Important Steps to Consider for a Home Loan from Start to Finish
With a substantial loan amount of up to Rs. 3.5 Crore and a prolonged loan tenure of up to 20 years (240 months) you can fund the purchase of your home with ease. Additionally, you can also avail affordable housing loan rates that make your EMIs inexpensive and lower the burden on your pocket.
Given below are some of the steps or facts that you should keep in mind while you avail home loans –
- Meet the eligibility criteria
Self-employed individuals and salaried employees are required to meet the eligibility criteria as follows –
- Between the ages of 25 and 70 years.
- A self-employed individual having spent 5 years in your current business.
- Between the age of 23 and 62 years.
- Employed for more than three years.
In addition, both self-employed individuals and salaried employees should be a resident of India residing in any of the cities where the respective lender would operate.
Submit the required documents
There are certain documents you need for a home loan application, as discussed below –
- KYC documents – such as Aadhaar card, PAN card, voter ID, passport, driving license, etc.
- Address proof – like electricity bill, gas bill, water bill, telephone bill, ration card, etc.
- Income proof – such as account statements, income tax returns, etc.
As income proof, self-employed individuals can also submit their profit and loss balance sheets and salaried employees can submit their salary slips. Also, self-employed individuals are required to submit documents proving their business vintage (of more than 5 years) such as SEBI certificate, SSI certificate, GST certificate, partnership deed, etc.
You are also required to provide a passport-sized photograph along with the above to avail of home loans in India.
Know the tax benefits
You get to avail tax benefits under Section 80C and Section 24(b) of the Income Tax Act. Under Section 80C, you can enjoy tax exemptions of up to Rs. 1.5 Lakh against the amount paid towards the principal portion of your EMI.
Section 24(b) allows you to avail of tax benefits against the amount payable towards the interest amount. You can claim home loan interest tax benefits of up to Rs. 2 Lakh under this section. While you avail advances, you can use a tax benefit calculator to determine the exemption amount you can claim.
Know the EMI calculations
Your EMI has two components – principal amount and interest amount. The formula to calculate your EMI is –
[P x R x (1+R) ^N]/ [(1+R) ^ (N-1)] = EMI
– where P determines the principal amount, R stands for housing loan interest rates and N stands for the loan tenure.
Alternatively, you can also use a loan EMI calculator to estimate your EMIs accurately and conveniently.
Learn about other facilities
Several financial institutions and NBFCs offer facilities such as a balance transfer facility and top-up loans. Choosing a home loan balance transfer helps you to transfer your outstanding balance from your existing lender to a new lender offering advances at a lower interest rate.
Top-up loans help you to increase your existing loan amount to fund the renovation or repair of your house or meet other financial urgencies.
Furthermore, you should also know the application process of your lender. You can conveniently apply for a home loan on the official website of your lender. You are required to fill out an application form with your financial and personal details. After your application is approved, a representative of your lender will visit you to take you through the process.