Most of us take a home loan to buy our dream house. Probably this is the biggest loan taken by any person. Not only in terms of the amount but also the period for repaying.
The amount of home loan you are taking may almost double by the end of the repayment. But it is one of the cheapest loans and comes in the category of a 'good loan'. It is called a good loan because with it you acquire a property whose value increases with time.
If you are thinking of buying a house, then consider buying only a ready-to-move house. Many housing projects in India are delayed by many years and you get the income tax benefit of taking a home loan only when you get possession of it.
The exemption of up to Rs 1.50 lakh on payment of principal amount of home loan is available under Section 80C. This exemption on interest payment is Rs 2 lakh annually.
One's personal profile is very important for home loan approval. This includes the person's education, profession, number of dependents, current assets, savings, insurance policies, etc.
Higher number of dependents or higher current liabilities means that the repayment capacity will be relatively less.
Documents like property deeds and No Objection Certificate (NOC) have to be submitted in the format proposed by the bank. If the borrower does not submit the documents in the proposed format, all his hard work may go waste. Here's a checklist of other documents required for home loan for salaried individuals:
PAN Card
Identity proof with passport, voter’s card, driving license, PAN card, adhaar card, employee card
Address proof with passport, Aadhar card, ration card, property tax, water bill, electricity bill, piped gas bill
Income proof – salary slip for 3 months and form 16 for the past 1 year
ITR for the past 2 years
Bank statements for the past 6 months
All the documents related to the property you wish to buy
Age plays an important role in rejection or acceptance of loan applications. Banks always check the age of the home loan applicant. If the age is near retirement then banks give only short term loans.
Because of this the monthly instalment becomes quite high. Therefore, the older the age, the lesser are the chances of a person getting a long term loan.
These days, the credit history of the borrowers also plays an important role home loan acceptance or rejection by the lender. Credit history is actually your financial report card. Any bank pays attention to this while approving a loan.
It contains information about all the loans outstanding or delayed payments. With the advent of credit information companies in India, it has now become very easy for financial institutions and banks to get information about the credit reports of loan applicants.
Banks do not approve loans for any particular location. Banks and financial institutions blacklist a particular location. Therefore, before taking a home loan, check that the property is not in a blacklisted location.
