FAQ

    • How much loan am I eligible for?

      The HFI, on the basis of your repayment capacity, decides on your loan eligibility. Your monthly income is taken into consideration by the HFI for this Purpose. every HFI sets certain norms on the amount of installment, as a percentage of the monthly income that can be accepted as being affordable. the HFI then uses these norms to arrive at loan eligibility.

    • Will the Co-applicant's source of income be included in arriving at my eligibility?

      If the Co-applicant receives income from a regular source of income that has been consistent, then such income would be considered for the loan eligibility calculation. Every HFI has certain acceptable relationships of the co applicant for inclusion of income. For certain types of income, however, HFI's insist on regular income tax returns being filed every year on time for e.g. For tuition income or tailoring income. If these returns are available then it will be included. Interest income, however, will not be considered for calculation of loan eligibility.

    • Will the repayment track record of my previous loans, be considered in computing eligibility?

      If you have availed of a loan from any other Bank, the repayment track record will be taken into consideration while determining your loan eligibility. A very good track record of repayment will prove favourable in deciding your repayment capacity. The Loan installments of these loans will also be taken into consideration while calculating the FOIR as per norms of the HFI.

    • How do I improve my eligibility for the loan?

      Some of the ways to improve eligibility are stated below:

      • Include a co applicant to the loan whose income can be considered.

      • Opt for a step up repayment facility (under this scheme your installment will keep increasing at Periodic intervals thereby enhancing your loan eligibility) to avail of a higher loan. You may also be eligible to opt for a flexible loan installment plan (under this scheme your alternate sources of income after your retirement will be considered to enhance your loan eligibility if you are nearing your retirement age).

      • If you are currently staying in a company accommodation and are planning to move out once you buy the property, you may become eligible for HRA from your Company. If you provide proof of the HRA amount that you will receive on vacating Company accommodation, include it in your monthly Income for calculating loan eligibility.

      • Provide proof of cash income received.

      • It’s advisable for you to buy a property where the agreement discloses the entire value of the House. This also help’s from any tax implications at a later point in time and in increasing loan eligibility. Especially if your eligibility is constrained by LTV (loan to value) norms.

      • Include all costs as mentioned in the definition of cost of property if LTV is a problem.

    • Why does the HFI need to judge my repayment capacity when it is holding my property as security?

      The HFI's in India use the mortgage only as a collateral security. This is because the foreclosure laws (i.E. The laws to enable the HFI to recover the property in the event that the Borrower defaults) are very time consuming and difficult to enforce. As a result the HFI relies more on your earning capacity and your ability to repay rather than your security value.

    • How does the HFI judge my repayment capacity for a Home loan?

      The HFI looks at your earning capacity both present and future to make a judgement call on your repayment capacity. Your existing obligations, your past repayment history, the quality of your earning (speculation and other non recurring income such as capital gains is normally not included in evaluating your repayment capacity) is considered. The HFI also gives due weightage to your Age, Experience, Employer and your qualifications to arrive at your repayment capacity.

    • Some portion of my income is by way of cash, will it be considered for loan eligibility?

      Most HFI's do not consider any income by way of cash unless supporting documents for the same are produced. This is because the HFI is not in a position to establish the genuineness of the cash income without proper evidence. However, if the proof for cash income is produced by way of either photocopies of the voucher or a statement from the Employer that would reflect the same along with relevant entries in the Bank statements, the HFI may consider part or full income based on the nature of such cash income.

    • I under declare the amount of my income? Will it affect my loan eligibility?

      Yes your loan eligibility will be affected if you under declare your income. This is because the HFI is not in a position to establish the genuineness of the undeclared income without proper evidence. However, if the proof for such income is produced, the HFI may consider part or full income based on the nature of such cash income. Under declaration of income is not advisable as it could result in Tax implications.

    • Do professionals have special eligibility norms?

      Most HFI's offer special privileges to self-employed professionals. They recognize the fact that in such cases, income is generally under stated and the earning potential of such individuals is higher that what has been disclosed. Every HFI has its own conditions regarding the type of professionals they would cater to. The HFI also decides on the qualifications required for such professionals to qualify for the relaxed norms for loan eligibility calculations.

    • Why are administrative fees collected from a Customer?

      To meet the operating expenses of the loan amount through the tenure of the loan amount administrative fees are charged to the Customer. Expenses to meet the visits made by a technical team are also included under this charge.

    • What is pre EMI?

      You’ve chosen a property that’s yet under construction. So the HFI makes the disbursement in parts based on the progress of the construction of your property. However till the loan is fully disbursed you have to pay simple interest at the rate you have agreed upon with the HFI. This is known as the pre emi. and from the month following in which the full disbursement is made you will start paying your EMI.

    • Why is pre EMI required?

      In case of under- construction property the disbursement is made in parts as per progress of the construction of your property. The HFI conducts a visit to your property with a technical team and on inspection disburses the loan as per the stage of construction. Once you forward the possession letter (mentioning the property is ready for possession) you receive from the developer to the HFI, only then is the final disbursement made. Till the entire amount is not fully disbursed the Bank cannot accept repayment of principal. However the HFI expects you to pay pre EMI, which is simple interest on the amount disbursed at the rate contracted.

    • What is a fixed rate loan? should I opt for a fixed rate loan?

      A fixed rate of interest is one where the rate charged by the HFI on the loan is constant over the tenure of the loan. It is advisable to go in for a fixed rate if you feel that the rate of interests in the market have touched rock bottom and the rates can only move upwards.

    • What is a variable rate loan? should I opt for variable rate loan?

      A variable rate is one where the rate charged by the HFI on your loan keeps changing with respect to the rates in the market over the tenure of the loan. Typically, the rate charged by the HFI is on the basis of their cost of funds and the prevailing market rates. these rates change periodically. accordingly the tenure increases or decreases or alternatively the EMI increases or decreases based on whether the rates move upwards or downwards. every HFI decides whether to change the rate of interest or change the tenure at the time of sanction. It is advisable to go in for the variable rate if you feel that the interest rates have reached its peak and can only go downwards.

    • What kind of costs are included under hidden costs?

      Normally, the hidden costs include the fees charged towards processing and administrative fees, the increase in the effective rates of interest due to the annual reducing balance method, pre payment charges, delayed payment charges, etc., If any. Some HFI's also charge legal fees and technical fees from the Customers while others may include charges for stamp duty and registration of the mortgage deed, if they are going in for a registered mortgage..

    • What happens to processing/administrative fees if I don't avail of the disbursement?

      Most HFI's refund the fees that you pay to them if you cancel the loan after taking the offer letter from the HFI. However, some HFI's may hold back the processing charges paid by you either fully or partly.

    • Are any interest rate benefits available for a physically challenged person?

      Yes, some HFI's do provide for differential rates of interest if you are physically disabled or handicapped. you will have to provide for a certificate from your medical advisor for the same, which will be validated by the HFI. normally, 0.5% discount is offered to physically challenged Customers.

    • Can I convert my loan from fixed rate loan to variable rate loan & vice versa?

      Yes, you can convert variable rate product into a fixed rate product with no extra charges. However, to convert a fixed rate product to a variable rate product, most banks will charge a small fee. The swap can be done any number of times and at any point of time.

    • What is the difference between monthly rest & annual rest?

      In a monthly rest, the interest is calculated on the outstanding principal at the beginning of every month. Once the interest is calculated at the rate applicable to you for the month it is deducted from the EMI received during the month. The balance component of the EMI forms the principal paid during the month. This amount is then deducted from the opening balance of the Principal (i.e. The amt on which the interest was calculated). The balance amount is carried forward as the opening balance of the principal for the next month. In an annual rest, the interest is calculated on your outstanding principal at the beginning of every year. Once the interest is calculated at the rate charged to you for the entire year it is deducted from the EMIs received during the year. The balance EMI is taken as principal repaid during the year. This amount is deducted from the opening balance of principal (i.e. The amt on which the interest was calculated). The balance amount is carried forward as the opening balance of principal for the next year.

    • Can the fixed rate of interest change during the loan repayment?

      The fixed rate of interest normally remains fixed over the tenure of the loan. This rate remains constant after the final disbursement has been made. It is ideally suited for situations where you expect the rates of interest to go up in the future and this fluctuation in the rates does not affect you adversely. In certain cases of home loans the disbursement takes place as per the stages of construction of the property i.E the disbursement is spread out over a period of time. In such cases it is quite possible that during this period there is a possible change in the interest rate in the Market. Irrespective of the fact that you are either under the fixed rate or the variable rate scheme, the new rate of interest would apply to the extent of undisbursed portion of the loan amount. The rate of interest would remain fixed at the final weighted average rate at which the loan was disbursed.

    • Who can be a co - applicant?

      Every HFI insists on all co-owners of the property being Co-applicants to the loan. In case of acceptable relationships as stipulated by the HFI, the income of the Co-applicant can be included in arriving at loan eligibilities.In case of any other relative being a Co-applicant to the property, the HFI would not include the income of the Co-applicant for the calculation of loan eligibility.

      Combination income clubbing of co – applicants

      • Husband – Wife : Yes.

      • Parent – Son : Yes (if only son).

      • Parent – Daughter : Yes (if only child).

      • Brother – Brother : Yes (if currently staying together and intend staying together in the new property).

      • Brother – Sister : No.

      • Sister – Sister : No.

      • Parent – minor child : Not eligible for a loan.

    • Why does the HFI insist on a Guarantor?

      Since the foreclosure laws in India (laws pertaining to recovery of loan by disposing off the property) are still weak it is difficult to re possess the property of an applicant. The HFI, in order to safeguard its interests and to ensure that the repayment of the loan comes on time, insists on a Guarantor. Some HFI's require a Guarantor in all cases while others insist on a Guarantor only if certain requirements are not met.

    • What is the liability of the Guarantor towards repayment of the loan?

      The Guarantor is equally liable to repay the loan incase you default on your loan. By taking a Guarantor, the HFI also puts some sort of a moral obligation on you to repay the loan.

    • Under what circumstances is a Guarantor required?

      Some of the conditions when a Guarantor is required are as follows:

      • In the case of a sole applicant to avoid the risk of a default in case something goes wrong with the applicant.

      • If the applicant’s job is of a transferable nature.

      • If the applicant is residing in a City different from the City where he intends to purchase the property.

      • Certain Industries, typically the software Industry, where the likelihood of the applicant going abroad either on assignments or to seek a permanent job is high.

      • Absence of a Co-applicant to the loan.

      • Lack of professional qualifications in a self-employed case.

    • Who can be Guarantor?

      A Guarantor should satisfy all the norms relating to age and income of a normal customer. This is because the Guarantor is equally liable to pay the loan in case you default to repay. Some HFI's may allow blood relatives to stand as a Guarantor while others may not.

    • What happens in the event of my Co-applicant / Guarantor's death?

      On the death of the Co-applicant you have to intimate the HFI with necessary proof. Subsequently if the Co-applicant is the main owner or the co-owner you will have to get the property transferred in your name through the co-op hsg.soc, or the registrar of properties and intimate the HFI about the change in the ownership of the property. In the event of the Guarantor’s death, you have to approach the HFI with another Guarantor and get the original one replaced with the new one.

    • Can my Guarantor apply for a loan later on ?

      In future your Guarantor can apply for a loan if he is capable of repaying the installment on your loan (in case of a default in your loan) and the new installment of his loan. If his repayment capacity does not make him eligible for a loan, you have to arrange for a replacement guarantee. This has to be done by releasing your current Guarantor and providing your HFI with another Guarantor(meeting all specified norms for a Guarantor). Once your Guarantor is released, he can apply for a loan.

    • Can I Get A Disbursement Before I Put In My Own Money?

      No, most HFI's do not allow for a disbursement before you have put in your contribution. However, in cases, where you avail of finance from a source (like pf), which generally takes a long time to get disbursed, some HFI's agree to partly disburse the loan. Yet it is necessary to put in some money towards the property at least before you avail of a part disbursement from the HFI . You also need to produce adequate evidence that you have got the source of income (sanction letter in case of a loan from pf).

      for example: Suppose the cost of your property is rs. 10 lacs and you avail of a loan of rs. 6 lacs from a HFI. Savings of rs. 2 lacs and a pf loan of rs. 2 lacs are the sources of your own contribution. The building is about 40% complete and you have put in rs. 2 lacs out of your savings. You also have a sanction letter from the pf authorities sanctioning the loan to you. However, the time for you to receive a Cheque from pf will take about 4 months. Since the building is already 40% complete and the construction is going on in full swing, the builder is pressurizing you for more money. He will also charge you interest on late payments made to him. In such a case, you can approach the HFI for a disbursement by showing them the sanction letter. The HFI will then release you part disbursement. Please note, however, the last disbursement of the HFI will be held back till you invest the pf funds also in the Project.

    • Can I switch jobs / leave job for self-employment during the course of loan?

      You can switch jobs / leave job for self-employment during the course of your loan. However you have to keep the HFI informed about the same. If your repayment happens by way of deduction against salary, you have to get this deduction from your new Employer. Alternatively arrange for PDCs for the installments. A copy of your new appointment letter also has to be sent to the Bank for their data maintenance.

    • The HFI from where I wish to avail of a loan insists on the registration of the sale agreement. However, my seller refuses to sign the agreement till he receives the money. What should I do?

      Every HFI requires you to hand over the registered agreement before it disburses the loan. What you can do is show the seller the sanction letter of the HFI and pay your contribution that is due to him. Once this is done, enter into a partly paid agreement with the seller. This mentions the cost of the house and the amount paid to the seller along with the balance amount to be paid. The agreement sets a time limit for the balance payment to be made and contains a clause that the agreement would be null and void in case of a failure of payment within the stipulated time. This agreement gets registered and the disbursement is taken from the HFI. The flat purchaser has to take sufficient care to take a proper receipt for the amount paid to the Seller. These receipts should cover the Flat purchaser’s own contribution and a receipt for the amount paid by the HFI.

    • Should I insure my property?

      Most HFI's do not insist on property insurance. Some HFI's even offer it to the customer as an incentive for a certain period of time. However, if your property is not covered under insurance, it is advisable to go in for an insurance cover on your property. The rates of property insurance are very low and today the rates are rs. 60/- per lakh of property value for a period of one year. If you decide to go in for a longer tenure for Insurance, you can avail of huge discounts being offered by the various Insurance Companies.

    • Can I sell my property even when the loan is outstanding?

      You can sell your property when your loan is still outstanding. However, you need the consent of the HFI to let you sell the property. Based on this consent letter, you can negotiate a sale with potential purchasers. In case the new purchaser opts for a loan, your loan will get transferred automatically to his name. The new purchaser can take even an additional loan at the time of entering into a loan arrangement with the HFI. In the event of an outright payment by the new purchaser, he will make a Cheque favoring the HFI for an amount equivalent to your outstanding principal. This will clear off your loan. For the balance amount, he will provide a Cheque in your name. Your property documents will be released only when you have prepaid your entire loan.

    • Can I transfer my loan to somebody else?

      You can transfer your loan to a third party. However, you need the consent of the HFI for the same. Based on this consent letter, your loan will get transferred automatically to his name. The new purchaser can take even an additional loan at the time of entering into a loan arrangement with the HFI. In the event of an outright payment by the new purchaser, he will make a Cheque favoring the HFI for an amount equivalent to your outstanding principal. This will clear off your loan. For the balance amount, he will provide a Cheque in your name. Your property Documents will be released only when you have prepaid your entire loan.

    • Can I take loan against my existing property?

      Yes, you can take a loan against your existing property. However, the normal home loan cannot be taken. You have to opt for a home equity loan where the end use of the finance is not monitored. You can avail of this loan from most HFI's. The terms and conditions and procedures of such loans would be different from that of a normal home loan.

    • Can I increase / decrease the loan after it is sanctioned? What will happen for the fees?

      Yes, you can request for an increase or decrease on your loan amount at any point of time. Most HFI's charge you fees on the new increased amount. Any excess fees paid in case of a decrease of your loan amount normally gets adjusted towards subsequent payments that you would be making to the HFI.

    • What is A pre - approved property?

      A pre-approved property is a property where the HFI has done a legal and technical check on the property documents. The builder gets his property pre approved from various HFI's to increase the marketability of his project. Every HFI has its own methods of carrying out legal and technical checks on the property.

    • What are the advantages If I buy a pre approved property?

      By buying a property in a pre-approved project, you can safely assume that the property is legally and technically clear. For you this means quality construction and authorized construction. Moreover, the documents that you submit to the HFI in a pre-approved project are fewer than in the case if you buy a non – approved Project. In a pre-approved Project, the only documents that you submit are your own property documents. While in the case of a non approved project, the entire list of documents pertaining to the land along with the various permissions granted to the Builder need to be handed over to the HFI.

    • In case of a pre-approved property if there is a delay from the builder - does it mean I don't have to pay HFI?

      When a HFI pre approves a property of a developer, it only means that the property is legally and technically clear. This does not mean that the HFI guarantees the performance of the developer. You have to pay off your loan even if the developer delays the construction or even calls off the Project completely.

    • Can I get a loan for agricultural land / farmhouse / holiday house?

      No, most HFI's do not provide finance for buying agricultural land, farmhouse or a holiday home.

    • Can I get finance to buy property Abroad?

      No, HFI's do not provide finance for acquiring property Abroad. The reason for this being difficulty in verification of the asset and knowledge of foreclosure laws in the country where property is purchased.

    • Can I get loan towards deposit for taking a House on lease?

      No, HFI's do not provide finance towards deposit for taking a House on lease.

    • Can I avail a loan against a property in another City

      Most HFI's insist that either the applicant or the property should be from a location where the HFI has a presence. However, some HFI's do finance properties even if the above two conditions are not met.

    • Can I rent a property for which I have taken a loan?

      Yes, you can rent a property for which you have taken a loan. Here you benefit as you can claim the entire interest paid by you towards the loan installments against the rental income. The balance interest, if any can be set off against other income.

    • Can I use my residential property for commercial Purposes?

      Most HFI's do not give loans to buy commercial premises to non professional or salaried applicants. However, you can reside in part of the property that you have purchased and have an office in the balance portion of your property.

    • Can I get a loan for non residential commercial premises?

      Most HFI's provide for a loan for non residential premises. However they insist that the applicant needs to be professional who has to be self employed. The terms and conditions of such loans would be different from the normal home loan product.

    • What is pugdi system?

      This is an age old system where the Owner of the property had leased it to an individual resident decades ago, the individual has paid a large sum upfront and continues to pay a very nominal rent of, say, rs 100 per month.The maintenance of the premises is the responsibility of the resident.

      If the resident wants to sell the property, he needs to get a consent from the Owner. The Owner would give consent provided he gets a share (approx 25-33%) of the sale proceeds.This figure is mutually agreed between the resident and the owner.The transfer of rights to the Buyer can happen only if the Owner has given his consent to the same, failing which the buyer will have no Ownership rights.

      Since the whole process is complex, flats under pugdi system fetch a lower resale value.

    • Can I get a loan for pugdi system?

      No, HFI's do not provide loans for property that is under the pugdi system.

    • Is parking space/ garage included in cost of property?

      Yes, parking space / garage charges are included in the cost of the property.

    • What is a NOC?

      NOC stands for a no objection certificate to mortgage the property. The NOC certificate covers five main clauses viz., property being free from any encumbrances, property being free and marketable, permission to mortgage the property, acceptance of lien on the property and the Owner not being allowed to sell the property to anyone else without the consent of the HFI.

    • Why is an NOC required from building/ society?

      In states like Maharashtra and others, the Flat Owner and the Owner of the land on which the Flat stands are not the same. The Flat Owner is given a property by virtue of his being a member of the society or the land being allotted (and not transferred) by a development authority in his favor or the Developer selling a Flat built on his land. Hence the NOC is required to safeguard the interest of the HFI from the repercussions of the five clauses viz; property being free from any encumbrances, property being free and marketable, permission to mortgage the property, acceptance of lien on the property and the Owner not being allowed to sell the property to anyone else without the consent of the HFI not being adhered to.

    • Will a noc be required if I am the owner of the land and the property?

      NOC is not required if the landowner and the property Owner are the same. Hence, if you are constructing a property on a plot of land that you own, NOC will not be required.

    • What are the credit documents required by the HFI to sanction my loan?

      Credit documents are required by the HFI to determine your repayment capacity. For a checklist of the documents that you will need to submit to get your loan sanctioned.

    • What are the legal documents required by the HFI to sanction my loan?

      Legal documents refer to the documents that pertain to your property. These documents establish the fact that you are the Owner of the property. For a detailed list of the documents that you will need to submit for getting the disbursement of your loan, please read legal documentation in the home loan content.

    • For carrying out improvements to my House that is already mortgaged to a HFI, do I need an NOC from the HFI?

      You do not require a NOC from the HFI to carry out improvements to your house. Most HFI's offer finance facility for carrying out improvements as well.

    • Can I make a lump sum payment at any point in time if I happen to get a huge sum of money?

      Yes, you can make a bulk repayment of your loan, either partly or fully. However some HFI's charge a prepayment penalty for earlier repayment of the loan. There’s also a limit on the number of times that one can prepay during the year and on the minimum amount that needs to be prepaid during every prepayment. You will have a choice of reducing your EMI by keeping your tenure constant or reducing your tenure by keeping the EMI constant.

    • When can I prepay my loan?

      You can prepay your loan at any point in time. You can either make a part prepayment or a full prepayment of your loan.

    • What Is A Prepayment Charge?

      Some HFI's levy a prepayment penalty if you decide to prepay your loan. This charge is made on the loan amount that is being prepaid.

    • How much can I prepay at any point in time?

      Most HFI’s have a limit on the number and the amount of part payments that you can make. Typically the amount should be the higher of three EMI's or an amount of rs. 10,000/- and the number of prepayments that you can make during a year is restricted to two. This would again differ from one HFI to another.

    • Why do HFI's charge prepayment penalty?

      The rationale behind the HFI’s charging a prepayment penalty is that they borrow money from their lenders for a certain fixed tenure at a contracted rate. When you make a prepayment, the HFI may suffer a loss, as they may have to disburse the loan at prevailing market rates. The prevailing market rates may be lower than the rates at which they have lent money to you.Hence the prepayment penalty.

    • Do I have to submit PDC's for the full tenure?

      Usually HFI's ask for PDC's for a maximum period of three years. Only after the last PDC, you have to hand over a fresh set of PDC's for the next three years or as the HFI instructs. However, if you are an NRI, you will be required to submit PDC's for the full tenure of the loan.

    • How is EMI divided into interest & principal?

      EMI essentially comprises of interest and principal. The amount of interest and principal varies depending upon whether the principal is reducing annually or monthly. In case of a monthly reducing loan, the break up of the EMI into principal and interest depends on the month to which the EMI pertains. Under annual reducing the EMI remains constant over the tenure of the loan but the individual components in the EMI vary from month to month.

    • How can I repay my EMIs?

      PDCs Post Dated Cheques for a certain number of years after which you provide another set of PDCs for the same tenure. DAS Deduction Against Salary. In this case the HFI ties up with your Employer. Under this facility, your Employer deducts the installment directly from your salary and remits the same to the HFI. Standing Instructions (SI) That’s by giving a written consent to your Banker to pay the installment from your account to the HFI every month on a particular date. The HFI ties up with your Banker for you to avail of this service. Cash / Demand Draft (DD) – Some HFI's provide for the facility of repayments of installments by way of cash in their office directly or by depositing the amount in a particular HGI account where they have an account. You could also pay your EMI by way of a Demand Draft (DD).

    • Can I get a time gap of a few months before I start repaying my EMI's?

      Normally, no HFI gives a time gap to repay your loan. However, incase of an under construction property, you do not pay your EMI's till the time of full disbursement. You pay simple interest at the rate applicable to your loan on the amount that has been disbursed to you by the HFI. This is similar to a delay in starting your repayment of EMI's.

    • Are there any other methods of repaying my loan other than the EMI?

      The EMI is considered as the best form of repayment for a loan as it is the easiest to administer. The EMI concept of repayment has been practiced for a long time. It is only now that we are seeing new forms of repayment coming in like the Equated Quarterly Investments, Bullet payments, Moratorium on principal repayments, etc. These forms of repayment however, will take a while to gain popularity and to be accepted as the general form of repayment.

    • How does the annual reducing method of repayment function?

      This method of repayment works as follows: The amount paid by way of EMIs is broken up into Interest and Principal at the end of every year. The opening balance of the principal is taken at the beginning of the year. The rate of interest that is charged is calculated on the opening balance. This amount is deducted from the total EMIs paid by you during the year. The difference between the total EMIs paid during the year and the interest on the opening principal is deducted from the opening principal to arrive at the closing balance of principal for the year. This in turn becomes the year opening balance of principal for the next year.

    • How does the monthly reducing method of repayment function?

      This method of repayment works as follows: the amount paid by way of EMI's is broken up into interest and principal at the end of every month. The opening balance of the principal is taken at the beginning of the month. The rate of interest that is charged is calculated on the opening balance. This amount is deducted from the EMI paid by you during the month. The difference between the EMI paid for the month and the interest on the opening principal is deducted from the opening principal to arrive at the closing balance of principal for the month. This in turn becomes the opening balance of principal for the next month.

    • What are the tax benefits in respect of home loans?

      Customers availing of home loans can claim a certain portion of the interest and principal that they pay towards the loan installments for reducing tax liability.

    • When should I apply for a loan?

      Ideally you should follow the 5 – step process as given below:

      • Decide on buying a house.

      • Decide on the amount that you can afford to put on your own.

      • Apply for a loan to find out your maximum loan eligibility.

      • Get your loan approved.

      • Select a House that meets your budget.

    • I have not selected a property. Can I apply?

      Yes, you can apply for a housing loan even if you have not selected a property.

    • I have a partnership firm? Can the firm take a loan?

      No, most HFI's do not provide for loans to partnership concerns. The terms and conditions applicable if an HFI provides loan would be different from the ones in the case of a normal home loan. You can, however, apply for a loan in your individual capacity. In such a scenario, you will be evaluated as a self employed person with your share in profits being taken into consideration for loan eligibility.

    • Can a minor / senior citizen join as a co-owner to a property?

      HFI's have a condition that all co owners need to be co applicants. All co applicants have to be eligible to sign loan agreements. Since a minor is not eligible to enter into a contract, HFI's do not allow for minors to be co owners. Senior Citizens, however can join as co owners. Some HFI's also lay down age limits which the co owners have to conform to before the loan is sanctioned.

    • Will cash component be included in calculation of LTV?

      It is not advisable to include any sort of payments for the House that are not accounted for in your it returns. It is always better to disclose the full value of the House in the agreement in your own interests. This also helps you from any tax implications at a later point in time. HFI's always frown upon any undisclosed portion of the cost of the House and hence the same is not included in calculation of LTV.

    • How is the cost of property calculated?

      The sum of the agreement value of the property, stamp duty, registration charges, garage charges for parking cars, society transfer charges, Electricity and Water connection charges, collectively form the value of the property for the HFI. Additional furnishings done by the developer, for which you enter into an amenities agreement (duly registered) with him are also included in the value of the property. The cost of the property, however, does not include any cash transactions involved in the purchase of the House over and above those mentioned in the agreement.

    • Can my home loan include cost of initial furnishing?

      No, the cost of initial furnishing does not get included in the cost of the property. However, if the initial furnishing is done by the Builder, for which you have signed an amenities agreement that is duly stamped and registered, then such value will be included in the cost of the property.

    • Am I assured that my property documents are clear if an HFI agrees to give a loan?

      Yes, be assured of a legally and technically clear property if an HFI decides to give you a disbursement against the loan on your property. The HFI also ensures that the construction has been completed within the norms stipulated by the governing authority. In most cases of resale, you can be sure that your property is clear if the HFI decides to give you a loan. However, if the HFI is not convinced that your property is clear, it insists on some other security as mortgage over and above the current property being financed. In under construction cases, the property will be clear at the time of final disbursement. In case the builder violates the permissions granted to him by the governing authority towards the final stages of the construction, the HFI will hold back final disbursement till it is assured that the property is clear.

    • For the same house can I get a further loan?

      You can avail of a further loan as and when you want as long as you have the repayment capacity to service the loan. If you need the loan against the same property, you have to avail it from the same HFI where you have your current loan. The loan is considered as a new one and the terms and conditions of this loan would be as per the prevailing norms at the time of your fresh loan.

    • What Is A Leasehold Land?

      A leasehold land is one where a third party like an individual Person, development authority, society or a developer is the Owner of the land on which the property is constructed. The Owner of the property has given the land on lease to a developer, society etc. The society or the developer constructs a building that is then bought by an individual Customer. Where the building consists of multiple flats or dwellings, the flat is owned by the Customer by virtue of the same being mentioned in the agreement to lease or in the tripartite agreement entered into between the lessor, lessee and the Customer. Alternatively, the property could be sub leased to the Customer. If the building is a single unit or house the owner will directly lease the land to the Customer.

    • Can I get finance on leasehold land?

      Yes, you can get finance on leasehold land if the lessor is a development authority. Finance is normally not available if the lessor is any other party than the one mentioned above.

    • Can I avail of two simultaneous loans against two different properties?

      Yes, you can have as many loans against different properties. Provided you have the capacity to repay all the loan installments every month. All HFI's take into consideration the loan installments that you pay every month before arriving at your eligibility.

    • Incase I get transferred outside the City how can I repay my loan?

      Make sure you inform the HFI in advance if you have a transferable job. And as far as repayment goes, after the transfer just inform your new branch about your loan, if the repayment is by way of DAS. If your repayment is by way of PDCs, you can either swap the PDCs with ones from the location where you are getting transferred to or you can retain the same PDCs and ensure that you remit the installment amount every month by the time your payment becomes due.

    • Do NRI's get any benefit for repayment of NRI loan?

      The terms and conditions for a NRI loan are different than those of loans granted to Residents of India.

    • What is SURF?

      SURF or the Step Up Repayment Facility as it is originally known, is a scheme that is provided to young professionals who have just begun their careers. Considering that their repayment capacity will increase steadily in the near future, this scheme increases the repayment capacity of a Customer. Thereby his loan eligibility also increases as it considers the increase in income of the Customer over the next few years.

    • What happens if my property value falls?

      There are always unexpected fluctuations in real estate prices. Accordingly the price of your property may rise or take a plunge. However you must not discontinue the payment of your installments. Fluctuating values of property do not in anyway undermine the need for you repay your loan obligations on time, as any default in payments by you will seriously damage your credit profile and further ruin your chances of getting any loans. Incase you would like to dispose of the property you may do so after clearing your loan with your Financier.

    • What is Refinance?

      You have taken a loan for your house from a HFI at a particular ROI. However over the years the ROI drops. In such a case you stand to lose. Well not if you opt to swap your loan. This could be done from either the same HFI or another HFI at the current rates of interest, which is lower. This is known as refinance.

    • How can I refinance my existing Loan?

      The procedure for refinance is as follows: Arrange for funds to repay the loan with the current HFI after getting the loan approved from the new HFI. Once you have repaid the loan, collect your title documents from the old HFI and submit it to the new HFI and avail of disbursement on your loan.

    • What is a balance transfer?

      When you transfer the balance of a loan that you availed at a higher ROI to either the same HFI or another HFI at the current ROI, it is known as Balance Transfer.

    • How can I avail of a balance transfer?

      The procedure for refinance is as follows: Arrange for funds to repay the loan with the current HFI. Get the loan approved from the new HFI. On repayment of the loan, collect your title documents from the old HFI and submit it to the new HFI and avail of disbursement on your loan. Kindly read the details on the Balance transfer product and use the calculator to find out the benefits that you will gain from such a swap.

    • Should I insure my property?

      Most HFI's do not insist on property insurance. Some HFI's even offer it to you as an incentive for a certain period of time. However, if your property is not covered under insurance, it is advisable to go in for an insurance cover on your property. The rates of property insurance are very low and today the rates are Rs. 60/- per lakh of property value for a period of one year. If you decide to go in for a longer tenure for insurance, you can avail of huge discounts being offered by the various insurance Companies.

    • I have heard of mortgage redemption life insurance policy, tell me more about it. Is it advisable to go for such a cover?

      Under a mortgage redemption life insurance policy your life insurance policy would be considered for the mortgage against the loan. In case of your permanent disability to repay or in case of the death of the applicant the loan gets repaid through the policy. Thus the property gets cleared without any legal implications. If, however, you repay the loan totally, you get back the sum assured at maturity. Most HFI's do not insist on going in for a mortgage redemption life insurance policy. However, some HFI's offer better rates on your loan if you opt for this policy. If you plan to go in for a life insurance policy soon and if you wish to avail of this rate differential, then you should opt for the mortgage redemption life insurance policy.

    • Can I get a loan to finance the construction of my own House?

      Yes, you can get finance to construct your own House. The documents that are required in such a case are slightly different from the ones you submit for a normal Home loan. If you have purchased this plot within a period of one year before you started construction of your house, most HFI's will include the land cost as a component, to value the total cost of the property. This will meet their LTV norms. In cases where the period from the date of purchase of land to the date of application has exceeded a year, the land cost will not be included in the total cost of property while calculating eligibility.

    • How much loan am I eligible for?

      The HFI, on the basis of your repayment capacity, decides on your loan eligibility. Your monthly income is taken into consideration by the HFI for this Purpose. every HFI sets certain norms on the amount of installment, as a percentage of the monthly income that can be accepted as being affordable. the HFI then uses these norms to arrive at loan eligibility.

    • Will the Co-applicant's source of income be included in arriving at my eligibility?

      If the Co-applicant receives income from a regular source of income that has been consistent, then such income would be considered for the loan eligibility calculation. Every HFI has certain acceptable relationships of the co applicant for inclusion of income. For certain types of income, however, HFI's insist on regular income tax returns being filed every year on time for e.g. For tuition income or tailoring income. If these returns are available then it will be included. Interest income, however, will not be considered for calculation of loan eligibility.

    • Will the repayment track record of my previous loans, be considered in computing eligibility?

      If you have availed of a loan from any other Bank, the repayment track record will be taken into consideration while determining your loan eligibility. A very good track record of repayment will prove favourable in deciding your repayment capacity. The Loan installments of these loans will also be taken into consideration while calculating the FOIR as per norms of the HFI.

    • How do I improve my eligibility for the loan?

      Some of the ways to improve eligibility are stated below:

      • Include a co applicant to the loan whose income can be considered.

      • Opt for a step up repayment facility (under this scheme your installment will keep increasing at Periodic intervals thereby enhancing your loan eligibility) to avail of a higher loan. You may also be eligible to opt for a flexible loan installment plan (under this scheme your alternate sources of income after your retirement will be considered to enhance your loan eligibility if you are nearing your retirement age).

      • If you are currently staying in a company accommodation and are planning to move out once you buy the property, you may become eligible for HRA from your Company. If you provide proof of the HRA amount that you will receive on vacating Company accommodation, include it in your monthly Income for calculating loan eligibility.

      • Provide proof of cash income received.

      • It’s advisable for you to buy a property where the agreement discloses the entire value of the House. This also help’s from any tax implications at a later point in time and in increasing loan eligibility. Especially if your eligibility is constrained by LTV (loan to value) norms.

      • Include all costs as mentioned in the definition of cost of property if LTV is a problem.

    • Why does the HFI need to judge my repayment capacity when it is holding my property as security?

      The HFI's in India use the mortgage only as a collateral security. This is because the foreclosure laws (i.e. The laws to enable the HFI to recover the property in the event that the Borrower defaults) are very time consuming and difficult to enforce. As a result the HFI relies more on your earning capacity and your ability to repay rather than your security value.

    • How does the HFI judge my repayment capacity for a Home loan?

      The HFI looks at your earning capacity both present and future to make a judgement call on your repayment capacity. Your existing obligations, your past repayment history, the quality of your earning (speculation and other non recurring income such as capital gains is normally not included in evaluating your repayment capacity) is considered. The HFI also gives due weightage to your Age, Experience, Employer and your qualifications to arrive at your repayment capacity.

    • Some portion of my income is by way of cash, will it be considered for loan eligibility?

      Most HFI's do not consider any income by way of cash unless supporting documents for the same are produced. This is because the HFI is not in a position to establish the genuineness of the cash income without proper evidence. However, if the proof for cash income is produced by way of either photocopies of the voucher or a statement from the Employer that would reflect the same along with relevant entries in the Bank statements, the HFI may consider part or full income based on the nature of such cash income.

    • I under declare the amount of my income? Will it affect my loan eligibility?

      Yes your loan eligibility will be affected if you under declare your income. This is because the HFI is not in a position to establish the genuineness of the undeclared income without proper evidence. However, if the proof for such income is produced, the HFI may consider part or full income based on the nature of such cash income. Under declaration of income is not advisable as it could result in Tax implications.

    • Do professionals have special eligibility norms?

      Most HFI's offer special privileges to self-employed professionals. They recognize the fact that in such cases, income is generally under stated and the earning potential of such individuals is higher that what has been disclosed. Every HFI has its own conditions regarding the type of professionals they would cater to. The HFI also decides on the qualifications required for such professionals to qualify for the relaxed norms for loan eligibility calculations.

      • Why are administrative fees collected from a Customer?

        To meet the operating expenses of the loan amount through the tenure of the loan amount administrative fees are charged to the Customer. Expenses to meet the visits made by a technical team are also included under this charge.

      • What is pre EMI?

        You’ve chosen a property that’s yet under construction. So the HFI makes the disbursement in parts based on the progress of the construction of your property. However till the loan is fully disbursed you have to pay simple interest at the rate you have agreed upon with the HFI. This is known as the pre emi. and from the month following in which the full disbursement is made you will start paying your EMI.

      • Why is pre EMI required?

        In case of under- construction property the disbursement is made in parts as per progress of the construction of your property. The HFI conducts a visit to your property with a technical team and on inspection disburses the loan as per the stage of construction. Once you forward the possession letter (mentioning the property is ready for possession) you receive from the developer to the HFI, only then is the final disbursement made. Till the entire amount is not fully disbursed the Bank cannot accept repayment of principal. However the HFI expects you to pay pre EMI, which is simple interest on the amount disbursed at the rate contracted.

      • What is a fixed rate loan? should I opt for a fixed rate loan?

        A fixed rate of interest is one where the rate charged by the HFI on the loan is constant over the tenure of the loan. It is advisable to go in for a fixed rate if you feel that the rate of interests in the market have touched rock bottom and the rates can only move upwards.

      • What is a variable rate loan? should I opt for variable rate loan?

        A variable rate is one where the rate charged by the HFI on your loan keeps changing with respect to the rates in the market over the tenure of the loan. Typically, the rate charged by the HFI is on the basis of their cost of funds and the prevailing market rates. these rates change periodically. accordingly the tenure increases or decreases or alternatively the EMI increases or decreases based on whether the rates move upwards or downwards. every HFI decides whether to change the rate of interest or change the tenure at the time of sanction. It is advisable to go in for the variable rate if you feel that the interest rates have reached its peak and can only go downwards.

      • What kind of costs are included under hidden costs?

        .Normally, the hidden costs include the fees charged towards processing and administrative fees, the increase in the effective rates of interest due to the annual reducing balance method, pre payment charges, delayed payment charges, etc., If any. Some HFI's also charge legal fees and technical fees from the Customers while others may include charges for stamp duty and registration of the mortgage deed, if they are going in for a registered mortgage.

      • What happens to processing/administrative fees if I don't avail of the disbursement?

        Most HFI's refund the fees that you pay to them if you cancel the loan after taking the offer letter from the HFI. However, some HFI's may hold back the processing charges paid by you either fully or partly.

      • Are any interest rate benefits available for a physically challenged person?

        Yes, some HFI's do provide for differential rates of interest if you are physically disabled or handicapped. you will have to provide for a certificate from your medical advisor for the same, which will be validated by the HFI. normally, 0.5% discount is offered to physically challenged Customers.

      • Can I convert my loan from fixed rate loan to variable rate loan & vice versa?

        Yes, you can convert variable rate product into a fixed rate product with no extra charges. However, to convert a fixed rate product to a variable rate product, most banks will charge a small fee. The swap can be done any number of times and at any point of time.

      • What is the difference between monthly rest & annual rest?

        In a monthly rest, the interest is calculated on the outstanding principal at the beginning of every month. Once the interest is calculated at the rate applicable to you for the month it is deducted from the EMI received during the month. The balance component of the EMI forms the principal paid during the month. This amount is then deducted from the opening balance of the Principal (i.e. The amt on which the interest was calculated). The balance amount is carried forward as the opening balance of the principal for the next month. In an annual rest, the interest is calculated on your outstanding principal at the beginning of every year. Once the interest is calculated at the rate charged to you for the entire year it is deducted from the EMIs received during the year. The balance EMI is taken as principal repaid during the year. This amount is deducted from the opening balance of principal (i.e. The amt on which the interest was calculated). The balance amount is carried forward as the opening balance of principal for the next year.

      • Can the fixed rate of interest change during the loan repayment?

        The fixed rate of interest normally remains fixed over the tenure of the loan. This rate remains constant after the final disbursement has been made. It is ideally suited for situations where you expect the rates of interest to go up in the future and this fluctuation in the rates does not affect you adversely. In certain cases of home loans the disbursement takes place as per the stages of construction of the property i.e the disbursement is spread out over a period of time. In such cases it is quite possible that during this period there is a possible change in the interest rate in the Market. Irrespective of the fact that you are either under the fixed rate or the variable rate scheme, the new rate of interest would apply to the extent of undisbursed portion of the loan amount. The rate of interest would remain fixed at the final weighted average rate at which the loan was disbursed.

    • Who can be a co - applicant?

      Every HFI insists on all co-owners of the property being Co-applicants to the loan. In case of acceptable relationships as stipulated by the HFI, the income of the Co-applicant can be included in arriving at loan eligibilities.In case of any other relative being a Co-applicant to the property, the HFI would not include the income of the Co-applicant for the calculation of loan eligibility.

      Combination income clubbing of co – applicants

      • Husband – Wife : Yes.

      • Parent – Son : Yes (if only son).

      • Parent – Daughter : Yes (if only child).

      • Brother – Brother : Yes (if currently staying together and intend staying together in the new property)..

      • Brother – Sister : No.

      • Sister – Sister : No.

      • Parent – minor child : Not eligible for a loan.

    • Why does the HFI insist on a Guarantor?

      Since the foreclosure laws in India (laws pertaining to recovery of loan by disposing off the property) are still weak it is difficult to re possess the property of an applicant. The HFI, in order to safeguard its interests and to ensure that the repayment of the loan comes on time, insists on a Guarantor. Some HFI's require a Guarantor in all cases while others insist on a Guarantor only if certain requirements are not met

    • What is the liability of the Guarantor towards repayment of the loan?

      The Guarantor is equally liable to repay the loan incase you default on your loan. By taking a Guarantor, the HFI also puts some sort of a moral obligation on you to repay the loan.

    • Under what circumstances is a Guarantor required?

      Some of the conditions when a Guarantor is required are as follows:

      • In the case of a sole applicant to avoid the risk of a default in case something goes wrong with the applicant.

      • If the applicant’s job is of a transferable nature.

      • If the applicant is residing in a City different from the City where he intends to purchase the property.

      • Certain Industries, typically the software Industry, where the likelihood of the applicant going abroad either on assignments or to seek a permanent job is high.

      • Absence of a Co-applicant to the loan.

      • Lack of professional qualifications in a self-employed case.

    • Who can be Guarantor?

      A Guarantor should satisfy all the norms relating to age and income of a normal customer. This is because the Guarantor is equally liable to pay the loan in case you default to repay. Some HFI's may allow blood relatives to stand as a Guarantor while others may not.

    • What happens in the event of my Co-applicant / Guarantor's death?

      On the death of the Co-applicant you have to intimate the HFI with necessary proof. Subsequently if the Co-applicant is the main owner or the co-owner you will have to get the property transferred in your name through the co-op hsg.soc, or the registrar of properties and intimate the HFI about the change in the ownership of the property. In the event of the Guarantor’s death, you have to approach the HFI with another Guarantor and get the original one replaced with the new one.

    • Can my Guarantor apply for a loan later on ?

      In future your Guarantor can apply for a loan if he is capable of repaying the installment on your loan (in case of a default in your loan) and the new installment of his loan. If his repayment capacity does not make him eligible for a loan, you have to arrange for a replacement guarantee. This has to be done by releasing your current Guarantor and providing your HFI with another Guarantor(meeting all specified norms for a Guarantor). Once your Guarantor is released, he can apply for a loan.

    • Can I Get A Disbursement Before I Put In My Own Money?

      No, most HFI's do not allow for a disbursement before you have put in your contribution. However, in cases, where you avail of finance from a source (like pf), which generally takes a long time to get disbursed, some HFI's agree to partly disburse the loan. Yet it is necessary to put in some money towards the property at least before you avail of a part disbursement from the HFI . You also need to produce adequate evidence that you have got the source of income (sanction letter in case of a loan from pf).

      for example: Suppose the cost of your property is rs. 10 lacs and you avail of a loan of rs. 6 lacs from a HFI. Savings of rs. 2 lacs and a pf loan of rs. 2 lacs are the sources of your own contribution. The building is about 40% complete and you have put in rs. 2 lacs out of your savings. You also have a sanction letter from the pf authorities sanctioning the loan to you. However, the time for you to receive a Cheque from pf will take about 4 months. Since the building is already 40% complete and the construction is going on in full swing, the builder is pressurizing you for more money. He will also charge you interest on late payments made to him. In such a case, you can approach the HFI for a disbursement by showing them the sanction letter. The HFI will then release you part disbursement. Please note, however, the last disbursement of the HFI will be held back till you invest the pf funds also in the Project.

    • Can I switch jobs / leave job for self-employment during the course of loan?

      You can switch jobs / leave job for self-employment during the course of your loan. However you have to keep the HFI informed about the same. If your repayment happens by way of deduction against salary, you have to get this deduction from your new Employer. Alternatively arrange for PDCs for the installments. A copy of your new appointment letter also has to be sent to the Bank for their data maintenance.

    • The HFI from where I wish to avail of a loan insists on the registration of the sale agreement. However, my seller refuses to sign the agreement till he receives the money. What should I do?

      Every HFI requires you to hand over the registered agreement before it disburses the loan. What you can do is show the seller the sanction letter of the HFI and pay your contribution that is due to him. Once this is done, enter into a partly paid agreement with the seller. This mentions the cost of the house and the amount paid to the seller along with the balance amount to be paid. The agreement sets a time limit for the balance payment to be made and contains a clause that the agreement would be null and void in case of a failure of payment within the stipulated time. This agreement gets registered and the disbursement is taken from the HFI. The flat purchaser has to take sufficient care to take a proper receipt for the amount paid to the Seller. These receipts should cover the Flat purchaser’s own contribution and a receipt for the amount paid by the HFI.

    • Should I insure my property?

      Most HFI's do not insist on property insurance. Some HFI's even offer it to the customer as an incentive for a certain period of time. However, if your property is not covered under insurance, it is advisable to go in for an insurance cover on your property. The rates of property insurance are very low and today the rates are rs. 60/- per lakh of property value for a period of one year. If you decide to go in for a longer tenure for Insurance, you can avail of huge discounts being offered by the various Insurance Companies.

    • Can I sell my property even when the loan is outstanding?

      You can sell your property when your loan is still outstanding. However, you need the consent of the HFI to let you sell the property. Based on this consent letter, you can negotiate a sale with potential purchasers. In case the new purchaser opts for a loan, your loan will get transferred automatically to his name. The new purchaser can take even an additional loan at the time of entering into a loan arrangement with the HFI. In the event of an outright payment by the new purchaser, he will make a Cheque favoring the HFI for an amount equivalent to your outstanding principal. This will clear off your loan. For the balance amount, he will provide a Cheque in your name. Your property documents will be released only when you have prepaid your entire loan.

    • Can I transfer my loan to somebody else?

      You can transfer your loan to a third party. However, you need the consent of the HFI for the same. Based on this consent letter, your loan will get transferred automatically to his name. The new purchaser can take even an additional loan at the time of entering into a loan arrangement with the HFI. In the event of an outright payment by the new purchaser, he will make a Cheque favoring the HFI for an amount equivalent to your outstanding principal. This will clear off your loan. For the balance amount, he will provide a Cheque in your name. Your property Documents will be released only when you have prepaid your entire loan.

    • Can I take loan against my existing property?

      Yes, you can take a loan against your existing property. However, the normal home loan cannot be taken. You have to opt for a home equity loan where the end use of the finance is not monitored. You can avail of this loan from most HFI's. The terms and conditions and procedures of such loans would be different from that of a normal home loan.

    • Can I increase / decrease the loan after it is sanctioned? What will happen for the fees?

      Yes, you can request for an increase or decrease on your loan amount at any point of time. Most HFI's charge you fees on the new increased amount. Any excess fees paid in case of a decrease of your loan amount normally gets adjusted towards subsequent payments that you would be making to the HFI.

    • What Is a pre - approved property?

      A pre-approved property is a property where the HFI has done a legal and technical check on the property documents. The builder gets his property pre approved from various HFI's to increase the marketability of his project. Every HFI has its own methods of carrying out legal and technical checks on the property.

    • What are the advantages If I buy a pre approved property?

      By buying a property in a pre-approved project, you can safely assume that the property is legally and technically clear. For you this means quality construction and authorized construction. Moreover, the documents that you submit to the HFI in a pre-approved project are fewer than in the case if you buy a non – approved Project. In a pre-approved Project, the only documents that you submit are your own property documents. While in the case of a non approved project, the entire list of documents pertaining to the land along with the various permissions granted to the Builder need to be handed over to the HFI.

    • In case of a pre-approved property if there is a delay from the builder - does it mean I don't have to pay HFI?

      When a HFI pre approves a property of a developer, it only means that the property is legally and technically clear. This does not mean that the HFI guarantees the performance of the developer. You have to pay off your loan even if the developer delays the construction or even calls off the Project completely.

    • Can I get a loan for agricultural land / farmhouse / holiday house?

      No, most HFI's do not provide finance for buying agricultural land, farmhouse or a holiday home.

    • Can I get finance to buy property Abroad?

      No, HFI's do not provide finance for acquiring property Abroad. The reason for this being difficulty in verification of the asset and knowledge of foreclosure laws in the country where property is purchased.

    • Can I get loan towards deposit for taking a House on lease?

      No, HFI's do not provide finance towards deposit for taking a House on lease.

    • Can I avail a loan against a property in another City

      Most HFI's insist that either the applicant or the property should be from a location where the HFI has a presence. However, some HFI's do finance properties even if the above two conditions are not met.

    • Can I rent a property for which I have taken a loan?

      Yes, you can rent a property for which you have taken a loan. Here you benefit as you can claim the entire interest paid by you towards the loan installments against the rental income. The balance interest, if any can be set off against other income.

    • Can I use my residential property for commercial Purposes?

      Most HFIs do not give loans to buy commercial premises to non professional or salaried applicants. However, you can reside in part of the property that you have purchased and have an office in the balance portion of your property.

    • Can I get a loan for non residential commercial premises?

      Most HFI's provide for a loan for non residential premises. However they insist that the applicant needs to be professional who has to be self employed. The terms and conditions of such loans would be different from the normal home loan product.

    • What is pugdi system?

      This is an age old system where the Owner of the property had leased it to an individual resident decades ago, the individual has paid a large sum upfront and continues to pay a very nominal rent of, say, rs 100 per month.The maintenance of the premises is the responsibility of the resident.

      If the resident wants to sell the property, he needs to get a consent from the Owner. The Owner would give consent provided he gets a share (approx 25-33%) of the sale proceeds.This figure is mutually agreed between the resident and the owner.The transfer of rights to the Buyer can happen only if the Owner has given his consent to the same, failing which the buyer will have no Ownership rights.

      Since the whole process is complex, flats under pugdi system fetch a lower resale value.

    • Can I get a loan for pugdi System?

      No, HFI's do not provide loans for property that is under the pugdi system.

    • Is parking space/ garage included in cost of property?

      Yes, parking space / garage charges are included in the cost of the property.

    • What is a NOC?

      NOC stands for a no objection certificate to mortgage the property. The NOC certificate covers five main clauses viz., property being free from any encumbrances, property being free and marketable, permission to mortgage the property, acceptance of lien on the property and the Owner not being allowed to sell the property to anyone else without the consent of the HFI.

    • Why is an NOC required from building/ society?

      In states like Maharashtra and others, the Flat Owner and the Owner of the land on which the Flat stands are not the same. The Flat Owner is given a property by virtue of his being a member of the society or the land being allotted (and not transferred) by a development authority in his favor or the Developer selling a Flat built on his land. Hence the NOC is required to safeguard the interest of the HFI from the repercussions of the five clauses viz; property being free from any encumbrances, property being free and marketable, permission to mortgage the property, acceptance of lien on the property and the Owner not being allowed to sell the property to anyone else without the consent of the HFI not being adhered to.

    • Will a NOC be required if I am the owner of the land and the property?

      NOC is not required if the landowner and the property Owner are the same. Hence, if you are constructing a property on a plot of land that you own, NOC will not be required.

    • What are the credit documents required by the HFI to sanction my loan?

      Credit documents are required by the HFI to determine your repayment capacity. For a checklist of the documents that you will need to submit to get your loan sanctioned.

    • What are the legal documents required by the HFI to sanction my loan?

      Legal documents refer to the documents that pertain to your property. These documents establish the fact that you are the Owner of the property. For a detailed list of the documents that you will need to submit for getting the disbursement of your loan, please read legal documentation in the home loan content.

    • For carrying out improvements to my House that is already mortgaged to a HFI, do I need an NOC from the HFI?

      You do not require a NOC from the HFI to carry out improvements to your house. Most HFI's offer finance facility for carrying out improvements as well.

    • Can I make a lump sum payment at any point in time if I happen to get a huge sum of money?

      Yes, you can make a bulk repayment of your loan, either partly or fully. However some HFI's charge a prepayment penalty for earlier repayment of the loan. There’s also a limit on the number of times that one can prepay during the year and on the minimum amount that needs to be prepaid during every prepayment. You will have a choice of reducing your EMI by keeping your tenure constant or reducing your tenure by keeping the EMI constant.

    • When can I prepay my loan?

      You can prepay your loan at any point in time. You can either make a part prepayment or a full prepayment of your loan.

    • What Is A Prepayment Charge?

      Some HFI's levy a prepayment penalty if you decide to prepay your loan. This charge is made on the loan amount that is being prepaid.

    • How much can I prepay at any point in time?

      Most HFI’s have a limit on the number and the amount of part payments that you can make. Typically the amount should be the higher of three EMI's or an amount of rs. 10,000/- and the number of prepayments that you can make during a year is restricted to two. This would again differ from one HFI to another.

    • Why do HFI's charge prepayment penalty?

      The rationale behind the HFI’s charging a prepayment penalty is that they borrow money from their lenders for a certain fixed tenure at a contracted rate. When you make a prepayment, the HFI may suffer a loss, as they may have to disburse the loan at prevailing market rates. The prevailing market rates may be lower than the rates at which they have lent money to you.Hence the prepayment penalty.

    • Do I have to submit PDC's for the full tenure?

      Usually HFI's ask for PDC's for a maximum period of three years. Only after the last PDC, you have to hand over a fresh set of PDC's for the next three years or as the HFI instructs. However, if you are an NRI, you will be required to submit PDC's for the full tenure of the loan.

    • How is EMI divided into interest & principal?

      EMI essentially comprises of interest and principal. The amount of interest and principal varies depending upon whether the principal is reducing annually or monthly. In case of a monthly reducing loan, the break up of the EMI into principal and interest depends on the month to which the EMI pertains. Under annual reducing the EMI remains constant over the tenure of the loan but the individual components in the EMI vary from month to month.

    • How can I repay my EMIs?

      PDCs Post Dated Cheques for a certain number of years after which you provide another set of PDCs for the same tenure. DAS Deduction Against Salary. In this case the HFI ties up with your Employer. Under this facility, your Employer deducts the installment directly from your salary and remits the same to the HFI. Standing Instructions (SI) That’s by giving a written consent to your Banker to pay the installment from your account to the HFI every month on a particular date. The HFI ties up with your Banker for you to avail of this service. Cash / Demand Draft (DD) – Some HFI's provide for the facility of repayments of installments by way of cash in their office directly or by depositing the amount in a particular HGI account where they have an account. You could also pay your EMI by way of a Demand Draft (DD).

    • Can I get a time gap of a few months before I start repaying my EMI's?

      Normally, no HFI gives a time gap to repay your loan. However, incase of an under construction property, you do not pay your EMI's till the time of full disbursement. You pay simple interest at the rate applicable to your loan on the amount that has been disbursed to you by the HFI. This is similar to a delay in starting your repayment of EMI's.

    • Are there any other methods of repaying my loan other than the EMI?

      The EMI is considered as the best form of repayment for a loan as it is the easiest to administer. The EMI concept of repayment has been practiced for a long time. It is only now that we are seeing new forms of repayment coming in like the Equated Quarterly Investments, Bullet payments, Moratorium on principal repayments, etc. These forms of repayment however, will take a while to gain popularity and to be accepted as the general form of repayment.

    • How does the annual reducing method of repayment function?

      This method of repayment works as follows: The amount paid by way of EMIs is broken up into Interest and Principal at the end of every year. The opening balance of the principal is taken at the beginning of the year. The rate of interest that is charged is calculated on the opening balance. This amount is deducted from the total EMIs paid by you during the year. The difference between the total EMIs paid during the year and the interest on the opening principal is deducted from the opening principal to arrive at the closing balance of principal for the year. This in turn becomes the year opening balance of principal for the next year.

    • How does the monthly reducing method of repayment function?

      This method of repayment works as follows: the amount paid by way of EMI's is broken up into interest and principal at the end of every month. The opening balance of the principal is taken at the beginning of the month. The rate of interest that is charged is calculated on the opening balance. This amount is deducted from the EMI paid by you during the month. The difference between the EMI paid for the month and the interest on the opening principal is deducted from the opening principal to arrive at the closing balance of principal for the month. This in turn becomes the opening balance of principal for the next month.

    • What are the tax benefits in respect of home loans?

      Customers availing of home loans can claim a certain portion of the interest and principal that they pay towards the loan installments for reducing tax liability.

    • When should I apply for a loan?

      Ideally you should follow the 5 – step process as given below:

      • Decide on buying a house.

      • Decide on the amount that you can afford to put on your own.

      • Apply for a loan to find out your maximum loan eligibility.

      • Get your loan approved.

      • Select a House that meets your budget.

    • I have not selected a property. Can I apply?

      Yes, you can apply for a housing loan even if you have not selected a property.

    • I have a partnership firm? Can the firm take a loan?

      No, most HFI's do not provide for loans to partnership concerns. The terms and conditions applicable if an HFI provides loan would be different from the ones in the case of a normal home loan. You can, however, apply for a loan in your individual capacity. In such a scenario, you will be evaluated as a self employed person with your share in profits being taken into consideration for loan eligibility.

    • Can a minor / senior citizen join as a co-owner to a property?

      HFI's have a condition that all co owners need to be co applicants. All co applicants have to be eligible to sign loan agreements. Since a minor is not eligible to enter into a contract, HFI's do not allow for minors to be co owners. Senior Citizens, however can join as co owners. Some HFI's also lay down age limits which the co owners have to conform to before the loan is sanctioned.

    • Will cash component be included in calculation of LTV?

      It is not advisable to include any sort of payments for the House that are not accounted for in your it returns. It is always better to disclose the full value of the House in the agreement in your own interests. This also helps you from any tax implications at a later point in time. HFI's always frown upon any undisclosed portion of the cost of the House and hence the same is not included in calculation of LTV.

    • How is the cost of property calculated?

      The sum of the agreement value of the property, stamp duty, registration charges, garage charges for parking cars, society transfer charges, Electricity and Water connection charges, collectively form the value of the property for the HFI. Additional furnishings done by the developer, for which you enter into an amenities agreement (duly registered) with him are also included in the value of the property. The cost of the property, however, does not include any cash transactions involved in the purchase of the House over and above those mentioned in the agreement.

    • Can my home loan include cost of initial furnishing?

      No, the cost of initial furnishing does not get included in the cost of the property. However, if the initial furnishing is done by the Builder, for which you have signed an amenities agreement that is duly stamped and registered, then such value will be included in the cost of the property.

    • Am I assured that my property documents are clear if an HFI agrees to give a loan?

      Yes, be assured of a legally and technically clear property if an HFI decides to give you a disbursement against the loan on your property. The HFI also ensures that the construction has been completed within the norms stipulated by the governing authority. In most cases of resale, you can be sure that your property is clear if the HFI decides to give you a loan. However, if the HFI is not convinced that your property is clear, it insists on some other security as mortgage over and above the current property being financed. In under construction cases, the property will be clear at the time of final disbursement. In case the builder violates the permissions granted to him by the governing authority towards the final stages of the construction, the HFI will hold back final disbursement till it is assured that the property is clear.

    • For the same house can I get a further loan?

      You can avail of a further loan as and when you want as long as you have the repayment capacity to service the loan. If you need the loan against the same property, you have to avail it from the same HFI where you have your current loan. The loan is considered as a new one and the terms and conditions of this loan would be as per the prevailing norms at the time of your fresh loan.

    • What Is A Leasehold Land?

      A leasehold land is one where a third party like an individual Person, development authority, society or a developer is the Owner of the land on which the property is constructed. The Owner of the property has given the land on lease to a developer, society etc. The society or the developer constructs a building that is then bought by an individual Customer. Where the building consists of multiple flats or dwellings, the flat is owned by the Customer by virtue of the same being mentioned in the agreement to lease or in the tripartite agreement entered into between the lessor, lessee and the Customer. Alternatively, the property could be sub leased to the Customer. If the building is a single unit or house the owner will directly lease the land to the Customer.

    • Can I get finance on leasehold land?

      Yes, you can get finance on leasehold land if the lessor is a development authority. Finance is normally not available if the lessor is any other party than the one mentioned above.

    • Can I avail of two simultaneous loans against two different properties?

      Yes, you can have as many loans against different properties. Provided you have the capacity to repay all the loan installments every month. All HFI's take into consideration the loan installments that you pay every month before arriving at your eligibility.

    • Incase I get transferred outside the City how can I repay my loan?

      Make sure you inform the HFI in advance if you have a transferable job. And as far as repayment goes, after the transfer just inform your new branch about your loan, if the repayment is by way of DAS. If your repayment is by way of PDCs, you can either swap the PDCs with ones from the location where you are getting transferred to or you can retain the same PDCs and ensure that you remit the installment amount every month by the time your payment becomes due.

    • Do NRI's get any benefit for repayment of NRI loan?

      The terms and conditions for a NRI loan are different than those of loans granted to Residents of India.

    • What Is SURF?

      SURF or the Step Up Repayment Facility as it is originally known, is a scheme that is provided to young professionals who have just begun their careers. Considering that their repayment capacity will increase steadily in the near future, this scheme increases the repayment capacity of a Customer. Thereby his loan eligibility also increases as it considers the increase in income of the Customer over the next few years

    • What happens if my property value falls?

      There are always unexpected fluctuations in real estate prices. Accordingly the price of your property may rise or take a plunge. However you must not discontinue the payment of your installments. Fluctuating values of property do not in anyway undermine the need for you repay your loan obligations on time, as any default in payments by you will seriously damage your credit profile and further ruin your chances of getting any loans. Incase you would like to dispose of the property you may do so after clearing your loan with your Financier.

    • What is Refinance?

      You have taken a loan for your house from a HFI at a particular ROI. However over the years the ROI drops. In such a case you stand to lose. Well not if you opt to swap your loan. This could be done from either the same HFI or another HFI at the current rates of interest, which is lower. This is known as refinance.

    • How can I refinance my existing Loan?

      The procedure for refinance is as follows: Arrange for funds to repay the loan with the current HFI after getting the loan approved from the new HFI. Once you have repaid the loan, collect your title documents from the old HFI and submit it to the new HFI and avail of disbursement on your loan.

    • What is a balance transfer?

      When you transfer the balance of a loan that you availed at a higher ROI to either the same HFI or another HFI at the current ROI, it is known as Balance Transfer.

    • How can I avail of a balance transfer?

      The procedure for refinance is as follows: Arrange for funds to repay the loan with the current HFI. Get the loan approved from the new HFI. On repayment of the loan, collect your title documents from the old HFI and submit it to the new HFI and avail of disbursement on your loan. Kindly read the details on the Balance transfer product and use the calculator to find out the benefits that you will gain from such a swap.

    • Should I insure my property?

      Most HFI's do not insist on property insurance. Some HFI's even offer it to you as an incentive for a certain period of time. However, if your property is not covered under insurance, it is advisable to go in for an insurance cover on your property. The rates of property insurance are very low and today the rates are Rs. 60/- per lakh of property value for a period of one year. If you decide to go in for a longer tenure for insurance, you can avail of huge discounts being offered by the various insurance Companies.

    • I have heard of mortgage redemption life insurance policy, tell me more about it. Is it advisable to go for such a cover?

      Under a mortgage redemption life insurance policy your life insurance policy would be considered for the mortgage against the loan. In case of your permanent disability to repay or in case of the death of the applicant the loan gets repaid through the policy. Thus the property gets cleared without any legal implications. If, however, you repay the loan totally, you get back the sum assured at maturity. Most HFI's do not insist on going in for a mortgage redemption life insurance policy. However, some HFI's offer better rates on your loan if you opt for this policy. If you plan to go in for a life insurance policy soon and if you wish to avail of this rate differential, then you should opt for the mortgage redemption life insurance policy.

    • Can I get a loan to finance the construction of my own House?

      Yes, you can get finance to construct your own House. The documents that are required in such a case are slightly different from the ones you submit for a normal Home loan. If you have purchased this plot within a period of one year before you started construction of your house, most HFI's will include the land cost as a component, to value the total cost of the property. This will meet their LTV norms. In cases where the period from the date of purchase of land to the date of application has exceeded a year, the land cost will not be included in the total cost of property while calculating eligibility.

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