You’re Applying For A Loan, You Have Questions.
You’ve selected a dream home, got hold of the names of banks offering the right kind of home loan solutions, and even picked beautiful furniture and matching curtains. Wondering what next to buy?
Well, before you go on a pleasurable shopping spree to beautify your would-be home, there’s one important thing you must do: prepare a list of questions to ask a representative of the selected bank.
Exactly why you must do this, given it is miles less enjoyable than shopping?
Asking the right questions help you ensure that the home loan you take is completely in sync with your current financial needs and requirements. Here are some questions that would prove much helpful when you walk into the bank to purchase home loan.
Is it possible to get a loan on all types of purchases, such as self-construction, land, ready, under-construction, etc., or is there some restriction?
There are no restrictions. With that said, some banks may not offer a loan on certain purchases. For instance, some banks shy away from extending a loan for purchase of properties that are under construction. Nevertheless, if you have a good profile as a borrower, you will easily find a bank that offers a loan on the kind of purchase you are making.
How much loan I would be eligible for on basis of my monthly income and the property’s cost?
Two most important home loan eligibility criteria are the ability of the buyer to pay the loan and the property’s cost. Both parameters are usually judged considering three things: purchaser’s monthly income, property’s market value and agreement value. For example, to take a loan of INR 50 lakhs with 20-year period, the purchaser’s monthly income should be INR 95,000 or more.
Property’s cost is also taken into account in case of percentage funding. For instance, for properties of INR 75 lakhs or less, banks fund no more than 80% of the cost. This maximum percentage in case of properties with cost of more than 75 lakhs is 75%.
Will the bank take into account statutory expenses?
Stamp duty, VAT, registration, legal charges, and service tax are examples of statutory expenses. Banks do not consider this but only the property’s cost and car parking.
What’s the time period for loan approval as well as disbursal?
For salaried professionals the bank usually takes 5 to 7 working days to approve a loan after all necessary documents have been submitted. The approval time period for self-employed professionals is 10 to 15 working days. You can expect conditional sanction of your loan within 7 to 15 working days assuming there are no issues with your credit checks and income verification.
Your bank in all probability will disburse the loan amount in 2 working days after issuing the sanction letter.
Is it mandatory for me to purchase an insurance to take home loan?
No, it’s not, but it is highly recommended. An insurance policy protects the asset mortgaged in an unanticipated event like losing job, disability, or death.
Will I’ve to pay the pre-closure penalty?
Many individuals do not pre-close their loan, even if they can, because they are worried about paying a penalty. This is a misconception. An RBI directive led to discontinuation of pre-payment penalty on floating rate home loans.
Do home loans have a lock-in period?
No, they don’t.
To whom I’d have to approach for requests like getting a provisional tax certificate issued, switching to fixed rate from floating etc.?
For all administrative requirements, you should approach the bank’s call centre. If you are using the services of a broker, you should approach him. Your mortgage broker, using his years of experience and knowledge, is likely to give best advice on matters related to your home loan.