Basic steps for Home Loan Process:
Step 1. Know Your Eligibility
Different people, Different liabilities and Different eligibilities, every person is different in their own way and same as everyone is different in loan eligibility which is somewhere crucial, and checking the eligibility is the best way to start home loan process.
With this understanding you can smartly choose the borrowing amount with the repayment understanding, because it is easy to get loan but tough to return because large part of your salary deduct in this loan repayment.
Step 2: Comparison across all Banks
For Banks customers are King and there are more than 35 banks which are challenging for sales target. Loan Easy portal gives maximum loan data and one should definitely compare all banks as a loan applicant ends up paying double the amount he has taken loan for.
Step 3: Home Loan Documents:
Now comes the most frustrating and time consuming process which is paper work or the home loan documents. Mostly delays happen because of the documentation hassles, so one should be ready with all the documents and should submit all the documents to bank on that very day to avoid the fro later process.
Step 4: Bank Processing Charges:
When you apply for Home Loan to a Bank, number of charges are imposed for dispensing the loan. These include documentation, legal and credit check charges. The charges are between 0.25% to 0.5% and Banks charge the amount regardless of loan application whether sanctioned or Not.
Step 5: Tax Benefits on Home loan
Tax benefits comes under two categories one is Interest component and the other is the Principal amount.
- Interest component:
Under Section 24, the interest amount paid up to 2 Lakhs to the bank can be claimed for absolution from Income tax or the interest paid in that financial year.
Note: You can claim this exemption only when you are in possession of your property.
- Principal Amount
Under section 80C, you can claim up to Rs.1.5 Lakhs for income tax exempt. The amount paid to the bank as repayment towards home loan also comes under the ambit of tax Exemption.
After knowing the complete procedure for Home Loan, now comes whether the lender will lend you or not? How will he decide?
The lender looks at the 5 C’s of credit:
Credit History: in this the lender will look at the stability of your current address that how long have you lived there and what has been your record of paying bills on time and in full.
Capacity: the lender will look out at your capacity that whether you can afford or not? Your other debts and expenses could sway your loan repay liability and he can also compare you on the basis of your earning.
Capital: this means your net worth which is the values of your assets subtracting your liabilities or how much you earn minus how much you owe.
Collateral: It refers to theadvantage of a debtor (for example, a home) that if in case debtor is unable to make loan payments then the lender has a right to take ownership.
Conditions: Lenders notices the borrower’s financial situation and his capacity to repayand a number of other circumstances and on this basis he may decide whether to lend or not.
