Home Loans FAQ

  • How is the Eligibility of my Home Loan amount determined?

    Banks/ HFCs determine Loan eligibility based on following:

    • Age of applicant & Co-applicants
    • Regular Income through various legal sources
    • Obligations of Existing Loans/ Credit Card Dues
    • No of Dependents
    • Stability & Continuity of Incomes
    • Savings Habits
    • Assets & Liabilities

    Although Banks have more or less the same norms for calculation of Eligible Loan amounts, depending upon risk profile of individual client, Banks internal risk guidelines Loan amount offered by different Banks may differ. Banks' main concern would be to judge whether applicant would be in position to service the loan regularly.

  • What is the maximum period of Home Loan offered?

    Home Loans are generally offered for maximum period of 20 years depending upon the age of applicants. Some Banks offer even higher tenor of 25 years. Home Loans to certain category of borrowers may be however restricted to maximum 15 years.

  • Is there a maximum or minimum amount I can borrow?

    As such there is no limit on minimum & maximum amount of Home Loan. However most Banks stipulate minimum Rs.5.00 lakhs as it may not be economical for them to process applications for amounts lower than that. There is no upper limit for Home Loan, its depends on property value and your eligibility.

    Banks/ HFCs are governed by RBI guidelines and are required to restrict maximum loan amount to 75-80% of Cost of Property.

  • What is the Floating Rate Home Loans? What Are the Fixed rate Home Loans?

    Floating Rate Home Loans are the ones wherein the Rate of Interest is linked to the Base Rate (Reference Rate) of the Bank (NBFC). All banks are required to declare their Base rates below which Banks are not allowed to lend. Floating Rate Loans are linked Base Rate of Bank + Banks Margin. For example, Home Loan Floating rate of 11.00% is indicated as Base Rate of 10.00% + Margin of 1.00% above Base Rate = 11.00%. As the Bank alters its Base Rate from 10.00% to 9.00%, the applicable Rate changes from 11.00% to 10.00% in this example.

    Generally most of the Banks are offering Home Loans at Floating Rates as it gives them flexibility to alter the rate of interest as per their cost of funds. More than 80% of Banks' Portfolio is on the Floating Rate regime.

    In case of Fixed Rate Home Loans, The Rate of interest remains fixed over the period of loan. Many Banks also offer Fixed Rates over limited period i.e say 1 year, 3 years or 5 years, instead of entire period fixed rate loans.

    In case of Fixed Rate Home Loans, applicants do not stand to get the benefit of lower rate of interests prevailing in the market whereas in Case of Floating Rate Home Loan applicants gains when the Rate of Interest is headed lower in the market.

  • What are the fees being levied by banks on Home Loans?

    The processing fee is either a fixed amount not linked to the loan or it may be a percentage of the loan amount. The loan amount received by you can be less than the processing fee. And as for the administrative fee, 1% of the loan amount sanctioned will have to be paid. Both the processing fees and administration fees are payable upfront.

    Home Loans may also be accompanied by the following extra costs:

    • Interest Tax: is the tax payable on the interest paid on a home loan and not the principal. This tax is sometimes included in the interest rate of the loan, or may be charged separately as interest tax.
    • Commitment Fees: Some banks levy a commitment fee in case the loan is not availed of within a stipulated period of time after it is processed and sanctioned.
    • Miscellaneous costs: It is possible that some banks may levy a documentation or inspection charges.
  • Do I have to contribute my funds while buying a Home OR Will the Bank finance entire cost of Property?

    One has to bring in his own margin/ contribution towards the total cost of property. Prevailing norms indicate Banks finance anywhere between 75-85% of Cost of Property, meaning owner's being between 15-25%.

  • Can I buy a home jointly with my family members?

    Banks accept certain relationship matrix. As such Husband Wife, Wife-Husband, Son-Father, Son-Mother are few of the acceptable relationship matrix. It may be noted that all co-owners of property need to be co-applicants in the Home Loan, but all co-applicants need not be co-owners in the Property.

  • What are the early repayment options ? Can I Close my Loan ahead of schedule?

    All major banks/HFCs offer complete freedom for early prepayment of Home Loan. However minimum Part payment amount per tranche may be different from Bank to Bank. Early Prepayment of Floating Rate Home Loan with most of the Banks invariably without any pre-closure charges. Also Banks generally do not charge any fees on part prepayment as well.

  • What tax benefits are associated with Home Loans?

    Clients are eligible for tax benefits on the principal and interest components of the loan under the Income Tax Act, 1961. However as the benefits could vary each year, do check out the current benefits available. As per presently prevalent IT Rules, Interest paid on Home Loan upto Rs.150,000/- is eligible for deduction from Taxable Income and Principal Repayment is eligible u/s 80C of Income Tax Act.

  • What are the documents I need to submit to get Home Loan approved?

    CLICK here to checkout the list of Documents required here


    Documents required for availing Home Loan:

    Generally the documents required to processing your loan application are almost similar across all the banks; however they may differ with various banks depending upon specific requirement etc. Following documents are required by financial institutions to process the loan application (Please note the list below is only indicative)


    • Age Proof
    • Address Proof
    • Income Proof of the applicant & co-applicant
    • Last 6 months bank A/C statement
    • Passport size photograph of the applicant & co-applicant

    In case of Salaried

    • Employment certificate from the employer
    • Copies of pay slips for last few months and TDS certificate
    • Latest Form 16 issued by employer
    • Bank Statements

    In case of Salaried

    • Copy of audited financial statements for the last 2 years
    • Copy of partnership deed if it is a partnership firm or copy of memorandum of association and articles of association if it is a company
    • Profit and loss account for the last few years
    • Income tax assessment order.

    Apart from the above, in case you have already availed any loans like Car Loan, Home Loan, Education, Overdraft etc, details of the same shall be also be required.

  • Will an NRI be eligible to get Home Loan?

    Majority of Banks do finance NRIs for Home Loan only. For the reasons of local contact, Banks stipulate that a blood relative who is not NRI, be given Power of Attorney by the NRI applicant. Banks may call for Credit Report from the Local Banks/ agencies like TransUnion in USA to ascertain credit worthiness of the applicant.

  • Will a person working in Shipping Company be eligible to get Home Loan?

    More or less similar procedure is followed for person working with Shipping Company. Banks/ HFCs insist on Continuous Discharge Certificate to be produced for verifying continuity of employment in case of Persons working with Shipping Companies.

    Real Value Consultants specializes in serving NRIs & we take pride in having completed NRI Home Loan applications of more than Rs.50 cr till date.


  • Who is an eligible borrower for LAP

    LAP can be availed by anyone who is salaried or self employed person.

  • What are the documents required to process Mortgage Loan (LAP) application?

    Although actual list of documents may vary from Bank to Bank, certain basic documents are listed below:

    For Salaried Individuals

    • Application Form with Photograph
    • Identity and Address Proof
    • Latest Salary Slips & Form 16
    • Bank statements for last 6 months & Existing Loans details
    • Property Documents with Building Plan
    • Processing Fees Cheque

    For Self Employed

    • Application Form with Photograph
    • Identity and Address Proof
    • Business Profile, Proof of Business existence.
    • Last 3 Years Audited Financials with Tax Returns
    • Bank statement and Existing Loans details
    • Processing Fees Cheque
  • What Factors determine my LAP/ LRD Amount?

    Generally following factors determine eligible amount

    • Income & its Regularity (In case of LRD its Rental Value as per rent agreement)
    • Present obligations of Other Loans
    • Market Value of the Property
    • Other subjective parameters like No of dependents, age of applicant, Banking & Savings Habits, Banks' risk perception about a particular Industry etc.
  • Is there a difference between Home Loan and LAP

    Basic Difference is the end use of both the loans, Home Loans are essentially end used for purchase of residential Property ,whereas in case of LAP/ LRD , end use can be anything. In LAP /LRD the applicant is in possession of the subject property.

  • How much time would the Bank/HFC need to disburse the LAP/LRD?

    Processing of application may normally take 7-10 working days. However the actual time may vary depending upon Borrower profile, documentation etc.

  • Does the Rent agreement be a registered one for LRD proposal?

    Yes, All Banks insist on having a duly stamped and registered Lease Agreement stating all the terms like Period of Lease, Lock In Period, Amount of Lease, Frequency of lease payment, Deposit amount, address of property, other outgoes like property tax, maintenance etc.

  • Does any Bank finance LAP / LRD on property which is on a Long lease from Development Authority?

    Many Banks do finance LAP / LRD against properties which are on long lease, especially if the lease is with Development Authority like MIDC/ TNIDC etc. The lease agreement should allow security creation by way of mortgage. In case of LRD, the lease agreement should additionally allow sub-lease of property.

  • Do the Banks charge Prepayment charges in case of early prepayment of LAP / LRD Loans?

    Yes, Banks levy prepayment charges of upto 2% to 4% in case of prepayment of LAP/ LRD facilities.

  • Can I Balance Transfer my Existing LAP / LRD loan to a new Bank? What are the benefits for doing this?

    You can certainly Transfer your existing LAP/LRD loan to a new Bank. While doing so, please bear in mind, are you getting either of the below benefits:

    • Additional Loan as the income and valuation have gone up
    • Interest Rate is substantially beneficial compared to present bank's Rate of Interest.
    • Longer Tenor with above said benefits.

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"Real Value negotiated a very flexible Home Loan plan that suits our requirement. They provided us door step service & thorough advise helping us chose best Home Loan deal."

Rupesh Dhande
Managing Director
Ishwar Forge Pvt Ltd