Home Loan

Yes, It is mostly mandatory to have a Co-applicant. If someone is the co-owner of the property in question, it is necessary that he/she also should be Co-applicant for the Home Loan. If you are the sole owner of the property, any member of your immediate family can be your Co-applicant

Most lender requires 10-20% of the home purchase price as a down payment from you. It is also called ‘one’s own contribution’ by some lenders. The rest which is 80-90% of the property value is financed by the lender. The total financed amount also include registration, transfer and stamp duty charges.

The loan amount can be disburse in full or in instalments which usually does not exceed three in number. In case of a under contraction property, the disbursement of loan amount is based on the progress of your construction as assessed by the lender and not necessarily according to the developer’s agreement. Make sure to enter into an agreement with developer wherein the payments are linked to the construction work and not predefined on a time based schedule. In case of fully constructed property, the disbursement is made in full

Home Loan rates can either be fixed or flexible. In the former, the interest rate is fixed for the loan entire tenure. While in the later, the rate does not remain fixed.

Generally the lenders offer various modes for loan repayment. One may issue standing instructions to the bankers to pay the instalment through ECS (Electronic Clearance System), opt for direct deduction of the monthly instalments by your employer or issue post-dated cheque from a salary account.

One may prepay the loan ahead of its original tenure. If you are on a floating interest rate, no charge will be applicable. If you are on a fix rate, there may be a charge applicable.

Partial prepayment refers to any payment made by the borrower in addition the regular EMI. It directly reduces the outstanding principle amount and the interest gate calculated on the reduced principle amount. Prepayment helps in reducing the total interest outgo as the loan tenure get reduced. The higher the prepayment amount and the longer the period, the more will be your savings.

Every Home Loan lender is supposed to furnished you with a statement, at the beginning of the year, showing how much of the total interest and principal is expected to be repaid during the year. This statement helps you to declare the figures to your accounts departments as a declaration of investment proof for tax deduction.

It is always better to cover your Home Loan liabilities and not let it fall on your family in your absence. He may either buy a pure term insurance plan or mortgage insurance plan for amount equal to loan amount for a specific tenure. One is allowed to pay a single premium or a regular premium to buy any such plan. It is however not compulsory to buy such insurance plan while taking a Home Loan from the lender

A home improvement loan is offered to facilitate improvements of self-owned property to existing or new customers. This loan may be used for repairs, renovation improvements & extensions of the home. The loan works like, the borrower will have to work out a cost estimate of the work & give it to the lender, who will take a quotation from the contractor to verify to estimate submitted. The loan amount is released at the rate of the construction work to the contractor to whom it is due

Of the total annual EMIs, the principal amount component gets tax benefits under Section 80C of the Income Tax Act. Even the partial prepayment amount qualifies for the same but within the limit of 1.5 Lacs under Section 80C. Further, if it is self-occupied property, the interest paid is deductible upto Rs. 2 lacs in a year under section 24. However, to get the deduction under Section 24, the buyer must get possession of the property within 3 years of taking the loan. If the 3 years deadline is not met, the deduction benefits reduces from Rs 2 lacs to only Rs 30,000 a year.