Home Loan

Depending on the type of housing loan you apply for, you will have to pay various charges, including:

1. Processing fee:

• Up to 1% of the loan amount or Rs 10,000 (whichever is higher) + GST (as applicable).
• An upfront processing fee of INR 5,000 plus GST shall be collected at the time of application submission. The balance processing fee, as applicable, shall be collected at the time of loan disbursement.
• The processing fee is a non-refundable fees collected by the Bank for the purpose of reviewing the loan application and same is independent of the outcome of such assessment.

2. Prepayment charges : If you decide to repay the home loan amount before the loan tenure ends, you will have to pay a prepayment penalty.

3. Conversion fee : A conversion fee is charged when you decide to convert to a different loan scheme for the purpose of reducing the interest rate attached to your current loan scheme.

4. Home insurance : It is vital to have an ongoing insurance policy throughout the housing loan tenure. You need to pay the premium for the insurance plan directly to the company offering the service.

5. Cheque dishonour charges : If a cheque you issue to pay the home loan EMI is dishonoured due to insufficient account balance or any other reason, cheque dishonour charges are levied.

6. Default charges : If you fail to pay your EMIs on time, you will be charged home loan fees as a penalty for delayed payments.

7. Change in loan term : You may have to pay nominal charges if you decide to change your loan tenure.

Home Loans serve various purposes beyond just purchasing a residence.

1. New Home Loans: For first-time property buyers meeting specific eligibility criteria.

2. Pre-approved Home Loans:: Based on a preliminary assessment of a borrower’s financial health and credit standing.

3. Home Purchase Loans:: Specifically for buying a house or apartment.

4. Construction Loans:: For building a house on owned land.

5. Renovation Loans:: For existing homeowners looking to upgrade or extend their homes.

6. Plot Loans: : For buying land to construct a house.

7. Home Loan Top-Up: Allows borrowing additional funds on an existing home loan.

8. Balance Transfer Home Loan: This enables transferring existing home loans to another lender for better interest rates. Your ability to repay is a critical factor in the approval or rejection of a Home Loan. Before applying, review your credit report and score.

If your home loan application is rejected, you can re-apply for the home loan. But you must consider the following aspects before you proceed:

• Credit score : Your credit score is a vital determinant of your capacity to repay a loan. Housing loans are long-term loans. Your ability to repay is a critical factor in the approval or rejection of a Home Loan.
  A poor credit score increases the chances of your home loan application getting rejected. Your ability to repay is a critical factor in the approval or rejection of a Home Loan. Before applying, review your credit report and score.
• Loan Amount : Some borrowers apply for a loan amount that is way beyond their eligibility. Paying off debts can improve your score and enhance loan eligibility.
• Other Ongoing Loans : Your loan application can also get rejected if you are already repaying some ongoing loans. To get loan approval, you must not be paying more than 50% of your monthly income towards loan repayments.
  Having many loans will have a detrimental effect on your personal finances and also your repayment capacity. Thus, you should clear any ongoing loans before applying for a housing loan.

A home loan balance transfer helps you avail of lower home loan interest rates.Paying off debts can improve your score and enhance loan eligibility. Banks determine the maximum loan amount based on your current monthly income. If a loan is denied because it exceeds your qualifying amount, consider reapplying after lowering the requested amount. As interest rates drop, refinancing could lead to lower EMIs and substantial interest savings.

Benefits of Home Loan Balance Transfer

• Hassle-free processing : Transferring a home loan is hassle-free. The eligibility criteria of the process are simple and require minimal documentation.
• Customised repayment options : Applicants can enjoy tailored repayment options to keep the housing loan affordable. With a lower interest rate, borrowers can either choose to enjoy lower EMIs or a shorter tenure.
• Affordable interest rates : If you’re paying above-market rates, transferring your home loan could be financially beneficial. Utilise the Home Loan balance transfer option to refinance your mortgage at reduced interest rates, leading to lower monthly payments and increased savings.
• Alter the home loan tenure : When you transfer a home loan, you can choose to restructure loan terms and change the home loan tenure or the repayment period as per your financial capabilities.
• Top-up loan : A home loan balance transfer comes with the benefit of a sizeable top-up loan that offers a relatively lower interest rate compared to personal loans.

To increase your chances of getting a housing loan approved, here’s what you can do.

1. Credit clean-up : Your credit score is a vital factor of consideration. A high credit score makes it easier for you to get a loan. If you have a low credit score, identify the reasons by checking your credit report. Sometimes, minor errors affect your credit score adversely. In such a case, inform Credit Information Bureau (India) Limited (CIBIL) immediately about the error.

2. Assess your debt-to-income ratio : Lenders analyse your current income to determine your ability to pay the home loan EMIs. If possible, you can try to increase your annual income through a part-time job or by selling liquid assets like stocks. As your debt-to-income ratio increases, your chances of getting a loan can also increase.

3. Limit your borrowing : If you borrow more money than you need to meet your financial targets, your chances of getting a housing loan are reduced. Save and invest more, and take wise calls on how much money you require as a loan and submit an application for that particular amount.

4. Add a co-signor or guarantor : In certain cases, it can be difficult to get a loan on your own accord. Consider adding a co-signor or guarantor with a good credit score. A co-signor or guarantor ensures that you pay your home loan EMIs on time, and if you fail to do so, they are liable to repay the loan on your behalf. However, getting a co-signor or guarantor comes with its own terms and conditions and so be sure to take note of the same.