A home loan is a financial product designed for individuals or self-employed individuals to purchase residential properties. These loans are offered by banks and NBFCs, and can be used to buy either newly constructed properties from builders or pre-owned properties from previous owners. Whether the property is under construction or fully built, it qualifies for such loans.
Once a property is chosen, key considerations for the home buyer include the seller’s payment terms, the agreement value, availability of the purchaser’s margin money, and the cost sheet if purchasing from a builder. Essential documents such as the approved plan and occupancy certificate, along with payment timelines, should also be thoroughly reviewed. Once these aspects are addressed, prospective buyers can proceed to apply for a home loan from financial institutions.
Most banks and NBFCs offer home loans with Loan to Value (LTV) ratios typically ranging from 75% to 90% of the property’s cost, depending on the loan amount and their specific lending criteria.
The residential property being purchased must be in the seller’s name and legally clear according to local laws. It should also be marketable and free of any unauthorized structural alterations. Additionally, the property must be located in areas approved by different lenders based on their respective norms.
The maximum loan tenure available is up to 30 years, subject to the applicants’ age at the loan’s maturity or the lender’s criteria. The property’s market value is usually determined by valuers approved by the respective lenders.
For income eligibility calculations, both the borrower and co-applicants’ incomes can be combined. Lenders vary in their selection of eligible co-applicants, but typically include blood relatives and spouses as natural choices.