Top 12 Terms You Must Know Before Taking Home Loan!

Updated on March 7, 20198 mins read
taking a home loan

Updated: January, 2018 Taking a home loan is a mammoth task, especially with all the paper work and cumbersome legal formalities involved. A lot of first time home loan customers are unfamiliar with several loan jargons and find themselves at a loss while dealing with bank officials and builders. But taking a home loan is one of the biggest financial liabilities you will incur. Thus, before you take the leap, you must familiarize yourself with related terms and common practices. So, we have compiled a list of 12 Common Terms You Must Know Before taking a Home Loan: Taking a home loan Click on the topic you want to know more about or just scroll down and read them all, 1) Margin 2) Offer/Sanction Letter 3) Post Dated Cheques 4) Disbursement 5) Equated Monthly Installments (EMI’s) 6) Pre – EMI 7) Resale Property? 8) Pre – Approved Property? 9) What is Credit Appraisal? 10) Is Pre-payment of Home Loan Beneficial? 11) Security 12) Processing and Administrative Fees

1. What is Margin?

In 2010, RBI set a ceiling limit on home loans which limits the amount of loan one can take against property to 80% of the property value. This means that while the bank pays 80% of the total cost of your property, the remaining 20% needs to be paid by you. This remaining amount is referred to as margin or down payment. For example, if you purchased a property worth 75 lakhs, then the bank can fund up to 80% of total amount, which is 60 lakhs. So, the remaining 15 lakhs has to be paid by you. However, in practice a lot of other factors determine an applicant’s loan eligibility. Note: In June, 2017 this limit was enhanced. Now for loans up to 30 Lakhs, banks can fund up to 90% of the property value. The higher the margin amount, lesser will be your loan amount, reducing the total cost of your property (since interest paid on home loan adds on to total cost of property).

2. What is an Offer/ Sanction Letter?

An offer letter is a formal confirmation from the bank stating that it has agreed to consider you as one of its loan customers. It does not confirm sanction of home loan. The loan will be disbursed after a verification of all legal documents and eligibility of applicant. The validity of a sanction letter is generally around 6 months. If the loan is not availed during this period, the sanction lapses and the entire process needs to be reworked if applicant approaches bank again. A sanction letter usually states the following;

  • Amount of loan sanctioned
  • Loan tenure
  • Interest rate applicable
  • EMI and pre-EMI amounts applicable
  • Validity of sanction letter
  • Terms and condition of loan agreement

3. What are Post Dated Cheques?

Taking PDCs for home loan repayments is a common practice banks. These cheques are addressed to the bank, state the exact EMI amount and are signed by you. These cheques cannot be processed ahead of date mentioned on them. 4. What is Disbursement? loan disbursement Disbursement means payment. It refers to the release of loan amount to borrower by lender. Usually, banks disburse the loan amount once all the submitted documents have been verified and the down payments have been paid. A loan is always disbursed by cheque, which can be credited into a loan account with the bank; it is never given by cash. Most banks charge a loan disbursement fee. It is added the principal amount when loan is granted. This fee covers all expenses involved in giving the loan to you. A loan can be disbursed in different ways, depending on your arrangement with the bank and its policies:

  • Full disbursement: A full disbursement means the entire amount is paid in one go. The bank hands over entire payment to seller on your behalf.
  • Partial disbursement: A partial disbursement means that the payment is made in stages. If you are buying an under construction property, then the bank will disburse payments as the construction progresses. For example, after completion of first floor, 20% of the payment will be made and so on.
  • Advance Disbursement: An advanced disbursement means that the entire payment is made before the completion of project. This is done only if the buyer request the bank to do so, or is convinced that builder will complete construction on time. However, its not a common practice.

5. What are Equated Monthly Installments (EMIs)?

EMI payments EMI is the repayment you make to your lender every month. It is an unequal combination of your principal repayment and interest payments. According to the thumb rule, EMI should not exceed more than 30% of your total income, considering other liabilities. To arrive at EMI, your bank will consider several parameters;

  • Principal amount
  • Repayment period
  • Rate of interest

EMI payments start once the loan has been fully disbursed. A break up of your EMIs over the entire loan term can be found in your amortization schedule. It’s important to go over your amortization schedule regularly to keep a track of any changes in interest rate or loan tenure made by the bank.

6. What is Pre-EMI?

When you buy property which is under construction, loan amount is partially disbursed to the builder. When a loan is partially disbursed, only interest payments are made on that amount. These interest payments are known as pre-EMI. So the longer your builder takes to complete construction, the more interest you pay to the bank, adding on to the cost of your property. Pre-EMIs too have tax benefits. After the construction is completed, you can claim tax deduction in five equal annual installments. However, any principal repayments made during this period are not liable for tax deductions. But this should not stop you from making repayments as it brings down your loan burden considerably.

Is paying full EMI a better option than pre-EMI?

Even though paying pre-EMI seems more lucrative in the short run, as you have to pay only the interest component, opting for full EMI payment is more beneficial in the long run. This way you start repaying principal amount even before you get possession, reducing total cost by reducing the tenure of home loan. For example, in the case of pre-EMI, if loan tenure is 20 years, and the builder takes 3 years to complete construction, you will actually end up making interest payments for 23 years.

 7. What is Resale Property?

ResaleProperty   When you buy property from someone who already owns it before, it is termed as resale. It indicates that you are not buying a new home straight from the builder and are not the first owner of that property. While buying resale property, make sure you have a record of all previous owners of property and the reseller has undisputed ownership. This will ensure smooth processing of loan application.

 

 

 

8. What is meant by Pre-approved property?

pre-approved property Now days, several builders get their projects pre-approved by lending institutions. A pre-approved property means that the concerned financial institute has verified all legal and technical documents of the project and has found them in order. So any buyer, who applies for a home loan for this property, need not get the legal verification done again. There are several misconceptions held by borrowers related to pre-approved properties, here are a few of them:

  • Getting a home loan is assured: Several builders misguide customers by assuring them home loans from the financial institute which has pre-approved their project. This is not true. Each application is assessed individually and there is no guarantee that home loan on pre-approved project will always be approved.
  • The project will complete on time: Though the financial institute takes into consideration, the builder’s past records and ability to complete projects on time, it doesn’t mean that it will take any action if construction is delayed
  • The project is legally safe: Though in most cases this holds true, sometimes, small banks  undermine several legal aspects and approve the project to get more business. So it’s always advisable to check which bank has pre-approved the project. A reputed bank is less likely to undermine such details which giving approval.
  • Less documentation is good:  Since the project has been pre-approved, the builder can directly share several documents with the bank, keeping you out of the loop. This way you are saved from the hassle of handling so many documents, but you will never get access to important documents related to the project.
  • You cannot take home loan from other lenders: This is not true! Just because the project has been pre-approved by a particular bank, it doesn’t mean you have to take the loan from them. The builder may try it’s best to convince you otherwise, but you are free to take a home loan from any lender of your choice.

9. What is Credit appraisal?

Credit appraisal is a check on the applicant’s financial situation to determine eligibility for home loan and the maximum loan amount. Credit worthiness of an applicant assures his repayment capacity. Several parameters are considered to confirm the credit worthiness of a loan applicant; credit appraisal

  • Incomes of the applicant and co-applicant
  • Age of applicants
  • Qualifications
  • Nature of profession
  • Employer
  • Security of tenure
  • Tax history
  • Assets owned and investments
  • Additional sources of income
  • Recurring liabilities

10. How is Pre-Payment of loan beneficial?

When a borrower chooses to make lump sum repayment of loan, it is termed as pre-payment. Pre-payments are beneficial as they help get rid of debt faster by reducing loan tenure.

11. What is Security in a loan?

home loan security Security is the asset provided by borrower while taking loan. In this case, the property being purchased serves as asset for home loan. If you fail to repay the loan due to certain circumstances, the bank can sell this property or convert it into an asset to recover loan amount. Therefore, before finalizing a loan, you must analyze the terms and conditions of various banks, and choose the one with favorable terms.

12. Processing & Administrative Fees

Every bank charges processing and administrative fees for processing the documentation of your home loan. On an average, the fee ranges from 0.5% to 2% of loan amount.  Though it seems like a small percentage, it can add considerable weight to your home loan costs. Several banks offer schemes wherein they waive off processing fee, to attract more customers. So while choosing a bank, it is advisable to opt for one which offers the lowest or no processing and administrative fees. For more information on home loan related terms, refer to; 3 Important Home Loan Terms Before You Switch! SwitchMe is an end-to-end service that helps you with everything related to your Home Loans! Signup for identifying the right lenders to figuring out the best tenure, interest rates or balance transfers. Also get one FREE call from one of our Advisors. Our customer, Mr. Girish Nambiar says “SwitchMe consultants are very proactive and responsive. They would listen to your challenges and provide creative ways to solve your problems. They are willing to go above and beyond to make their customers happy and they always stick to their commitment.”


Tarini

Tarini

Tarini comes with a degree in Mass Communication and Media studies. She joined SwitchME as a content writer and moved on to being an assistant product manager. Tarini is an experienced Content Strategist with a background in Product development and management. She is skilled in SEO, social media strategy and online content marketing and likes to travel when possible
381 COMMENTS

Have a question? Post it here and we will get back to you within 1 working day.

  1. SKumar
    Sep 06 2016 at 5:08 pm
    Reply

    This is an excellent place to understand home loans better. Appreciate your hard work.
    I have a query on home loan for under construction flat which is almost ready. Builder and bank feels 95 % should be paid immediately. So my questions are:-
    1. Will I have to pay first 20 % or how much for the bank to release 80 % ( max loan amount) to builder ?
    2. Can the remaining 5 % be paid by me instead of bank as part of final loan disbursement ? So i can start paying full emi from day one. Also in this context of 5 % how does the first 20 % change – to 25 % ?
    3. Property insurance is being forced upon by bank, so how much would that be typically for 55 L property for loan of about 40 L for 10 yr ?

    I’m confused on above, hence need some light !

    • Sumita Nath
      Sumita Nath
      Sep 15 2016 at 1:58 pm

      Hi Sunmenda,

      1. You will have to pay first 20% and the bank will release 80% depending upon the eligibility criteria of that bank.
      2. You can pay the remaining 5% as part of final loan disbursement and yes, it means you are paying 25%.
      3. Your Property insurance would be around Rs. 10516/-.

  2. Ashish Kumar
    Aug 30 2016 at 10:04 pm
    Reply

    Hi Tarini,
    Hope you are well !

    I have a approved load of maxgain 42 Lakhs , But I have not done any disbursement for it yet , They have given me Monatary Period of 18 Month´s to Start the EMI , Now I don´t wanted to take the Disbursement , Can I close this account of 42 Lakhs which is there in my SBI Bank account and
    will SBI charge me anything for it to cancel now the Approved Loan without taking any disbursement ??

    Please help , need your suggestion on this

    Thanks and regards

    Ashish Kumar

    • Sumita Nath
      Sumita Nath
      Sep 28 2016 at 12:55 pm

      Hi Ashish,

      You need to get in touch with your bank to discuss about the closure.

  3. Satish
    Aug 24 2016 at 2:31 pm
    Reply

    Hi, i have approved home loan for 10L from Indiabulls for an approved project and i requested to Indiabulls to reschedule the agreement(tri party and between Indiabulls and me) sign date due to some reason.But the executive told me that it is not possible and if i delayed it then agreement and loan approval gets cancelled and that may reflects on my CIBIL or there may be some problems will occur when i apply for next time from the same i.e. Indiabulls or some other bank or institutions in the future. I am not cleared at all. Please help me out.
    Thank you.

    • Sumita Nath
      Sumita Nath
      Sep 28 2016 at 2:34 pm

      Hi Satish,
      Its is advisable to sign the agreement as soon as possible as delaying it might lead to cancellation of approved loan and that will affect your CIBIL score.

  4. akash dahake
    Aug 24 2016 at 11:00 am
    Reply

    i have purchased a flat.. its possession is due after one month. me and my wife have applied for home loan. we have taken 58 lakhs loan out of our 70 lakhs eligibilty according to out house value. i want to have furniture so i require a top up loan. is there any bank which provides top up loan just after possession. i ahve paid only 2 emis yet..

    • Sumita Nath
      Sumita Nath
      Sep 28 2016 at 2:27 pm

      Hi Akash,

      Now a days banks give top up loan after possession also. Please get in touch with your bank to know more.

  5. Vaibhav Negi
    Aug 16 2016 at 8:49 pm
    Reply

    Hi Tarini,

    I have opted HDFC home loan (on my salaried account) for 1 Mahagun builder property 2 years back. But now do to some personal reasons i want to cancel my loan and everything. Is it now possible? if yes then please suggest.

    • Sumita Nath
      Sumita Nath
      Sep 28 2016 at 5:29 pm

      Hi Vaibhav,

      Please consult your bank for the same.

  6. Narasimharao
    Jul 05 2016 at 3:37 pm
    Reply

    1.how far indiabulls is reliable to take home loan. 2. Indiabull follow the rbi guide lines or not to increase or decrease the rate of interest. 3. is there any chance to increase the rate of interest for existing customer with out rbi guide lines

    • Sumita Nath
      Sumita Nath
      Sep 28 2016 at 5:17 pm

      Hi Narasimharao,

      I would suggest you to go with banks rather then nbfcs as banks provide good interest rates. India bulls doesn’t fall under rbi guidelines but under sebi guidelines.

  7. Anil rana
    Jul 01 2016 at 12:23 am
    Reply

    Hi madam . Good morning…
    Ma am mene hdfc se 16 lakh ka loan liya h jo approve ho gya ha .. meri property 20 lakh ki jo under construction h.. mene down payment kiya h 10%.
    Abhi bank 6 times m ye pesa dega builder ko…
    Mujhe apse y jana h ki agar m apni taraf se kuch arrangements kar k 4..5 lakh rs dena chau or m y chahta hu bank se jitnaa loan ho sake kam lu…kya y possible h…..ya jo laon approved hua h wo lena hi padega….. plz help me out of this plzzzz

    • Sumita Nath
      Sumita Nath
      Oct 05 2016 at 4:18 pm

      Hi Anil,
      Sorry for the delay response. You can definitely do that, just ask the bank to disburse lesser amount and rest of the amount can be paid by you.

  8. Jerome Vinod R
    Jun 15 2016 at 1:52 am
    Reply

    Let me know why are you keep on deleting my question

    Hi Tarini,
    I’ve taken a home loan for 25 lacs for 10 years from HDFC bank and it was sanctioned last week. The property is under construction and expected to be completed in 2 or 3 months. I’ve opted for Full EMI option even though the amounts will be partially disbursed to the builder. I have chosen the EMI payment date to be 20th of every month. My first EMI would start on 20th July.
    As of 09 Jun 2016, I’ve requested to disburse 5 lacs for which the bank has issued a cheque to the builder. Now my issue that the bank tells me that I have to pay an additonal interest for the days upto the 30th of that month whenever a partial amount is disbursed by them. Hence they are asking me to pay Rs. 2833 as the interest for the first disbursement. When I argued that wouldn’t the same interest be collected as part of first full emi, they say that it is EMI and different. (Even in that EMI, interest charges would be calculated only for 5 lacs and the rest would be principal). Similarly they say that for every subsequent disbursement, I’ve to pay one time interest charges separately for the amount that is disbursed.
    Please let me know if it is right on their part to collect this apart from the Full EMI that I’ll be paying each month because I believe that the interest they collect in the EMI applies to the previous month. I’ve failed to succeed in my argument with them today with regard to this.
    Thanks,
    Vinodh

    • Tarini
      Tarini
      Jun 16 2016 at 2:16 pm

      Hey Vinodh

      I apologize for the delayed reply. Furthermore, none of your queries have been deleted from our blog, I can assure you of it. We have been unable to post timely responses to all the the queries on the blog due to an overwhelming response from all our readers. Moving on to your query;
      This is a standard practice across several banks, an additional one time interest is charged for each partial disbursal made by the bank to you/ builder.

  9. Mikesh
    Jun 11 2016 at 11:34 pm
    Reply

    Hi Tarini,
    Nice work its great help to me for your comments and suggestion at all stages in home loan . I have some queries ,I got sanctioned of home loan from axis bank of 22lkh . I already have my salary Account with axis bank . Is it mandatory to open a another loan account for loan process . also is the property insurance mandatory ? bank person stating its mandatory in axis side i have waived of insurance cover with loan

    • Tarini
      Tarini
      Jun 16 2016 at 1:40 pm

      Hey Mikesh

      Thank you for the appreciation! 🙂 Regarding your query;
      1. No, there’s no need to open an additional account with Axis bank, since you already have your salary account with them. The EMIs can simply be debited from there by the bank’s ECS.
      2. Yes, for several leading banks like Axis, ICICI, SBI; property insurance is mandatory for all home loan borrowers. Its done to safeguard the bank’s and borrower’s interests against all the unforeseen circumstances covered under difference property insurance schemes. I suggest that you get the property insurance cover for your own benefit, in the long run.
      Do let me know if I can help with anything else.

  10. Chintan Jain
    Jun 01 2016 at 4:36 pm
    Reply

    Great post! The cumulative points are really helpful. Other the points given in the post, I guess more clarification can be gained from the comment section discussions:) Nice one to read before proceeding to take loans.

    • Tarini
      Tarini
      Jun 01 2016 at 4:50 pm

      Hey Chintan

      Thank you for the appreciation 🙂

  11. keerthi
    Jun 01 2016 at 4:15 pm
    Reply

    We are planning to buy a flat from land owner’s share in an apartment for 3000/- perSFT. But land owner is willing to register the property only as per Government value i.e., 1500/- per SFT.
    Total flat value is 45 Lakhs and we planned to avail home loan of 80% and down payment of 20%. My doubt is, do we get loan amount only as per registered value or can we get complete 80% of the amount in 45 Lakhs.
    If the loan amt is given only as per registered value, we have to pay around 25lakhs by cash. Is there alternative to availe loan for complete house value.?
    What is Third Party registration?
    Please provide me a solution as early as possible so that we can proceed.

    • Tarini
      Tarini
      Jun 24 2016 at 3:30 pm

      Hey Keerthi
      Its perfectly fine if you register the property on a lower value (or on government value). the bank will still give you a loan on the actual property value ie. 45 lakhs. Generally, banks consider the highest of the two rates, the government rate and the actual property value. Hence, you have nothing to worry about 🙂

  12. laxmikant
    May 31 2016 at 8:08 am
    Reply

    Hi, Tarini,

    My loan application got rejected from HDFC this month citing the reason of two bounces of bajaj finserv home appliance loan which is about to complete in three more months. My salary is 35000 PM, and i beleive i can easily pay the emi of 15000 against home loan, though i do not save much at month end because i use all my salary but beleive that i will not waste money for unimportant things and pay my emi when the loan is disbursed.

    Please suggest when can i reapply for HDFC loan, or which institutions can give me home loan considering the fact that there were two instances of emi bounce of bajaj finserv few months back. I dont have any other liability or loan except for 10000 per month in birla sun life.

    Regards,

    Laxmikant

    • Tarini
      Tarini
      Jun 03 2016 at 3:23 pm

      Hey Laxmikant

      It will be difficult for you to get a home loan immediately from any (financial institution) due to the following reasons:
      1. 2 bounced payments on an existing loan : this affects your financial credibility and CIBIL score
      2. Existing liability of Rs. 10,000 on insurance : when you apply to a bank for a home loan, they gauge your financial capacity to repay the loan on several parameters, one of which is income. While your income is Rs. 35,000 , for the purpose of judging repayment capacity, the bank will deduct all your existing liabilities from the salary, this brings it down to Rs. 25,000.

      Thus, I would suggest that you reapply for a loan;
      1. once 12 months have passed from the date of your first bounced repayment on the existing loan.
      2. You have an increased financial capacity to service a home loan.
      Further I would advise you to go with a nationalized bank like SBI as they have a track record of offering the lowest interest rates in the market.
      I hope this is helpful.

  13. Saikat
    May 28 2016 at 12:37 pm
    Reply

    Hi,
    I have applied home loan and got approved in Indiabulls. But I need to cancel that application due to certain circumstances. I want to know is there any cancellation charge? I did not provide any property related paper. I gave only self documents and a cheque of Rs. 1145.

    • Tarini
      Tarini
      Jun 03 2016 at 4:43 pm

      Hey Saikat

      While there will not be any additional cancellation charges, the processing fees of Rs.1,145 will not be refunded to you.

  14. Rahul
    May 26 2016 at 11:46 am
    Reply

    I am planning to take a loan for 20 years, Please suggest it is advisable to take a loan for 15 years by increasing an emi by 5k only.
    Also, would like to understand, in case, if i pay 10k everymonth over and above my EMI amount will that be deducted from my principal loan amt and how that will be adjusted.

    • Tarini
      Tarini
      Jun 06 2016 at 5:34 pm

      Hey Rahul

      Here’s a clarification to your queries;
      1. Its always advisable to take a home loan for a shorter tenure, and repay it before the tenure ends. Hence, I would suggest that you go for a 15 years loan with an increased EMI of 5k.
      2. Yes, if you repay an additional amount of 10k every month, it will reduce your principal amount by 10k every month. You can simply deposit the additional amount in your loan account every month, the bank’s systems will take care of the rest.

  15. Awtar Singh
    May 23 2016 at 10:48 am
    Reply

    HI,
    I am going for a home loan for a resale property @ Rs 2200000 for a tenure of 25 years. What benefit will I get if a pay an amount of Rs 1000000 after 3 years. kindly suggest.

    Regards
    Awtar Singh

    • Tarini
      Tarini
      Jun 06 2016 at 6:04 pm

      Hey Awtar

      Simply put, the additional prepayment of 10L after 3 years will help reduce the principal amount. This will also reduce your home loan tenure, while the EMI remains the same as before, helping you close the loan sooner than projected.

  16. Prabhat
    Apr 14 2016 at 9:36 pm
    Reply

    Book flat 2 BHK it is in Ready possession .I have paid 20% of the amount to the builder and rest will be taking loan. Builder will prepare the agreement and hand over to me. i need to know what are the more documents will the builder provide me at the time of agreement ie other documents. Next I need to hand over this document to the bank for applying the loan or bank will approach to the builder to get the document. Please advise.

    • Soni Singh
      Soni Singh
      Apr 25 2016 at 5:02 pm

      Hey Prabhat

      You will get agreement copy from the builder which should include following important documents.
      1. Possession Certificate
      2. Completion Certificate
      3. Occupancy Certificate
      4. Index II
      5. Building Plan copy
      6. Receipts of payments made to builder
      7. Property registration receipt
      8. Property tax and maintenance receipt etc

      If you are taking the loan through tie up bank with builder, then bank directly approaches the builder.
      If not, then you need to do all the formalities and documentation involved in home loan process.

  17. Jaswinder singh
    Apr 11 2016 at 11:53 am
    Reply

    Hi Tarini,
    i have availed home loan of Rs 1500000/-from AFGIS (Air Force Group Insurance Society) as i am serving in Air Force but now i wish to transfer my home loan because i am leaving Air Force and its mandatory to clear all my dues before leaving Air Force . Please suggest me how to transfer my existing loan .

    • Soni Singh
      Soni Singh
      May 16 2016 at 5:17 pm

      Hey Jaswinder

      We need to understand your case in detail. Kindly share your contact number to help you with best possible options or else you can call on +918108899980.

  18. Bhavesh Solanki
    Feb 10 2016 at 10:50 am
    Reply

    Hi ,
    I have a home loan of 21 lakhs for the flat at Pune which is self occupied by me,i’m availing another loan for 16 lakhs at a new flat at Nagpur .I wish to seek your advice as to which loan should I repay first ??

    • Tarini
      Tarini
      Feb 10 2016 at 7:56 pm

      Hey Bhavesh

      I would suggest that you repay the loan on the highest interest rate or highest tenure first. This way you will be able to save on the total interest paid on the entire home loan. I hope this is helpful 🙂

    • yogesh
      May 23 2016 at 11:29 pm

      Hi Tarini,

      I have taken a home loan of 1300000rs for 15 years and it is fully disbursed from ICICI Bank on 20th May 2016, But EMI has not yet neen started. Pre EMI of 5500rs will be there in June and actual EMI of 13500rs will starts from July. But My registration will be there on 6th June. I am short of 200000 for registration. So I thought of applying personal loan . Now if I take any personal loan will it affect my home loan? Is there any chance of rejecting my home loan from ICICI Bank. ? Or Can I proceed to take personal loan from other banks without informing them I have homeloan from ICICI Bank? In case If personal loan got approved then should I inform ICICI Bank? Please help on this.
      My net salary per month is around 27000rs

    • Tarini
      Tarini
      Jun 28 2016 at 5:17 pm

      Hey Yogesh

      I need you to clarify a few points for me before I proceed with answering your queries;
      1. Is the registration amount 2L or 2K? Generally, registration and stamp duty of a property is .2% of the sale amount of the property. So a registration of 2L will put your property at a price of 10 crores!
      2. Hence, I suggest that you recheck your calculation to see what the stamp duty actually is. Once you get the correct figure, I suggest that you make a decision based on that.

      3. Answering your second question, taking a personal loan to pay the stamp duty will not affect your home loan in any way. You are free to take a personal loan from any bank that gives you the best deal, you are not liable to inform the bank you have taken your home loan from. ICICI bank has nothing to do with any other loans that you take. Hence, there is nothing to worry about here.

      I hope this is helpful information 🙂

  19. Shailesh
    Feb 08 2016 at 6:06 pm
    Reply

    Hi Tarini,

    I am going to purchase a Resale flat costing 20Lacs.If i pay down payment partial in cash and partial thru cheque,Do bank ask for sellers bank statement.OR. Mentioning in agreement will be sufficient.as 20% amount recd.
    Please reply

    Shailesh

    • Tarini
      Tarini
      Feb 09 2016 at 2:36 pm

      Hey Shailesh

      There is no need to submit a copy of the seller’s bank a/c statement, its sufficient to mention it on the agreement 🙂

    • tarun gupta
      May 23 2016 at 3:42 pm

      My banker is asking again and again seller’s bank a/c statement even i have submitted agreement.
      Does it is necessary

    • Tarini
      Tarini
      Jun 03 2016 at 4:45 pm

      Hey Tarun

      That’s an unusual request, general banks don’t bother about the seller’s credibility, and simply verify the property in question. I think it would be helpful if you asked them the exact reason for this request.

  20. Gaurav Singh
    Feb 01 2016 at 12:35 am
    Reply

    Hello Tarini

    I have bought property in resale and possession in one year.I availed loan through HDFC Ltd.They disbursed amount on 20th Jan so i have to pay 10 days interest i.e. Jan to 31st Jan. My EMI date is 15th of every month.Loan Tenure is 25 year.

    1.When will be my first EMI? In 15th feb or 15th March?
    2.Since there is time in possession so one demand of Rs 228000 is pending.Right now EMI amount is 28890 after full amount it will be Rs 30000.if there is any delay in possession then will i pay more than 25 year or not?
    3.Whatever i will pay right now till possession, is this pre Emi or full emi.

    Regards

    Gaurav Singh

    • Tarini
      Tarini
      Feb 08 2016 at 2:53 pm

      Hey Gaurav

      Here’s a clarification to all your queries;
      1. Since your home loan was disbursed in Jan, technically your first EMI should be due on 15th feb. However, thsi query will be answered best by the bank, I can only give you a general outline of how its supposed to be. Please contact the bank for further clarification on this 🙂
      2. Even if there is a delay in possession of your property, it will not affect the tenure of your home loan as the EMI will remain the same once the amount has been disbursed.
      3. The difference between the two is;
      pre EMI : you pay only interest for a certain period, or in most cases, until possesion of the property
      full EMI : you pay interest + principal repayments from the very first installment itself. This option will help you close your loan faster than the former.
      Every borrower is given an option to chose between the two payment methods. So its up to you to decide. Generally, if the option wasn’t given while completing the documentation, then its treated as Full EMI. However, you can confirm the same either by asking the bank or requesting for an amortization schedule (which provides a breakup of each EMI payment for the entire loan tenure).

      I hope this is helpful 🙂

    • Bhumi
      Feb 21 2016 at 4:03 pm

      Hi Tarini
      I have taken a home loan on Jan 2015 from SBI but I’ve not been given any papers confirming that. EMI is deducted every month from my account. No documents were given to me by the bank. Not a single letter about how much loan have i taken, how much EMI i am paying? When will i finish paying it? I have nothing with me in written. I tried asking the officer but he said it iis nnot needed.What do I do?

    • Tarini
      Tarini
      Feb 22 2016 at 3:28 pm

      Hi Bhumi

      This is strange and against SBI rules and regulations. Any borrower is entitled to a copy of the MOD (Memorandum of Disburement), whihc is supposed to be signed by the bank officials in the borrower’s presence.
      Every borrower is entitled to get a loan sanction letter from the bank, and a home loan disbursement cheque, which you will need to en-cash to get the loan started.
      You are even entitled to getting an amortization schedule from the bank on request (you can put in a written request through mail, they bank will have to provide it to you).
      Please put in a written request for all these documents, and if need be go to the bank and talk to the branch Manager. If nothing works out then please write a letter to the regional head office of your area. I hope you get the documents asap, do keep us posted.

  21. Santosh
    Jan 28 2016 at 11:48 am
    Reply

    Hi Tarini,
    I am aged 44 yrs 8 months. My question is that, how strict any bank would be (w.r.t age) in providing home loans? can i get load even if i am 45 yrs 6 months old?

    • Tarini
      Tarini
      Jan 28 2016 at 11:56 am

      Hey Santosh

      The bank considers several factors before lending to a borrower, age is just one of those factors. So if you have the financial capabilities to service the home loan repayments for the tenure being offered by the bank, then you may be eligible for the loan. I suggest that you go ahead and apply for a loan to a bank of your choice, age shouldn’t be a big deterrent.

  22. Ameya Kunte
    Jan 19 2016 at 10:36 am
    Reply

    Hello,

    I am looking property which is in under construction. But currently I am living in rented house. So it is not possible for me to pay rent as well as EMI.

    Can you advice which are the options available.

    • Tarini
      Tarini
      Jan 20 2016 at 3:36 pm

      Hey Ameya

      Since you do not have the financial capacity to support an EMI and a rent, it will be difficult for you to get a home loan. Unfortunately, you don’t have any alternate options available either :/

    • aj
      Jan 27 2016 at 2:24 am

      Hello tarini I’m salaried employee my take home salary was 25k pm. My age was 22 year old I’m looking forward to take home loan. Flat is in construction and price was 26Lakh my father is ready to pay 10Lakh and now I want to take 16Lakh home loan. Please suggest me how should I proceed.

    • Tarini
      Tarini
      Jan 27 2016 at 4:46 pm

      hey aj

      You can go ahead an apply to any bank of your choice. While teh chances of you getting a home loan of 16 lakhs are not very bright, given your take home salary, you can try applying for an SBI Yuva home loan to get a higher eligibility, incase the bank of your choice denies a home loan. One of our home loan advisors will get in touch with you shortly to assist you further. Thank you for getting in touch with us 🙂

    • Alekhya
      Jan 29 2016 at 7:23 am

      Hi Tarini, I am a doctor doing my post graduation as MD in microbiology in a government college. I get stipend of Rs.25,000/- every month till 18 months from now. After that I can make the repayment of loan by doing job. Will I get loan now on stipend income?

    • Tarini
      Tarini
      Feb 08 2016 at 1:54 pm

      Hey Alekhya

      Yes, you can try to get a loan on the stipend. IF you are looking for a home loan, Yuva Home Loan by SBI would suit your needs best, as its designed for young professionals like you. A few features include:
      1. A higher eligibility based on the assumption that within a few years there will be an increase in the salary.
      2. A moratorium period of 3 years during which you will need to pay only interest. So your full EMI payments will start only after 3 years. This gives you the benefit of paying a low EMI initially.
      I hope this helps 🙂

    • Alekhya
      Feb 09 2016 at 2:44 pm

      Thank you Tarini

    • Tarini
      Tarini
      Feb 09 2016 at 2:51 pm

      You’re welcome! 🙂 Do let me know if I can assist you with anything else.

  23. CJ
    Jan 18 2016 at 5:36 pm
    Reply

    This query is regarding an under construction property. The builder has worked with loaning institutions and has come up with special funding scheme. The special funding scheme requires you to pay 50% upfront payment. The difference in the property cost including taxes and vat is around 8 lakh( reduction in total price). The property would take 3 years from now to complete. There are 11 installments, where first one is sale-agreement and last is registering the property. for 50% case the first installment would be 50% money disbursement followed by 7%->7%->7%->7%->4%->3%->3%->3%->3%->3%->3%. Whereas in normal case 27% followed by 7%->7%->7%->7%->7%->7%->7%->7%->7%->7%->3%(Register the property). 1) If the borrower doesn’t have 50% upfront, how much minimum upfront would still be advantageous.(in case upfront is 25%??) 2) What kind of EMI schedule the borrower should follow,(higher tenure/lower emi or lower tenure/higher emi) 3) What would be the best way to utilize the funds and bring down property cost. 4) if one goes with very low emi during first 3 years with large tenure let’s say 25 years, and does huge repayments after property possession. Repayments with capacity to close the loan account within 5 years from now. is it a suitable option. Any kind of guidance to utilize the self-funds in best possible ways and exploit 50% special funding option to borrowers advantage will be highly helpful. Thank You.

    • Tarini
      Tarini
      Jan 20 2016 at 4:17 pm

      Hey CJ

      Apologies for the delayed reply, here’s a response to all your queries:

      1. The down payment is subject to internal discretion of the builder, please get in touch with them regarding this.
      2. The ideal scenario is following lower tenure and higher EMI, as this way you will end up paying less interest on the entire tenure. However, if one has some financial constraints and cannot service a very high EMI, then going for a lower EMI and higher tenure is the only option. So I would advise that you go for an EMI that’s comfortable for you to pay, even in the near future.
      3. There is no way you can bring the property cost down, the only option is to do a negotiation with the builder.
      4. Sure! That’s an excellent way to close your home loan quickly. You can definitely make pre payments every month on occasionally in lumpsum. So if you have surplus funds right now, why not start with a lower loan amount all together?

      I hope this helps. Please feel free to get in touch with me in case of any further queries 🙂

    • CJ
      Jan 20 2016 at 4:46 pm

      Thank you for replies Tarini.
      Please consider this point, that with 50% advance funding and normal funding there is a difference of 8 lakh (builder has lowered cost for 50% option). hence i’m interested to understand that , in case of 50% option how much minimum percentage of self funds needs to be arranged to avail the benefit of the 8 lakh difference. In this case higher emi’s will start and i guess only interest flow since it’s under construction property. Also, The emi’s paid in both normal funding and 50% advance funding would catch up anyway and borrower after some time(year or so) will see same amount of emi in both the case.

      For 1) I meant, if we pay 27% upfront and get into sale agreement (paying 25%self and 2% from bank and start emi is this better or if we pay 50%upfront to builder with 25% self and 25% bank(higher emi), but if you see the installment breakup in both case after 1 year(or after some 5-7 installments are paid) , the release of funds to builders will almost be same isn’t it? in that case what percentage mark of self-funds in 50% advance funding would be a good choice( i understand that it needs some maths). Are there any pointers from your side on things to take care while doing the calculation.

      Please let me know, early response would help. Thanks

    • Tarini
      Tarini
      Jan 20 2016 at 5:27 pm

      Hey CJ

      As per the points explained by you, I understand that the builder is offering an option of a 50% down payment with a reduction of 8 lakhs as getting a higher down payment is beneficial to them.
      However, from a customer’s perspective, its best if you follow the standard pay out system of 27% down payment and rest of the payments per construction of slab. This way you will be able to ensure;
      – a steady pay out to the builder as per development of your property
      – a stable liquidity
      – financial security (in case the builder doesn’t fulfill his end of the deal or delays the construction, you will have the security of the remaining amount, which will get reduced if you pay 50% in down payment)

      I hope this helps 🙂 Do let me know if I can assist you with anything else.

  24. Ashish
    Jan 15 2016 at 5:27 pm
    Reply

    Hi Tarini,

    I have Few Question’s

    Q1. I have Given My Documents for Processing the SBI MaxGain Home Loan Under 0% Processing fee Festival of SBI – As per My eligibility SBI Bank Submitted the Documents for Sanction Letter around 49 Lakhs , I wanted to Know is it necessary to take all the 49 Lakhs as per the Sanction Letter , as I wanted to take only the 20 Lakhs Rest I will Fund My Myself , as they have sended the documents as per the eligibility but my plan is to take only 40% Loan around 28Lakhs ( for next 40 % CLP. )

    Q2. Is in SBI MaxGain , there is option for the PRE- EMI or FULL EMI as my Property is UnderConstruction I have Self Funded already 40 % Initial amount ( CLP) and Rest as per Slab like 4th floor , 8th floor , 12th floor and 18th floor and 20% in Possession , So what you will Suggest to take the PRE EMI Option for the Next 40 % CLP and 20% of Possession CLP I can do SelfFunding intead of taking the Loan or I ask the Bank to Start the FULL EMI from Day 1 for the Rest 40 % CLP, Which can benefit me in Principle amount as in PRE EMI i have to be dependent on Construction Months which subsequently may Increase Interest depending on the Builder and in PRE EMI Case Prinicple amount will be funded later .

    Q3 . Is SBI Maxgain better than Normal Home Loan ?

    Please respond , so that It can help me in taking decision better .

    regards
    Ashish Kumar

    • Tarini
      Tarini
      Jan 18 2016 at 2:04 pm

      Hey Ashish

      Here’s a clarification to all your queries:
      1. When a loan gets sanctioned, its only indicative of the maximum amount of loan a person can borrow. So you can simply tell SBI that you want loan for a lower amount and they should comply, this shouldn’t be a problem 🙂

      2. Since you have an under construction property, going for pre EMI is a safer choice as, if the the construction gets delayed, you will not have to worry about paying the full EMI for that extra period. However, if you start paying full EMI from day 1, then you will be able to start reducing your principle amount sooner. So I would suggest that you weigh all the pros and cons before taking a decision.

      3. I would say SBI Maxgain is better than a regular home loan as it provides the borrowers with an Over Draft account in which one can deposit surplus money that helps reduce the loan amount on which interest payable is calculated (book balance). This helps close the loan sooner than the decided loan tenure. Also, you have an option of withdrawing thsi money any time you like, unlike regular home loans where surplus deposits made with the EMI can’t be debited by the borrowers.

      I hope this information helps you make a decision, do let me know what you go ahead with! 🙂

  25. thisisneeraj
    Jan 10 2016 at 3:11 pm
    Reply

    Hi, It was a very wonderful and informative post. I am planning to take home loan but bank is sanctioning only 80% of amount.
    I have heard SBI Yuva home loan ,gives more loan amount.
    I am a salaried professional and ofage 26 years.
    I would be thankful if you could please advise if SBI Yuva home loan is better then others ,and the possible catches/pitfalls in this scheme.
    Thanks a lot.

    • Tarini
      Tarini
      Jan 25 2016 at 5:34 pm

      Hey Neeraj

      Thank you for the appreciation 🙂 Regarding your query, under SBI Yuva Home loan, you will be able to get a 20% higher loan eligibility. For the first 3 years, you will need to pay only interest, after which the actual EMI payments will start. This has been designed with the assumption that you will get a salary hike within this time frame of 3 years and will be eligible to service the increased loan amount.
      So effectively, you will end up paying more interest on a Yuva home loan than a regular home loan or a Maxgain home loan as the principal repayments start only after 3 years. You cannot make any pre payments before this.
      But if you are looking for a higher eligibility and are okay with paying a little extra in terms of interest payments, then please go ahead with this. I hope this helps you decide better! 🙂

  26. ravi
    Jan 09 2016 at 11:06 pm
    Reply

    hi this ravi i had received the offer/sanction letter from HDFC bank and i have also paid the 20% of the loan amount so what is the criteria when bank disbursed the approved amount for eg; my aggrement value is of 2000000 and the loan approved is the of 15 lacs then for disbursing the loan amount i have pay the the difference amount which is 5 lac after which loan will be disbursed or just what are ways that i can get the loan amount from the bank.

    • Tarini
      Tarini
      Jan 27 2016 at 5:16 pm

      Hey Ravi

      Your payment to builder for 20% of the property value does not affect the amount on the sanction/offer letter. The sanction letter simply states the maximum amount you are eligible to borrow from the lender. You can get disbursal from the bank simply by signing an agreement and completing all the documentation formalities. The payment of Rs. 5 lakhs can be done anytime as per your and the builder’s convenience, they bank will have nothing to do with it.

  27. T Madhusudhan Reddy
    Jan 09 2016 at 6:17 pm
    Reply

    Hi tarini,

    I had agreement with seller for buying a property in Hyderabad. the house is in 66 sq.yards with two floor building which was constructed 10 years back. the value of the property is 20 Lacs. I was willing to go for home loan of 15 lacs. I had applied the home loan with UBI. after all scrutiny of documents bank had given a sanction letter & asked to submit the original agreement copy the same was submitted to the bank. but after 10 days banks confirm that house which was constructed was 30 years back. new construction which was done 10 years back doesn’t have municipal permission. so we cannot sanction a home loan for these property. So accordingly i have informed the seller for cancellation of the agreement. Seller accepted for the same. But now bank had misplaced our original agreement copy. Seller says untill you return the original agreement i will not refund your down payment.

    So request you to please confirm how to proceed to get back my down payment.

    • Tarini
      Tarini
      Jan 27 2016 at 5:20 pm

      Hey Madhusudhan

      This is indeed a very compicated situation to be in 🙁 Unfortunately, the only way out is to press the bank officials to find the Original sale agreement and take up the matter with higher officials if need be. The builder will not be able to return the down payment amount until the original agreement is returned. I hope it works out for you!

  28. ravi Kataria
    Jan 08 2016 at 1:49 pm
    Reply

    Hi Tarini,

    I have booked a under construction flat having property value of 29L, i have paid to builder 18L (65% completed) but now i am planning to take bank loan from SBI with full-pay EMI option. I am looking from bank, loan of 15L for five years.
    i have a plot and i want to use that 15L to construct my bungalow there, secondly i will also be able to receive the
    tax exempt of 30% on intrest

    There will be no issue from documents & eligibility perspective.

    Will it be possible for bank to disburse the loan amount to my account instead of builder account ?

    • Tarini
      Tarini
      Jan 08 2016 at 3:17 pm

      Hey Ravi

      No, the loan amount will get disbursed to the builder’s account only, it will not get disbursed to your account.

  29. Rohit Kumar
    Jan 05 2016 at 9:38 pm
    Reply

    Hi
    I am planning to buy a flat which is under construction or about to be constructed in near future. My builder who is reputed offers me either i go for one time payment (OTP) or CLP. In OTP he asked me to pay rs. 16 lac as a revised rate of 3000 sqft in CLP. I am little bit confused in following-

    (i) is it good to go for OTP?

    (ii) wil bank give me a home loan of 14 lac in one time as my gross salary is 4lac p.a.?

    • Tarini
      Tarini
      Jan 08 2016 at 3:04 pm

      Hey Rohit

      A one time payment is a very risky option as your money will be stuck with the builder in case the construction is delayed or get stuck due to some legal problems. Further, no bank will give you a home loan for a OTP as according to RBI regulations, in the case of under construction properties, the partial disbursements of the loan need to be tied to the progress in construction of the property. Thus, its best of you go for second option.
      I hope this helps 🙂

  30. Amit
    Jan 04 2016 at 10:03 pm
    Reply

    Hi Sir,
    The bank has just sanctioned my home loan of Rs.15 lacs. The construction of my house will start in Feb & complete in Aug. But, the bank manager in advising me to pay only Pre-EMI for disbursed loan amount instead of full EMI till Dec 16 & to pay full EMI from Jan 17 onwards. What will be the better option ?

    • Tarini
      Tarini
      Jan 06 2016 at 3:46 pm

      Hey Amit

      Paying full EMI is always a better option as you start repaying your principal amount from day 1. While in pre-EMIs, you will have to continue paying only interest on the loan amount for 1- 2 years. This way you will end up paying more interest on the entire home loan.
      However, from a tax perspective, until you get possession of your property, you will not be able to claim any tax benefits on the principal component of your EMIs. You will be able to claim full tax benefits on the interest payments.
      For detailed information on this subject, please read: http://www.switchme.in/blog/2015/01/opt-emi-pre-emi-home-loan/

  31. Anand
    Dec 30 2015 at 7:10 pm
    Reply

    HI Tarini,

    I get home loan section latter from ICICI bank, now they deny for disbursement for loan, they saying some information not in demand letter, but other many bank govt/privets are doing loan in same docs and project.( it is Govt Society). I submitted all docs to bank person from day one.

    can I ask to bank for return my processing fees,

    can I do complain in higher authority?

    • Tarini
      Tarini
      Jan 06 2016 at 3:22 pm

      Hey Anand

      Could you please elaborate on what the problem is? It will help me guide you better. However, in either case, you will not be able to get your processing fees back 🙁

  32. Ankit
    Dec 29 2015 at 12:39 am
    Reply

    Hi Tarini I want to purchase a resale property through home loan possession of same will be in next 4 months ,please let me know if I need to give 10% now and bank will do 80% payment rest 10 % I will in pay when possession is offered,or I have to give all 20% now and bank will give loan when possession is offered to me.

    • Tarini
      Tarini
      Jan 06 2016 at 3:20 pm

      Hey ankit

      Such details are best discussed with the bank from which you ahev taken the home loan as all banks have different internal policies. Generally, banks disburse the loan only once possession has been taken. So if possession will be delayed in your case, you will have to make the 20% payment first and get the bank to disburse the remaining amount when you get possession. I hope this helps 🙂

  33. Nilotpal Kumar
    Dec 23 2015 at 4:37 pm
    Reply

    Dear Sir / Madam,

    I need your help. HDFC bank had sanction home loan and they took processing fees Rs 13000 from me.
    When the time came for disbursement now, Bank is saying your Builder are not providing all the documents so we can’t do the payment. so my question is How I can back my processing fees from bank? Please suggest.

    • Tarini
      Tarini
      Dec 24 2015 at 7:56 pm

      Hey Nilotpal

      Unfortunately, there is no way to get the processing fees back from HDFC, you will have to forgo the amount. Further, no action can be taken against HDFC bank as the builder is at fault :/

  34. RAMESH
    Dec 21 2015 at 12:44 am
    Reply

    Dear Ms.Tarani, I intend to take a home loan for a flat worth 60L. My query is what are the benefits if I make max down payment apart from tax benefit. Is it wise to have Bank FD’s and take max of Housing loan. _ Pls advice which option is better ??? – Regards – Ramesh

    • Tarini
      Tarini
      Dec 23 2015 at 4:47 pm

      Hey Ramesh

      I would suggest that you go with the option that helps you get maximum returns on your money. While you can invest in an FD and continue to pay interest on your home loan, you will benefit from this investment only if the interest rate you are getting is higher than the interest rate you are paying on your home loan. So in a situation where the interest earned on FD is generally lower than the interest rate paid on home loan, you will benefit more by using that amount for prepaying your home loan as money saved is money earned.
      I hope this helps you decide better 🙂

  35. Manish Gokhale
    Nov 30 2015 at 8:08 pm
    Reply

    Hi Tarini,
    I am living in Nagpur. I want to buy a plot an do construction on it.
    I have finalised plot which is 750 sqft. but it is not sanctioned by NIT(Nagpur Improvement trust) and comes under gramin. Plots cost is 7 lakhs and expected cost of construction is 8 lakhs. My salary is 22k per month.
    My questions are,
    1) Do I get loan from any bank( I am ready to pay more interest if not getting loan from nationalised bank)
    2) How much loan can I get.

    Please help.

    • Tarini
      Tarini
      Dec 10 2015 at 2:32 pm

      Hey Manish

      Unfortunately all your queries are related to Eligibility assessment, which differs from bank to bank and borrower to borrower. Eligibility of a borrower can be accurately determined only by the bank you are applying to. Hence I will not be able to give you any direction in this matter, it totally depends on the bank you apply to.
      Only advice is that please try to borrow from a nationalized bank as their interest rates are generally competent with market rates and are bound by strict RBI guidelines which are protect consumer interests.

  36. Harshpreet singh
    Nov 27 2015 at 11:37 pm
    Reply

    Hi mam

    I want to know about you, I have taken a home loan from lichfcl in 2009 for rs 990000/- for 20 years. At that time my EMI was set 8593/- at the time of disbursement I was give 36 emis cheque for rs 8593/- but in 2012 my emi was two time increase but not given any intimation to me, so my emis was 14emis was short total amount is pending 18000 for 14emis. When I get to know in 2013 April I was paid actual correct emis with 1500 more in actual emis for recovery of short emis past. But lic deduced all the increase amount in charges and right now that stand rs 35000 more in my account as emis dues… Kindly guide me what can I do now. I paid my all till date emis regularly but due to that 14 emis they say me my account is inregular. No one in lic office can guide me that only want to deposits rs 3500them. them. I think this is really a loot in lichfl. In six years I paid already to lic more than six lacs in emis but at present my loan outstandin rs 948000 stand.
    Kindly guide me what can I do with lichfl

    • Tarini
      Tarini
      Jan 06 2016 at 2:37 pm

      Hey Harshpreet

      This is indeed very unethical of LIC HFL, however, there isn’t much that you can do in this case. While you can go ahead a file a complaint with NHB regarding the same, you will still have to pay off the dues or else it will reflect poorly on your CIBIL score. This will create problems with future loans. Once you have cleared the dues, you can look at switching to other banks which offer a lower interest rate and better customer service and experience. You can make use of this balance transfer calculator to find the cheapest bank for yourself. If you like, you can sign up and have us do all the documentation and other formalities for you 🙂

  37. raj
    Nov 23 2015 at 10:53 am
    Reply

    i have taken home loan from hdfc in last month, can i close my loan now??

    • Tarini
      Tarini
      Nov 23 2015 at 7:58 pm

      Hey Raj

      Yes! You can close your home loan as convenient to you, unless the bank has specified a certain time period after which you can do so. Please check your home loan agreement with the bank to confirm that no such terms and conditions apply to your case.

  38. sudip
    Nov 19 2015 at 9:19 pm
    Reply

    I had applied for sbi home loan for rs 19 lakhs. It was sanctioned vide letter dated 29.10.15. I am expected to give processing fee on it, as it exists on that date. However processing fee is waived off in sbi home loan vide circular dated 6.11.2015 . In my home loan case, disbursement of home loan is not done till date as documentation is not done. Will i be benefited for waiver of processing fee. Does DGM has the power to waive off processing fee in such cases (where sanction of loan is done previous to 6.11.2015 but documentation and disbursement of loan is done after 6.11.2015).

    • Tarini
      Tarini
      Dec 24 2015 at 8:05 pm

      Hey Sudip

      Since this is a matter of internal policy and decision making at your branch / RACPC, I would suggest that you contact them for clarification on this 🙂

  39. Bikash
    Nov 01 2015 at 9:07 pm
    Reply

    Hi Tarini,
    I have booked a flat in Bangalore costing 59L including registration. I need 45 L as loan. My net salary is 55k/month though dere is a chance of salary hike up to 70k/ month from next year onwards. Right now I am getting 35Lloan. Can I apply second time for 8-10 lakhs loan when my salary increases. Plz help.

    • Tarini
      Tarini
      Nov 02 2015 at 12:12 pm

      Hey Bikash

      While you can’t apply for a second home loan once your salary increases ,You could explore the possibility of borrowing a Yuva Home Loan from SBI. This home loan is especially designed for young professionals like you, who are expecting a salary hike in the near future. Under this scheme, you can borrow a higher loan amount.

  40. srimaya mahapatra
    Oct 30 2015 at 11:54 pm
    Reply

    Dear Tarini, went through your replies and gained confidence to seek your advise on a difficult situation I am in. Me and my mother booked a studio apartment worth 26 lakhs with the Seven Hills Estates, Puri, Odisha in 2012. Possession was promised by 2013 but till date it has progressed only till the plastering of the walls and a door!! The down payment paid was 7 lakhs and 19 lakhs was the loan amount taken from HDFC Home Loans division spread over 10 years. The EMI was set at 25640 p.m. of which my mother used to pay 15640 and I have been paying 10000. A month ago my mother unfortunately passed away due to a heart condition. The OCT EMI of 15k bounced off her account as it was linked to her pension account which obviously got closed. I am seeing this as a bad investment and not willing to continue paying when the builder is just delaying the project with no assurance of delivery even after two years of delay in possession. So, I figured that I will stop the 10k ECS from my bank account, request of which I already have initiated recently (yet to get a reply) and approach HDFC for a solution. Note that the builder by now has been pronounced notorious by many other purchasers in Odisha and they are planning to lodge an FIR and proceed for court case soon. I am wondering how come HDFC disburse 16 lakhs already to the builder (as shown in my HDFC online housing loan account) with out checking its current credibility or progress of the project ? Isn’t there a law for this? PLEASE, WHAT CAN YOU ADVISE ME TO HANDLE THIS SITUATION BARING AS MINIMUM FINANCIAL LOSS AS POSSIBLE?

    • Tarini
      Tarini
      Nov 02 2015 at 2:49 pm

      Hey Srimaya

      This is a very unfortunate situation to be in, I am sorry for your loss.

      while the disbursement of 16 lakhs to builder without checking progress in construction of project is pretty debatable as its a violation of NHB rules and regulations, most Housing Finance Companies do not follow this rule. (Here’s a link to the NHB regulation)

      The most hassle free way to get out of this situation will be to tell the bank that you can no longer finance the loan, asking them to auction off the property to recover remaining loan amount, after which any balance amount will get credited to your account. I hope this helps!

  41. Vasu Arora
    Oct 29 2015 at 1:55 am
    Reply

    Hi Tarini,

    My mother is a co-borrower in a Home Loan. Only 2 years left to repay. My father passed away who was the borrower.

    1. Me being Son, can I take over the loan by myself? Or is it possible that the bank can make me borrower/ co- borrower of that Loan?
    2. I am a salaried employee. If i go to the same bank and apply for a balance repayment and make my mother burden free from the loan.
    Note: Loan is against property mortage. In case of Gift deed, can it happen? If not, please guide us into the right direction.

    Thanks.

    • Tarini
      Tarini
      Oct 30 2015 at 12:46 pm

      Hey Vasu

      We are extremely sorry for your loss, regarding your queries:
      1. You can put in a request with the bank to add you as a co-borrower in the home loan, since you will be the one repaying the loan, the bank should not have a problem with adding you as a co-borrower.
      2. In order to avail tax benefits on your home loan payments, (if you are not a co-owner of property) then your mother can take permission from the bank to add you as a co-owner of property by executing a gift deed in your name.

      I hope this information helps, do take care.

  42. Somaraju
    Oct 26 2015 at 3:45 pm
    Reply

    Hello experts,

    I need to know how to take home loan for cost of 400000 to construct a home. I am contract employee in wipro my gross salary is 17500 per month. Please any one let may i eligible to get loan and what is my emi.

    Somaraju

    • Tarini
      Tarini
      Nov 09 2015 at 4:50 pm

      Hey Somaraju

      We will be unable to guide you as while determining the eligibility of a borrower, banks take several factors into account like;
      existing or past debts, salary, age of borrower, cost and type of property, repayment capacity of borrower etc. Further, this differs from bank to bank. So I believe it will be best if you approach you bank to get an idea of your eligibility, and the amount of EMI you will have to pay.

  43. Dipankar Dutta
    Oct 14 2015 at 9:04 pm
    Reply

    I have received a sanction letter from kotak bank for a loan of 31lacs for a resale property. On the arrival of the bank representative of kotak bank during signing for the loan documents had asked for 7cheques. one security cheque of the entire amount of 31.0lacs. 02 other security cheques of EMIvaluex06 times(approx: 1,82,000.00 each) apart from 01 cancelled cheque for ecs and other 02 cheque for 1st two months EMI and 01 cheque for processin fee which are o.k. But I am not comfortable with the 03 security cheques which I have earlier mentioned(one for entire 31lacs and other 02 of 1.82lacs each) as this may be misused.

    Due to this reason I am looking at other banks…
    pls. advsie….

    Regards,
    Dipankar

    • Tarini
      Tarini
      Oct 15 2015 at 3:54 pm

      Hey Dipankar

      This is a very unusual request. Generally banks ask for total 3-4 cheques in the case of home loan.
      While 1-2 cancelled cheques can be demanded at the time of signing agreement, the bank should ask for only 1 blank cheque. Processing fees and other fees should make up 1 cheque. Not sure why they want a security cheque from you as your property itself serves as security for the home loan. You may want to consider looking at other banks. I hope this helps 🙂

  44. Soumik
    Oct 09 2015 at 10:08 am
    Reply

    One of my friend is selling is property to own brother(blood relation)..SBI accepted the invitation and later rejected saying that Loan cant be issued on blood relation transactions.Is this true ? If yes, how to mitigate the issue…
    Also same friend actually booked a house , with a reduced loan amount..assuming that the other loan would get through…His loan is not disbursed but approved…so if he wants to increase the loan amount, does he have to go through the same process again ? This is a SBI loan too.

    • Tarini
      Tarini
      Oct 09 2015 at 2:23 pm

      Hey Soumik

      Its a common pratcice across most banks to refrain from lending to blood relations (like 2 brothers) or deal with any major financial transactions between the two, so I believe they will have to find another way out :/

  45. bhaskar
    Oct 08 2015 at 10:30 pm
    Reply

    hi
    i recived santion letter frm bank then i final prop.resell then after bank clear all verification and told us you can process and making ragistration
    all document sign with bank
    original agreement copy submited to bank
    then bank show our cheqe is ready
    we ask they when our cheqe disburse they ask serch report is pending after serch report they will relised
    but still 12 days bank why dont relised cq.pls give some guideline

    • Tarini
      Tarini
      Oct 09 2015 at 2:08 pm

      Hey Bhaskar

      Since this is a matter of bank’s internal policies, there isn’t much scope for us to guide you :/ Please keep constantly following up with your bank regarding the status of disbursal.

  46. Akaash Verma
    Sep 23 2015 at 4:07 pm
    Reply

    I want to take a home loan and I’m salaried. If after 2-3 months of loan sanction I quit my job and become self-employed, will there be any problem with bank regarding the loan, of course I will be able to pay the loan. I want to know if there will be any problem in such case.

    • Tarini
      Tarini
      Oct 01 2015 at 3:21 pm

      Hey Akaash

      Once you get the home loan sanctioned, as long as you are able to finance the entire loan amount and pay EMIs on time, the bank will not have a problem. However, it’ll be best if you don’t reveal this while applying for the loan as it may make it difficult for you to get a home loan. I hope this helps 🙂

  47. Pravin Jadhav
    Sep 14 2015 at 5:52 pm
    Reply

    Hi Arjit to answer your first question, you can make payment from your side because you will get lower interest rate on FD than HOME LOAN interest rate. BuT AS Tarini said you should also check ypur liquidity and past track record of the builder. If the builder is reputed you should pay from your side.

  48. Joseph
    Sep 12 2015 at 10:05 pm
    Reply

    icici home loan part payment can be done either cheque or cash, please advise

    • Tarini
      Tarini
      Sep 14 2015 at 8:13 pm

      Hey Joseph

      All banks accept payment for home loan by cheque only. To make a part payment of your ICICI home loan, you will need to transfer the exact amount you wish to prepay, to your loan account (from specified SB account.) I hope this helps 🙂

  49. dilip
    Sep 12 2015 at 5:57 pm
    Reply

    hi i am apply a home loan from dhfl , unfortunately my processing fee cheque is bounced. so what is the solution

    • Tarini
      Tarini
      Sep 14 2015 at 8:19 pm

      Hey Dilip

      In this case, you can talk to the bank officials and issue another cheque for the same.

  50. Rajan
    Aug 30 2015 at 11:59 am
    Reply

    Dear tarani,
    1. I am not very clear of what you explained above and request you to kindly elaborate/ clarify a little more.
    2. In my case I had taken home loan of 25l in 2013 . till date I have paid rs 22l to builder as per CLP plan.
    3. Till date I have paid almost 1.5l as pre EMI and possession of my property will be in DEC 2016.
    4. How and from when can I claim the pre EMI that I have paid till now. Can I claim complete amount at one go or over period of 2-3 yes.
    Thanks and regards

    • Tarini
      Tarini
      Aug 31 2015 at 1:11 pm

      Hey Rajan

      Once you get possession of your property, you will be able to claim IT deductions on your pre-EMI payments up to a limit of 1.5 lakhs under section 24 of income tax act, divided in 5 equal installments over the next 5 years. This limit is applicable to one financial year only. So if you have paid pre EMI of 2 lakhs until possession, then over the next 5 years you will be able to claim 40k + interest paid in that financial year (i.e FY1, FY2, etc).
      I hope this helps 🙂