Anyone — whether self-employed or salaried individuals/professionals — with a regular source of income can apply for home loans. One must be at least 21 years old when the loan period begins and should not exceed an age of 65 years when the loan ends or at the time of superannuation. This is the generic home loan eligibility criteria and specifics such as the minimum and maximum age limits, minimum income level, etc. may differ from one lender to another.

• Find out the various lenders who would be interested in providing you with a home loan based on the loan amount, income level and related criteria provided by you.

• Compare the home loan offers based on factors such as interest rates, processing fees and other relevant factors.

Once repayment capacity determines your eligibility to apply for home loan, lenders consider the following factors:

• Income level of the applican

• Age of the applicant

• Qualification (stability and occupation continuity)

• Resident status (maximum limit for an Indian resident differs from that of a non-resident)

• Spouse’s income (household income is taken into account when there is a co-applicant)

• No. of dependants (it is a measure of repayment capacity)

• Credit history and score (past repayment track record) Status of existing loans

No. A lender would only allow you to apply for a joint home loan if the application is co-signed by one or more members of your immediate family. Thus, your friend does not qualify.

Immediate family members such as your parents, spouse and children are allowed to be joint borrowers in case of a home loan.

The maximum number of joint borrowers in case of a home loan is fixed at 6. However, only family members such as parents, siblings and spouse can be co-borrowers for a home loan in India. Additionally, having a co-borrower who has a robust credit history and good credit score is preferable as compared to one with a low credit score.

If the interest rate on the loan varies periodically over the loan tenure, then it is called a floating rate home loan. Lenders have their own base rate which determines the rate of interest charged on a home loan. The base rates of banks are revised from time to time based on RBI directives as well as other factors, which leads to an increase or decrease in the EMI amount payable.

Fixed rate home loans are offered at a predetermined interest rate during the loan period and these remain unchanged during the loan period irrespective of market conditions. This can be a huge benefit when market volatility starts affecting interest rates. For instance, if the RBI increases interest rates on loans, then people with fixed rate home loans will not be affected by any increase or decrease in the market interest rates and the EMI amount will remain unchanged. This type of home loan is less popular these days.

As per recently updated RBI rules, banks are required to use the MCLR (Marginal cost of lending rate) method to determine the interest rate on home loans. In case of a floating rate home loan, the banks are now required to change the interest rate either yearly or every six months. In case you have a fixed rate home loan, you can get in touch with your bank to get information regarding the conversion of your fixed rate home loan to the new MCLR-based floating interest rate. At present, the introduction of the new MCLR regime has led to a reduction in applicable home loan interest rates.

Yes. A few lenders do offer you the option of switching from a floating rate to a fixed rate home loan and the other way around. However, this is not applicable to all home loans and there are a few charges involved in implementing this conversion. Get in touch with your lender to get details regarding the procedure and requirements.

There are different ways to pay off your loan such as issuing post-dated cheques for the tenure of the home loan, getting the amount deducted automatically from your salary or by issuing standard instructions to the lender for ECS (Electronic Clearing System) wherein the EMI is automatically deducted from your bank every month.

Before zeroing in on a home loan, it is best to compare the various interest rates that would be applicable to you. Also, take into account the fact that banks charge various processing and other related fees when you apply for a home loan and you should also consider these when applying for a home loan.

Yes, one can repay the loan amount before completion of the scheduled loan tenure by making a lump sum payment towards paying off the loan. In such cases, the bank may decide to apply some penalties in the range of 2-3% of the principal amount outstanding. Some banks and NMFC (non-banking financial companies) do not charge any penalty on making prepayment of a home loan.

• Processing Fee- When applying for a loan, a fee is paid to the lender known as processing fee. The amount paid could be either a percentage of the loan amount or a fixed amount that is paid in lieu of carrying out the loan sanction formalities.

• Commitment Fee- It is essential to avail the loan within a stipulated time period after it is processed and sanctioned otherwise some financial institutions levy a commitment fee. By paying the commitment fee, you are assured that you can access the loan at the interest rate and for the tenure that was initially agreed on. Most banks no longer charge this fee.

• Pre-payment Charges- Banks/ financial institutions might charge a penalty if the entire loan amount is paid off before completion of the loan tenure. The penalty amount also known as foreclosure/pre-payment charges could be a maximum of 5% of the loan amount that is paid off before the completion of loan tenure.

• Miscellaneous charges- Documentation, stamp duty, credit bureau report issuance charges and consultant charges are generally considered as miscellaneous charges by few lenders.

The documents that need to be submitted may vary from one lender to the other. Some of the necessary documents to be submitted include the following-

• Completed loan application form

• Passport size photographs

• Identity proof – PAN card/Passport/ DL/ Voters ID

• Residence proof- telephone or electricity bill/ passport/ voter ID / property tax receipt

• Bank statement for at least past 6 months and salary certificates/ latest acknowledged ITR

• Copy of plan approved for the proposed construction/extension

• Cost estimation/ valuation report from Bank’s (or finance company) authorised surveyor/evaluator.

• Allotment letter of housing board/ NOC of the society/Builder etc. as well as any other land use certificate/other

The tax benefit on home loan is divided into two sections-

• Tax exemption on repayment of the home loan principal: This is the deduction allowed under Tax Section 80C with a maximum annual tax deduction of Rs, 150,000 under the section.

• Tax benefit on the interest rate for a home loan:Under Section 24 of the Income Tax Act, you can avail the tax benefit on the amount of interest paid on a home loan to the maximum limit of Rs. 2 lakhs for a self-occupied property.

• Tax benefit for Joint BorrowersIn case of joint home loans, each of the co-borrowers is eligible to receive a total of Rs. 3.5 lakhs (1.5 lakhs under section 80C + 2 lakhs under section 24) as tax exemption. Hence, if a married couple co-signs for a home loan, they can claim a total tax exemption of Rs. 7 lakhs on their home loan.

If you have an existing home loan and have made timely repayments towards the existing home loan, you may get the option of borrowing an additional loan equal to the amount you have paid off on your current home loan. This is termed as a top up loan. The interest rates on a top up loan are less than a personal loan and it requires little or no paperwork to process this loan and the money can be used for a range of expenses.

Yes. You can have a family member like your spouse or your parents co-sign with you when you apply for a home loan. Having a cosigner for your home loan improves your chances of being approved for a larger home loan amount. A co-signer is especially recommended if the primary applicant has a low credit score or has had problems when applying/paying off a loan in the past.

A home loan is a long term loan (5 to 30 years tenure), hence lenders want to ensure that they will get their money back in the long term. Therefore, the loan sanctioning authority will definitely check your credit history before sanctioning a home loan to you. By having a good credit record/history you would be classified as a low-risk borrower and you may be able to get preferred (low) interest rates and waivers on various bank fees on the basis of your credit history.

In case you have a poor credit score, you will find it difficult to get a home loan. However, you can improve your chances by getting a co-borrower. The co-borrower needs to be a family member like your spouse or parents. Ideally, you should choose a co-borrower who has a regular source of income and good credit history to better your chances of a successful application.

When banks sanction you a home loan, the EMI payments may not start immediately. In such a situation, the bank is liable to charge a pre-EMI interest on your loan. This interest is payable monthly from the time the loan is disbursed till the time the EMI payments start off. The pre-EMI interest amount is lower than the home loan EMI as the principal payment portion is excluded for pre-EMI interest payments.

The margin on a home loan refers to the percentage of the cost of the home that is not covered by the lender providing you with the home loan. On average, lenders implement a 20% margin on home loans i.e. the home loan amount sanctioned to you will be 80% of the actual cost of the property. The remaining 20% of the home loan cost will have to be borne by you. Though the 20% margin is the industry average, lenders may increase or decrease their home loan margins on a case by case basis.

Apart from the margin, some other costs will have to be borne by you. Some of the key expenses in this regard include the initial down payment, stamp duty costs, registration costs and transfer charges among others.

Amortization is a table with details of interest payment and periodic principal of a loan along with the amount outstanding after each payment and the decrease of loan balance till zero.

There are various types of home loans depending upon your specific requirement. Some of the key ones are as follows:

• Land purchase loans: TThese loans are granted to individuals for the purchase of land on which they intend to build a house.

• Home purchase loans: These are the most common types of home loans that are granted to individuals and they are granted for the purchase of an apartment.

• Home construction loan:This type of loan is granted to individuals for the construction of a house on a plot of land that is already owned by the applicant.

• Home Expansion/Extension Loan:This loan is specifically granted to individuals who want to expand their current home to include a new construction such as an additional floor, room, bathroom, etc.

• Home Improvement Loan: TExisting home owners who lack sufficient funds to renovate their existing home can apply for this loan to upgrade their home with a new paint job, electrical wiring, water proofing, etc.

• Home conversion loans:Using this type of home loan, an existing home owner can add to their existing loan so that they can purchase a new house. This type of loan is only applicable to existing homeowners.

• NRI Home Loans: These home loans are specifically designed to provide non-resident Indians with financing so that they can purchase a home in India.

Your best option is to apply for a home conversion loan. Using this type of loan, you can add to your existing home loan and purchase the new one without having to opt for a second home loan.

Home loan pre-approval is a facility provided by banks and NBFCs to their customers, which allow those interested in purchasing a house with the particulars regarding their eligibility even before they have decided on a property to purchase.

The pre-approved home loan offer is valid for only a limited period, which varies from one bank to another as per the lender’s internal rules and regulations. However, these pre-approvals are usually valid for no more than 6 months.

When you take a home loan for an apartment, you technically apply for a home purchase loan. This type of loan is the most common one that is provided to individuals and is eligible for tax benefits under section 24 and section 80C. In case you want to purchase a plot of land for building your house at a later date, you have to apply for a land purchase loan and there is currently no tax exemption benefit for this type of loan.

Due to the huge demand for home loans, banks and NBFCs across India provide home loans to their customers. Some of the leading banks who provide home loans to individuals include HDFC Bank, Axis Bank, ICICI Bank, State Bank of India and associates, Bank of Baroda, RBL Bank and many others. Leading NBFCs in India that provide home loans in India include IndiaBulls, Bajaj Finance, Financiers, LIC Housing Finance and many others.