10 steps to peaceful home loan processing - MyLoanDetails.com
10 Steps to peaceful Home loan processingByRam Srikanth
IntroductionBuilding a home of our dream is a life time achievement to a middle class person. Formaking this dream come true to a middle class person banks are playing a significant roleby providing them with the right home loans at door steps. But if do not plan properly andif we are not aware of the policies, terms and conditions of the bank we will end up payingmore to the bank in terms of principal and interest components.For the convenience of our customers we planned to give a 10 steps plan which thecustomer has to understand to take a home loan to build a dream home of their life.Please read these 10 steps of processing carefully and follow these to make the transactiona memorable moment in your life.
1. Understand your productBefore going for a home loan processing please be aware of your loan product and theterms and conditions that the Bank is asking to fulfil to have the loan done. There aredifferent products for which bank is having different terms and conditions for eachproduct. Normally the Bank will have the below products which come under home loans.a. New Purchase of Flat or Independent House: In this a customer can purchase aNew Flat or Independent house of his choice which is under construction or in ready tooccupy position.b. Resale purchase: This product is applicable to those customers who wants to go fora Flat or Independent house which was already owned by some body else.C. Plot + Construction: The product is applicable to those customers who want to buya Plot and do the construction immediately, but banks ask you to start the constructionwith in the specific period of time.
d. Balance Transfer (BT): A person who wants to transfer a loan from oneBank/Financial Institution to other can opt for this product.e. Construction: A person who wants to construct a house in his/her plot can go forthis loan.f. Plot: A customer can go for this loan who wants to purchase a Plot which is underHUDA, Municipality and Grampanchayat limits.g. Enhancement: Increasing the loan amount which was already taken from the samebank is called enhancement.h. Top – Up: This loan is just a facility that banks provide to customers to take on thebasis of the previous loan and the repayment track.I. Mortgage: It is the loan that a customer can opt by depositing the original propertydocuments with the bank which he already owns.
2. Rate of Interest (ROI): The most important point to be taken care of in taking ahome loan. There are two types of interest rates which banks normally have i.e Floatingand Fixed.Floating Rate of interest is subject to change according to the money marketconditions. If the interest rate increases then the bank will increase the Rata of Intereston your loan vice versa.Fixed Rate of Interest is fixed for the complete tenure of for over a period of timedepending on the Banks, but Banks reserve the right to modify the rate of interest ifthey is any huge differences in the money market conditions.Taking clear clarifications is suggestible to the customers about the fixed rate ofinterest if it is fixed for the whole tenure or not in spite of any differences in moneymarket conditions.
3. Tenure or repayment period: A customer can choose the tenure of his own.Usually banks offer a min and max tenure of 1 to 25 years to home loans, and 1 to 15years to mortgage loans.Choose tenure of your own for flexible repayments of your loan by keeping all yourincome and liabilities in mind. It is always advised to choose less tenure to save theinterest part on the Home Loan.4. Eligibility and sanction process: By taking the Fixed and variable income intoconsideration banks will calculate the eligibility and the sanction will be given upon allthe verifications being positive which the customer have specified in the applicationform. It is suggested to give useful and applicable information only.Banks reserves the right to sanction or reject the application if they find anyinformation that you have given is misleading.Once you receive the sanction letter please read it carefully for the conditions of Interestrate revisions, Sanction conditions, Pre-closure charges, Processing fees and terms andconditions of the bank for availing the loan before signing it.
5. Legal documents and scrutiny: The customer is required to submit all the legaldocuments to the bank of the property which he is buying. The customer should askthe vendor to give all the link documents, Lay out, and plan copies along with his/herownership documents.It is to be taken care that if there is any legal disputes on the property then theproceeding and judgement copies are also required.The customer should verify the legality of the property with a legal advisor becauseafter clearing with the process of the bank if any legal issue raises in future thecustomer has to pay the loan and the bank do not take any responsibility about thelegality of the property.It is suggested to verify the legality of those pre approved ventures of the Bank for thesafety purpose.
6. Technical evaluation: Banks evaluate the value of the property with their panelvaluer and the value is final. The customers should take all security measures againstthe deviations like Horizontal and vertical which will affect the processing and thefuture transactions also. If any deviations are there with the property then you shouldask the vendor for the copies of regularisation. The property should have the necessarypermissions or documents to regularise the deviations according to Buildingregularisation scheme (BRS).Please check all the details like Plot area, sanction area, Plot No and the MunicipalApproved Plan Valid dates before going for a processing.7. Home Loan Agreement: It is the Agreement which a customer has to sign beforegoing for disbursement of the loan which he requested to the bank to fund on theproperty. Please read the document carefully before signing it as it is a long termcontract between the customer and the Bank. Once you sign the document it can’t bealtered or modified until and unless you repay the loan in all respects.
8. Registration: The most vital part of the Home Loan processing ends with theregistration of the dream property for which you availed the loan. Please take care ofthe points typed in the Sale Deed documents which give you the ownership of theproperty and any small mistake in that leads to bigger controversies. So please read theSale Deed documents before submitting it for the registration process.The vendee should collect all the link documents, Plan copies and tax Paid receipts fromthe vendor at the time of registration only.9. Processing, pre-payment and foreclosure charges: The customers have to paythe processing charges to the bank for the loan availed.Depending on the banks some charge a max of 2% along with service tax for makingpart payments towards your home loan account and some do not charge for thesepayments, but there is a limit for making these part payments over a financial period.The customer should know about the additional charges which bank will make in casesof pre payments and foreclosures. A customer needs to pay a max of 4 % of theoutstanding principle along with service tax towards the foreclosure charges of the loan.
10. Tax exemption: Apart from giving the joy of a own house the home loan givesTax exemption on the principal and interest paid over a financial period.The Customer can get a tax benefit of Rs. 1,00,000/- maximum under section 80C ofIncome Tax act 1965. In addition to this you will get tax benefit of Rs. 20,000/-maximum on the principal amount repaid during a financial year under the section 88of the principle repayment of the loan.A customer can claim tax exemption for the amount paid as stamp duty during theregistration process. The Bank will provide you with the provisional certificates to claimthe tax exemption from the income Tax department. The loans which do not have taxexemptions are top-up, plot and Mortgage loans.More on www.myloandetails.com