Home loans

The present situation is more favourable than ever

Many banks and home financing companies are competing with each other to give you loans ,Lower interest rates, 9 to 10% per year - depending upon the amount borrowed.

Faster clearance of applications.

Almost 80 to 85% of the cost of your home is given as loan amount.

Longer the time for repayment, lower the Equated Monthly Instalments (EMI)

How much do Home Loans cost you ?

Don't worry if you don't understand the complexities of finance. Request your bankers to explain to you clearly the net payment you need to make every month. Using the table below, just compare the net payment per month for the same amount and for the same period offered by different banks/financial institutions. The lower the net payment, the better it is for you.

When you take a home loan, find out how much you need to pay every month. Other than EMI, look at the administration fee, processing fee and any other costs.

A great deal of Income Tax savings are possible with home loans. This can be used for paying your EMI Interest calculation is best done by the daily reduction method, which is better than the monthly reduction method, which in turn, is better than the annual reduction method.

Ideally, you should choose the bank which does not require a guarantor and offers home loans without pre-payment penalty (or a penalty for repaying loan before it is due). So that you can repay your loans earlier, if possible.

Once you move into your own home, you save on your rent. This can be used to pay your EMI.

Example: If you want to build a home worth Rs 5,00,000 you need to put in up to 20% of this amount from your own savings (such as Fixed Deposits, Shares, PPF, UTI or any other capital savings). This means you can borrow up to Rs 4,00,000 for which you need to pay 4 x Rs 1400 = Rs 5600 per month.

• What Banks/HFCs require to give you home loans

If you are a Salaried Employee

1. The latest salary slip showing statutory deductions.
2. Form 16 (showing tax deducted at source by employer.
3. Proof of age (birth certificate/voter identity card/passport/school-leaving certificate/valid driving licence).
4. Proof of residence (phone bill/electricity bill/ration card).

If you are a Salaried Employee

1. The latest salary slip showing statutory deductions.
2. Form 16 (showing tax deducted at source by employer).
3. Proof of age (birth certificate/voter identity card/passport/school-leaving certificate/valid driving licence).
4. Proof of residence (phone bill/electricity bill/ration card).

 If you are Self-employed

1. Computation of income for the previous two years, certified by a Chartered Accountant.
2. Profit & Loss Account and Balance Sheet for the previous two years, certified by a Chartered Accountant.
3. Proof of age (birth certificate/voter identity card/passport/school-leaving certificate/valid driving licence).
4. Proof of residence (phone bill/electricity bill/ration card).