How To Apply For A Home Loan in India- Its Types, Features & Eligibility Criteria
A home loan is a secured loan that gives you access to funds to buy or construct your dream home. You can repay the loan at a predetermined rate of interest within a specified tenure. Home loan interest rates can range anywhere between 6.40% to 10% p.a. If you have a good credit history and the desired repayment capacity, you could get loans up to 90% of the property value. The remaining 10% is what you have to pay out of your pocket.
Similarly, interest rates vary from lender to lender and depend on several parameters. If you have an excellent credit score, say 800, you could get preferential rates from the lender, at times lower than the advertised rates. So, keep your credit score in check before applying. We have compiled the latest home loan interest rates in India in case you want to compare lenders before applying. Also, you should know that there are different types of home loans available – home purchase loan, plot loan, home renovation loan, home improvement loan, and more. So, if you’re planning to apply for a home loan, here’s everything you should know.
Types of Home Loans Available in India
There are different types of home loans you could opt for:
- Home Purchase Loan: Probably the most common of the lot, a home purchase loan or a home loan is used to buy or purchase a house, flat or property.
- Plot Loan: A plot loan is used to purchase a plot of land. You could use the land to build a house or flat.
- Home Extension/Improvement Loan: You could apply for a home extension loan if you decide to build another floor over your existing property.
- Top-up Home Loan: You could apply for a top-up over your existing loan in case you’re in urgent need of funds. You could use the amount for any financial requirement.
- Home Loan Balance Transfer: A home loan balance transfer allows you to switch your existing home loan to another lender under favourable terms and conditions like lower interest rates.
- Loan Against Property: You could use a loan against property or LAP to pay off your other loans. Like personal loans, you could use the LAP amount for any financial requirement. However, it’s a secured loan where you have to pledge your existing property as collateral.
In case you’re looking for a home loan to purchase your dream home, try Navi Home Loans. You could get loans up to Rs.10 crore at attractive interest rates starting from 7.93% p.a. with Navi. What’s more – it’s a 100% paperless process! Download the Navi app and get in-principle approval today!
Features and Benefits of Home Loan
Here are some of the features and benefits of home loan:
- Big ticket loans: If you’re eligible, you could get home loans up to 90% of the property value.
- Low interest rates: Home loan interest rates are significantly lower than personal loans.
- Flexible repayment tenures: A home loan comes with longer repayment tenures that could extend up to 30 years.
- Top-up facility: You could take a top-up against your existing home loan instead of a personal loan. You have the option to use the top-up loan for any kind of financial requirement.
- No foreclosure charges: Lenders aren’t supposed to charge you any penalty fee in case you decide to pre-close your loan. However, this is applicable only for floating rate loans.
- Balance transfer: You have the option to move your existing home loan to another lender in case you’re not happy with your bank/NBFC’s current interest rates or terms and conditions.
Documents Required to Apply for a Home Loan
Prospective borrowers need to provide these documents when applying for a home loan:
- Identity proof: Aadhaar, PAN, voter ID, driving license or passport
- Address proof: Copy of utility bills, telephone bills, Aadhaar, driving license, employer ID card, or passport
- Income proof: Last 3 months’ salary slips and copy of Form 16 for salaried applicants, last 6 months’ bank statements, IT returns for the last 3 years, business license details, business address proof and TDS details for self-employed applicants
- Passport size photograph
- Property papers
However, with Navi Home Loans, you won’t be required to service so many documents. Only your personal details along with PAN and Aadhaar numbers would suffice. However, if there’s any discrepancy in the details provided, Navi customer care representatives might get in touch with you to take you through the home loan application process.
Home Loan Eligibility Criteria
Here are the basic home loan eligibility criteria:
| Eligibility Criteria | Requirement |
| Age | 21 – 65 years |
| Nationality | An Indian citizen or NRI |
| Employment | Salaried or Self-employed |
| Credit Score | 750 or above |
| Net Annual Income | Rs.5 lakh – Rs.6 lakh p.a. |
Calculate Your Home Loan EMI
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Applying for a home loan with Navi is extremely simple. Follow these steps to apply for a home loan online:
- Step 1: Download the Navi app.
- Step 2: Subsequently, register on the app using the mobile number.
- Step 3: Next, fill in personal and employment details.
- Step 4: Enter PAN and Aadhar details.
- Step 5: Select city and property details.
- Step 6: Enter your profile and work details.
- Step 7: Check your loan eligibility
- Step 8: Submit property and personal documents
There is no need to submit any document to apply for a housing loan at Navi.
By applying for a home loan from Navi, individuals can avail of these features and benefit from them accordingly:
- Big ticket loans up to Rs.10 crore.
- Low-interest rates starting from just 7.93% p.a.
- High loan-to-value (LTV) ratio. Borrowers can avail of a loan of up to 90% of the property value.
- Flexible EMIs of tenure up to 25 years.
- 100% paperless process
- Instant in-principle approval
Here’s how you can apply for Navi Home Loans.
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How to Calculate Home Loan EMI
It’s always advisable to calculate your EMI before you take a home loan. You could do so with the help of an online home loan EMI calculator. These calculators are extremely easy to use and give you 100% accurate results. All you need to do is choose your preferred loan amount, tenure and interest rate. Upon entering the details, you would be able to check your EMI. This would help you get a better idea regarding how much loan should you take and what would be the loan tenure. It could also help you compare different lenders.
Do’s and Don’ts While Taking a Home Loan
| Do’s | Don’ts |
| Check home loan eligibility. This will provide clarity on the amount of loan one can borrow. Calculating eligibility prior to borrowing also helps an individual plan the repayment without any hassle. | Do not miss reading the fine print in detail. Borrowers often ignore the agreement and miss certain critical information, such as hidden charges, loan disbursal terms, etc. |
| Compare home loans offered by different lenders, including interest rate, processing fee, and tenure before cashing in on one. | Don’t apply for loans with multiple lenders in a short span of time. This will significantly affect your credit score. |
| Always consider your home loan repayment obligations as a part of your emergency fund. This will help you sail through during times of financial emergency. | Avoid arranging insufficient corpus for margin contribution. Lenders usually value customers contributing more as a down payment. |
Another important thing to consider when taking a home loan is calculating EMIs. Prior calculation of EMIs can help one plan a hassle-free repayment schedule. One of the best ways to calculate EMI is through a home loan EMI calculator. Such calculators are easy to use and help you calculate your monthly repayment obligations in a matter of a few seconds. All you need to do is choose your preferred loan amount, tenure, and interest rate.
What are the Tax Benefits of a Home Loan?
The Government of India extended an additional tax deduction of Rs. 1.5 lakh on housing loan interest paid by another year, over its initial tenure. This deduction is available under Section 80EEA of the Income Tax Act, 1961. However, borrowers can avail of such exemptions on a house purchase with a stamp value of up to Rs. 45 lakh.
The following table denotes the tax benefits on home loans offered under the Income Tax Act:
| Nature of deduction | Max. deductible amount (in rupees) | Under Section |
| Tax deductions on principal repayment | 1.5 lakh | Section 80C |
| Additional home loan tax benefit on interest for first time home buyers | 50,000 | Section 80EE |
| Tax deduction on the payable interest amount | 2 lakh | Section 24(b) |
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Final Word
With home loan rates at an all-time low, this is probably the best time for aspiring homebuyers to apply for a loan. However, before applying for a loan, make sure that you have the capacity to repay the loan. Having an emergency fund will come in handy to ensure financial stability, especially during unprecedented situations.
Also, it’s advised to calculate your monthly repayment obligations before taking a loan so that you can plan your finances accordingly. You can do so with the help of an EMI calculator.
Download the Navi app to enjoy a hassle-free home loan application process. The entire home loan journey can be completed on the app in an automated and unassisted manner. This includes loan applications, disbursements, and repayment of EMIs. Just make sure that you have all the required documents at your disposal.
FAQs
Ans: Market value means the estimated amount of a property as per prevailing market conditions.
Ans: Yes, one can repay the loan amount ahead of schedule by making lump sum payments on part or full repayment. This is subject to the applicable home loan prepayment charges.
Ans: Any individual wishing to renovate their house can avail of a home renovation loan. Also, existing home loan borrowers can also take a house renovation loan.
Ans: EMI or Equated Monthly Installment is the amount you will pay to the lender on a specific date each month till the loan is repaid in full. It includes the principal and interest components. During the initial months of your loan, you will be paying more towards the interest. This flips over when you are closer to the end of your loan tenure, where you start paying more towards the principal amount.
Ans: No, it’s not mandatory. However, if you and the co-applicant have a good credit score, lenders may consider you as a low-risk borrower.
Ans: All co-owners of the concerned property will be considered co-applicants to the housing loan. Co-applicants, in most cases, are family members.
Ans: It usually takes a few days to get your loan sanctioned. However, the timeline may vary due to certain internal as well as external factors. If you have a property and other documents in place, your loan sanction process will be much smoother.
Ans: To experience quick loan approval, you need to improve your credit score. Lenders prefer applicants having a credit score of 750 or above.
Ans: Navi Home Loan is currently present in Karnataka in Bengaluru, Davangere, Dharwad, Gulbarga, Hubli and Hyderabad, and Chennai. Expansion to other states and cities soon.
Before you go…
Are you looking to buy that house you’ve been eyeing 🏠 and you need a loan of up to ₹5 crore. Install the Navi app now and get instant in-principle approval right away! Interest rates starting at 8.60% p.a.
Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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