakhs every year, whereas the principal amount paid can be claimed for a deduction of upto Rs 1.5 lakhs per year.
Home loan balance transfer: This facility allows you to transfer your outstanding loan amount from one lender to another for the purpose of taking advantage of lower interest rates.
Check out some of the most common types of home loans available from banks and financial institutions:
Home loan for purchase: Most commonly available, this type of loan is for purchasing a residential property, whether it is a resale home, a ready-to-move-in home or an under construction home.
Home loan for construction: This loan is available only for construction of a house and is offered to those who own a piece of land.
Home loan for renovation: This can be availed for making renovations or improvements to an existing home.
Bridge home loan: This loan is availed by those who are looking to upgrade their homes to bigger or better ones. Such a loan helps meet shortage of funds that arises due to time lag between sale of existing home and purchase of new one.
Step up home loan: Designed primarily for young salaried professionals, this home loan helps you avail a bigger amount as compared to your eligibility under regular home loans. Also, under these loans, the EMIs are kept lower during initial years.
Balance transfer home loan: This facility allows you to transfer your existing home loan from one lender to another for the purpose of taking advantage of better interest rates.
Here are some key factors that you must consider before applying:
Apart from the interest rates, there are many other types of charges associated with home loans. Take a look at some of the most common home loan fees and charges:
Processing fee: A one-time charge, non-refundable fee charged by the banks for processing your loan application. Although most lenders charge this fee, there are some banks that offer zero processing fee schemes as well. Generally, this fee ranges from 0.5%-1.0% of the loan amount.
Prepayment charges: This is the charge that you may have to pay for early repayment of your loan. As per RBI norms, there is no prepayment penalty on floating rate home loans. However, in case of fixed rate loans, lenders can charge a prepayment penalty of up to 2%.
Loan conversion charges: This fee is charged when you switch your home loan from floating to fixed rate or vice-versa. Loan conversion fee varies from bank to bank. However, most banks charge a conversion fee of 2% of the outstanding amount.
Legal and technical charges: Also known as Administrative charges, these charges are levied by the banks for getting your property and other documents verified. These charges may range from Rs 5,000 to Rs 10,000.
MODT Charges: Memorandum of Deposit of Title Deed (MODT) charge is levied for an undertaking that you are submitting your property documents with the bank at your free will. It generally ranges from 0.1% to 0.5% of the loan amount. Banks usually incur this charge initially, but later on they recover the same from the borrower.
Lenders use your Credit score as an indicator of how likely you are to repay the loan. The higher the score, the lower the interest rate you pay on your loan.
Score below 600: A score below 600 generally indicates high risk. With such a score, it may be a little tough to secure a loan. If your score is below 600, it's best if you try to improve the score before applying for a home loan.
Score between 600 and 749: Although it's not considered a very good score but it gives you at least a chance to get the loan approved. Some lenders might approve your loan with this score after considering your income, your employment/business, etc.
Score of 750 and above: If your score is 750 or above, you are most likely to get your loan approved. Not only that, you are also most likely to secure the loan at an attractive rate of interest.
If you are applying for a home loan with a woman as a co-applicant, you can enjoy a concessional rate of interest on your loan. The interest rate in such cases are usually around 0.05% (5 basis points) lower than the standard rates.
To avail this benefit, make sure the woman co-applicant must be either the sole owner or a joint owner of the property.
Here are some of the key factors that can help you improve your Credit score:
Pay your dues on time: You must pay all your dues on time, including your credit card bills as well as other loans you may have. Timely payments indicate your reliability when it comes to loan repayments.
Keep checking your credit report: At times, your score may get hit due to certain errors in your credit report. Keep an eye on the report and if there are any discrepancies, report to the credit bureau for correction.
Optimize the loan tenure: If you are taking a loan, try to choose a longer tenure. This will keep your EMIs low and ensure that you never default on repayments.
Maintain the right mix of loans: To have a right combination of secured and unsecured loans can also help improve your Credit score. Make sure you repay all the loans on time. This will help create a good credit history.
Avoid too many loans: You should not take on too many loans at the same time. Having too many loans may indicate high repayment risk. Additionally, if you fail to repay any of the loans, your credit score may get seriously impacted.
It's an option that allows a borrower to pay only the interest amount on the disbursed home loan until the construction of the property is completed. This means if a borrower opts for pre-EMI, he/she will not have to pay the principal amount until the property is ready for possession. Thus, once the property is ready, the pre-EMI payments will end and the EMI payments will start.
For example: A person takes a home loan with a tenure of 30 years. The construction of the property completes in 5 years. If this person opts for pre-EMI, he will have to pay the interest every month for 5 years. After 5 years, this person will start paying regular EMIs (interest + principal) for 30 years.
Who should opt for pre-EMI?
This option works best for those who are living in a rental home and, therefore, cannot afford to pay the full EMI plus the rent every month. With pre-EMI option, such borrowers will be required to pay "interest only" until the property is ready for possession.
Moratorium period is that period during which you don't have to pay any EMIs on your loan. This facility is provided by lenders to help you manage your finances better and ensure that you don't have too much of a financial burden immediately after taking a loan.
For example: If a person gets a moratorium period of 3 months on their home loan, then he/she will not have to pay any EMI for the first three months after getting the loan. The EMIs on the loan will start after 3 months.
Launched in 2015, Pradhan Mantri Awas Yojana (PMAY) is a Government of India's initiative that aims to provide affordable housing for certain sections of the society. The scheme targets construction of about 20 million houses at an affordable price by 31 March 2022.
Here are some of the key objectives of this scheme:
An EMI Calculator or Equated Monthly Installment Calculator is a tool which calculates your monthly EMI payments for a Home Loan within a few seconds.
To use the Home Loan EMI Calculator, all you need to do is enter the variables like principal amount, interest rate, tenure, etc. in the calculator and it will give you the EMI amount instantly.
It is a free tool available on Magicbricks 24 X 7. You can use the EMI Calculator to make an informed decision by comparing various loan EMIs before you finalise a Home Loan.
EMI = [P x R x (1+R)^T]/[(1+R)^ (T-1)].
Let's take an example to understand this clearly. For instance, you have taken a Home Loan of Rs 2 Lakh which is to be paid in 2 years at an interest rate of 20% per annum.
First, convert the yearly interest rate into months. We can obtain the monthly interest rate by dividing the yearly interest rate by no. of months in a year i.e. 12. So, monthly interest will be 20/12 = 1.66%.
Even, the EMI Calculator uses the same formula to calculate the EMI of Home Loan. We also recommend calculating the EMI via EMI Calculator as it is accurate, requires minimal calculation and can determine the EMI within seconds.
Interest Rate is the cost of borrowing money and is calculated as a percentage of the amount borrowed. Interest rates may vary from bank to bank. As a borrower, you should try to choose a lender that offers a home loan at the lowest interest rate for your specific requirements.
There are two types of home loan interest rates you can choose from:
Fixed Interest Rate: This type of interest rate remains unchanged throughout the loan tenure. Thus, your EMI also remains the same. Choosing Fixed Interest Rate Loan is better if you expect the rates to increase in the future.
Floating Interest Rate: This type of interest rate keeps changing in line with the market rates. Thus, your EMI also keeps fluctuating. Floating interest rate loans are better if you expect interest rates to go down in the future.
|Bank/Financial Institute||Interest Rate||Processing Fee (%age of loan amount)|
|State Bank of India||From 6.95% p.a.||Upto 0.50% +GST|
|HDFC ltd.||From 6.95% p.a.||Upto 0.50% +GST|
|Sundaram Home Finance ltd.||From 7.75% p.a.||Upto 0.50% +GST|
|L&T Housing Finance Ltd.||From 8.40% p.a.||Upto 0.50% +GST|
|PNB Housing Finance Ltd||From 8.45% p.a.||Upto 0.50% +GST|
|Cholamandalam HFL||From 10% p.a.||Upto 1% +GST|
|Magma Housing Finance||From 11.50% p.a.||0.5% + Other Charges|
There are various ways you can reduce your home loan interest and EMI payments.
Choose a shorter tenure: When you choose a shorter tenure home loan, though the EMI is higher, your overall interest payment is reduced drastically.
Apply for a Balance Transfer Loan: With a Balance Transfer home loan, you can transfer your existing home loan to another lender that is offering lower interest rates.
Make loan prepayments: In the initial years of home loan, you pay more towards the interest and less towards the principal amount. Therefore, if you make prepayments regularly, you can reduce your interest burden.
Choose the right EMI calculation method: There are two ways banks can calculate your EMI: Flat Rate method and Reducing Balance method. Under the Flat Rate method, the interest is calculated on the original loan amount for the entire tenure; thus your interest outgo remains equal throughout the tenure and doesn't decrease as the principal amount reduces. However, in the latter method, the interest is calculated and revised every month based on your outstanding principal amount.
All the borrowers are required to meet certain eligibility criteria to get their home loan approved. If you don't meet any of the eligibility criteria set by the bank, your application may get rejected. Understanding the home loan eligibility criteria can help ensure a smooth approval process for you.
Here are some of the key factors that may affect your home loan eligibility:
Age: It's one of the most important factors to determine the home loan tenure. For instance, getting a home loan with 30-year tenure is easier for a young individual compared to an aged individual.
Income: Whether you are a salaried or self-employed individual, you must meet the minimum income requirement set by the banks. The income requirement may vary from bank to bank.
CIBIL Score or Credit Score: This score is used by lenders to determine your creditworthiness. Higher the score, the better the chances of loan approval. A CIBIL score of above 550 and near 900 is generally considered good. However, if your CIBIL score is not good, you can still apply for a home loan.
Employment/ Business type: Lenders also consider your job type or business type to determine your eligibility. Applicants with a stable job or business income have a higher chance of getting the loan approved.
Check out some of the key home loan eligibility criteria set by major lenders in India:
|Bank/Financial Institute||Age (in years)||Resident Type||Min. Monthly Income (primary applicant)||Loan Amount|
|State Bank of India||18 - 70||Indians and NRIs||₹ 15,000||₹ 10 lakh - ₹ 10 crore|
|HDFC ltd.||18 - 70||Indians and NRIs||₹ 15,000||₹ 5 lakh - ₹ 5 crore|
|Sundaram Home Finance ltd.||Salaried: 18 - 60
Self-employed: 18 - 65
|Indians and NRIs||₹ 15,000||₹ 2 lakh - ₹ 4 crore|
|L&T Housing Finance Ltd.||21 - 60||Indians and NRIs||₹ 15,000||₹ 5 lakh - ₹ 20 crore|
|PNB Housing Finance Ltd||18 - 70||Indians and NRIs||₹ 15,000||₹ 5 lakh - ₹ 3 crore|
|Cholamandalam HFL||21 - 60||Indians only||₹ 15,000||₹ 5 lakh - ₹ 50 lakh|
|Magma Housing Finance||21 - 65||Indians only||-||₹ 5 lakh - ₹ 1 crore|
For successful and faster processing of your Home Loan, you need to furnish a list of documents. Although the complete list of documents required may vary from bank to bank, there are certain documents that are generally required to be submitted with the application.
In order to make your experience hassle-free, here's a document checklist for you:
As the name suggests, prepayment signifies the early payment of a Home Loan before its maturity. For e.x. If you have got a big amount in your hand and you want to use it to ease your liability then you can use the prepayment option. This will eventually reduce the tenure or the EMIs to be paid.
It is a tool that you can use to determine the impact of home loan prepayment. A prepayment usually helps reduce your EMI or tenure or both. With this calculator, you can figure out how much you will save by reducing the tenure.
You can easily use the Home Loan prepayment calculator on Magicbricks by following these steps:
EMI Savings: Amount you have saved on your EMI by reducing it and monthly EMI
savings using prepayment option.
Tenure Savings: Reduction in the Tenure of loan as a part of the prepayment option.
Home Loan Balance Transfer is the process in which a loan borrower can easily transfer his/her outstanding principal amount to another bank or financial institute to get a better rate of interest as well as better features. The entire process of Home Loan Balance Transfer helps in saving the extra amount to be paid on the interest rates.
To become eligible for Home Loan Transfer, you need to fulfill the below criteria:
You need to get these documents ready before applying for a Home Loan Balance Transfer:
A letter which is issued by your current bank in which the outstanding principal amount will be mentioned so that you can carry forward from the same amount when you transfer your loan to the new bank.
Processing fee is a one-time fee charged by lenders for processing your loan application. This fee generally varies from bank to bank and is mostly charged after your home loan application is approved.
The fee is generally calculated as a small percentage of the loan amount. Check out the table below to know more about home loan processing fees charged by various banks and financial institutions in India:
|Bank/Financial Institute||Processing Fee (%age of loan amount)||Interest Rate (starting from)|
|State Bank of India||Upto 0.50% +GST||6.95% p.a.|
|HDFC ltd.||Upto 0.50% +GST||6.95% p.a.|
|Sundaram Home Finance ltd.||Upto 0.50% +GST||7.75% p.a.|
|L&T Housing Finance Ltd.||Upto 0.50% +GST||8.40% p.a.|
|PNB Housing Finance Ltd||Upto 0.50% +GST||8.45% p.a.|
|Cholamandalam HFL||Upto 1% +GST||10% p.a.|
|Magma Housing Finance||0.5% + Other Charges||11.50% p.a.|
Most banks charge a processing fee in the range of 0.5% - 1% of the loan amount. However, certain lenders offer processing fee waiver from time to time. You can check with your lender about such offers before you apply for a loan. Please know that even if your processing fee is waived, you may still have to pay other charges involved.
If you have applied for a home loan, you can check the status of your application through any of the following methods:
Call Customer Care: You can call up the customer service department of the bank to check your application status. The customer support executive might ask for your application ID/ reference number.
Visit the bank branch: You can also visit the bank branch to check the status of your application.
You can also check the status of your application through the bank's website. No matter where you are, simply visit the website and enter the required details like your phone number to know the application status. Some banks might also ask for your Application ID or Reference number along with your Date of Birth.
Getting a Home Loan often turns out to be an expensive affair but if you are well-informed, a lot of your money can be saved through tax rebates as per Income Tax Act, 1961. Also, in the recent financial budget of 2020, the government has continued to extend tax benefits on home loans. So, let's have a look in detail on how to take the optimum advantage of tax benefits on a Home loan.
According to the Income Tax Act, 1961, you can avail tax benefits under:
Here you will know about the yearly rebates on the interest paid on the Home Loan
Getting a home loan has become very easy these days. In fact, you don't even have to step out of your home to apply for a home loan. With new and advanced home loan portals like Magicbricks Home Loans, you can easily compare home loans right on your smartphone & apply online in just a few minutes.
Take a look at some of the common steps involved in getting a home loan:
This requires you to provide some basic details about yourself as well as the property you're buying. You can fill the application form online or you can visit a bank branch as well.
Once you submit your application along with the supporting documents, the bank will verify all the documents to make sure you're a genuine borrower. In addition, most lenders also conduct a background check to ensure your creditworthiness.
Once the bank has verified all the details, it starts your home loan process. At this stage, you will have to pay a processing fee. It's a one-time fee charged by most lenders for processing your application. It generally ranges from 0.5% to 1% of loan amount.
At this stage, the bank decides whether you approve or reject your application. The decision is made after carefully considering various factors, including your age, income, employment, credit score, etc. It also involves determining loan amount to be approved and the rate of interest.
Once your loan is approved, you will have to submit your property's original documents to the bank. The lender keeps the documents until you repay the loan in full.
Finally, the bank disburses the loan amount following registration of the loan deal. The amount is deposited into your account.
Banks and financial institutions offer different types of home loans for your unique requirements. Check out some of the popular types of home loans available in India:
Most commonly available, this loan is offered by banks for purchase of residential property, including flats, apartments, villas, etc. Banks offer a maximum home purchase loan of upto 90% of the property's market value.
Also known as Plot Purchase Loan, this home loan is available for purchase of land or plot for either construction or for investment purpose.
If you already own land, you can avail home construction loan to pay for the cost of construction of your new home. The loan amount is approved based on the estimated cost of construction.
This loan is generally available for making renovations or repairs to an existing residential property.
This home loan is preferred when you are planning to expand your home, including adding extra rooms or making any alteration to the existing structure.
This loan helps you transfer your existing home loan from one bank or financial institution to another. Balance Transfer home loan allows you to take advantage of lower interest rates offered by the new lender.
This is generally availed by those who need immediate funds for down payment of the new home. These individuals usually pay for the new home by selling their existing property.
Pradhan Mantri Awas Yojana CLSS is a subsidy scheme launched by the Ministry of Housing & Urban Power Alleviation (MoHUA) to promote 'Housing for All' mission. The scheme caters to the housing needs of:
Under this scheme the Govt. provides subsidy on home loan interest rates to the people falling in the above-mentioned categories. The benefits of this scheme can be availed for the purchase of a new/resale house as well as for the construction, improvement/extension of existing Kucha/Semi-pucca houses.
To avail the subsidy under PMAY(CLSS), you need to fulfil the following eligibility criteria as per the income groups:
For EWS - Rs 3 lakh
For LIG - Rs 3 lakh to Rs 6 lakh
The ownership of a woman has been made mandatory by the Government. Whether the house is new or existing, it should be in the name of an adult female member or in joint ownership with wife (if married). However, if the subsidy is being availed for the construction or extension/renovation of an existing Kucha/semi-pucca house. Also, if there is no adult female member in the family, then only the sole ownership of a male member of a house is acceptable.
The carpet area of a house must be:
For EWS: Upto 30 square metres.
For LIG: Upto 60 square metres.
For MIG-1: Between Rs 6 lakh to Rs 12 lakh
For MIG-2: Between Rs 12 lakh to Rs 18 lakh
In this category, the ownership of a woman is not mandatory.
The carpet area of the house must be:
For MIG-1: 160 square metres.
For MIG-2: 200 square metres.
Along with the eligibility criteria, the applicant must fulfil the below conditions which are stated below:
|Details||EWS||LIG||MIG 1||MIG 2|
|Eligible annual household income||Upto Rs. 3 lakh||Rs 3 lakh to Rs 6 lakh||Rs 6 lakh to Rs 12 lakh||Rs 12 lakh to Rs 18 lakh|
|Carpet area (max.)||30 sq.m.||60 sq.m.||160 sq. m||200 sq. m|
|Subsidy calculated on a max. loan of||Rs. 6 lakh||Rs. 6 lakh||Upto Rs 9 lakh||Upto Rs 12 lakh|
|Annual interest rate on subsidy||6.50%||6.50%||4.00 %||3.00 %|
|Subsidy amount (maximum)||Rs. 2.67 lakh||Rs. 2.67 lakh||Rs 2.35 lakh||Rs 2.30 lakh|
|Maximum loan tenure (in years)||20 yrs.||20 yrs.||-||-|
|Discount rate to calculate Net Present Value (NPV) of the interest subsidy||9%||9%||-||-|
|Woman Ownership||Mandatory (except for loan availed for construction)||Mandatory (except for loan availed for construction)||Not Mandatory||Not Mandatory|
|Scheme validity||31 March 2022||31 March 2022||31 March 2021||31 March 2021|
Disclaimer: The information available on this site has been gathered from publicly available sources and is accurate to the best of our knowledge. However, please be aware that the rates and other offers may vary based on your profile and may be subject to change without notice. Therefore, we advise you to verify the information before applying for any loan through this website. Magicbricks accepts no liability for any loss arising from the use of the information on this website. Refer T&C for the detail.
(T&C link: https://property.magicbricks.com/terms/terms.html)
**This service is available in select cities only.
*These calculators are only for illustrative purposes. These figures may or may not be applicable to your particular situation. Magicbricks will not be responsible for any loss or liability arising from the use of these calculators.