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Owning a home is one of the largest ambitions they will ever realize, and it is also an expensive one. The majority consider owning a home to be one of their most significant ambitions, however, managing swift home loan disbursals and lending processes can be challenging for banks and NBFCs.
A home loan can be used to purchase a new home or apartment, the land on which to build it, or even for home renovations, additions, and repairs.
What is a Home Loan?
A home loan is a secured loan that is acquired for the purpose of buying a property by pledging the asset as security. Home loans provide high-value financing with reasonable interest rates and lengthy terms. Through EMIS, they are compensated. The borrower receives title to the property back after repayment.
Types of Home loan:
Loans for Land Purchases:
Several banks provide loans for buying land. The option of buying land is versatile; the buyer can decide to keep the land as an investment or save money and build a home whenever his finances allow. Lenders like Axis Bank offer loans for up to 85% of the cost of the land.
Loans for Home Purchase:
The loan for the purchase of a new or used home is the most common sort of mortgage. This loan is likewise widely accessible and is provided in various forms by numerous banks. The interest rate is typically between 9.85 percent and 11.25 percent and is either floating or fixed. A lot of banks also offer loans for up to 85% of the total.
Loans for Construction of a House:
This financing is specifically intended for persons who would prefer to build a home from scratch rather than purchase one that has already been built. This sort of loan has a distinct approval procedure because it also considers the plot cost. The requirement that the plot is purchased within a year in order for the plot cost to be included in the loan amount is the most crucial one when applying for a home construction loan. Based on a ballpark calculation of the construction costs, the loan amount is chosen. The money may be given out entirely at once or in several payments. Popular house construction financing programs include those provided by Canara Bank, UCO Bank, and Bank of Baroda.
House Expansion or Extension Loans:
Want a second balcony or a third bedroom? Not to worry, several banks also provide loans for home improvements including altering the existing structure and adding new rooms. Popular options in this area include the HDFC Home Extension Loan and the Bank of Baroda Home Renovation Loan.
Home Conversion Loans:
Home conversion loans are an option for people who have previously taken out a mortgage and used it to buy a home but wish to relocate. Borrowers can finance the purchase of a new home and avoid repaying their existing mortgage by transferring their current debt to the new property. Despite the simplicity, this type of home loan is also quite pricey.
Loans for Home Improvement:
Your home will appear better after restoration and repair projects like painting, overhead water tank building, exterior, and interior repairs, and electrical upgrades. However, banks like Union Bank of India and Vijaya Bank offer special home improvement loans if you don't have the money for repairs and renovations.
Balance Transfer Home Loans:
When a person wants to transfer their home loan from one bank to another bank due to factors like lower interest rates or better services provided by the other bank, they can use this option. This is done so that the remaining loan can be repaid at the new, reduced interest rates that the other lender is offering.
NRI Home Loans:
The requirements and application process for this kind of loan are distinct from those for other types because it was specifically created to assist non-resident Indians in purchasing residential property in India. NRI loans are often offered by the majority of commercial and public sector banks as a part of their home loan portfolio.
Documents required for a Home loan:
Documents Required for Salaried and Self-Employed Applicants
1. Completed and signed home loan application form
2. Proof of Identity: (Any one of the below)
PAN Card
Passport
Aadhaar Card
Voter’s ID Card
Driving License
3. Proof of Age: (Any one of the below)
Aadhaar Card
PAN Card
Passport
Birth Certificate
10th Class Marksheet
Bank Passbook
Driving License
4. Proof of Residence: (Any one of the below)
Bank Passbook
Voter’s ID
Ration Card
Passport
Utility bills (Telephone Bill, Electricity Bill, Water Bill, Gas Bill)
LIC Policy Receipt
Letter from a recognized public authority verifying the customer’s address
5. Proof of Income for Salaried:
Form 16
Certified letter from Employer
Payslip for the last 2 months
Increment or Promotion letter
IT returns for the past 3 years
6. Proof of Income for Self-Employed:
Income Tax Returns (ITR) for the last 3 years
Balance Sheet and Profit & Loss Account Statement of the Company/Firm (duly attested by a C.A.)
Business License Details (or any other equivalent document)
The license of Professional Practice (For Doctors, Consultants, etc.)
Registration Certificate of Establishment (For Shops, Factories & Other Establishments)
Proof of Business Address
7. Property documents:
Receipts of payments made to the developer (in case of a new house)
Allotment Letter / Buyer Agreement
Title Deeds including the chain of previous property documents (in case of house resale)
A copy of the sale agreement (if already executed)
Receipt of initial payment made to the house seller
Title Deeds of the plot (in case of house construction)
A detailed estimate of house construction by an Architect / Civil Engineer
A copy of the plans, approved by the Local Authorities
Proof of no encumbrances on the property
8. Other Documents:
Passport-size photographs of all the applicants / co-applicants (to be affixed on the application form and signed across)
Proof of own contribution
Last 6 months’ bank statements showing the repayment of ongoing loans (if any)
The details of ongoing loans (such as the outstanding amount, monthly installments, purpose, remaining loan tenure, etc.) in the name of an individual or business entity (if any)
A cheque for processing fee favoring the home loan provider
For Salaried:
Employment Contract / Appointment Letter if the current employment is less than a year old
For Self-Employed:
Business Profile
Latest Form 26 AS
A list of Directors and Shareholders with their individual shareholding certified by a CA / CS in case of the business entity is a company
A partnership deed in the case of the business entity is a partnership firm
Memorandum and Articles of Association of the Company
List of Home Loan Documents Required for NRIs/PIOs Applicants
KYC Documents:
Passport with VISA stamps / PIO Card
Proof of Address mentioning the current overseas address
Proof of Income for Salaried:
Work Permit
Employment Contract / Appointment Letter / Offer Letter (Duly attested by employer/ consulate / foreign office/embassy in case it is in any other language)
The labor card/ identity card (documents in a language other than English must be translated into English and countersigned by the consulate)
Last 3 months’ Salary Certificates/Slips (in English) specifying name, date of joining, designation, and salary details for applicants working in the Middle East
Last 6 months Bank Statements showing salary credits NRE / NRO account (if any) Credit Bureau Report (in case available in the country where you are residing)
Duly acknowledged copy of last year's ITR (except for NRIs/PIOs located in Middle East countries and employees in the Merchant Navy)
A copy of the Continuous Discharge Certificate (CDC) for applicants employed in the merchant navy
Form P60/P45 and latest employment contract (for salaried) If any previous loans from other Banks/Lenders, then the Loan A/C statement for the last 1 year
Proof of Income for Self-Employed:
Business License / License of Professional Practice (for Doctors, Consultants, etc.)
Registration Certificate of Establishment (For Shops, Factories & Other Establishments)
Business’ proof of address
Proof of income in case of self-employed professionals/businessmen
The last 3 years’ Balance Sheets and P&L Accounts are audited or certified by a C.A.
Last 3 years ITR (except for NRI/PIO located in Middle East countries)
Last 6 months Bank Statement of overseas account in the name of individual and/or company/unit
Property documents
Original title deeds tracing the title of the property
Encumbrance Certificate
Agreement for sale/ sale deed/ detailed cost estimate from the Architect/ Engineer for property to be purchased/ constructed/ extended/ improved
A copy of approved drawings of proposed construction/ purchase/ extension
Receipts for payments made for buying the dwelling unit
ULC clearance/ conversion order, etc.
Receipts for investing the margin money through normal banking channels from the NRE /NRO account(s) in India
The latest tax-paid receipt
Allotment letter from the co-operative society/ association of apartment owners
Top 10 Best Home Loan Banks in India:
Union Bank of India
Kotak Mahindra Bank
HDFC Bank
ICICI Bank
LIC Housing Finance
Canara Bank
Axis Bank
State Bank Of India
PNB Housing Finance
Indiabulls bank
Advantages of availing of a Home Loan:
Tax Advantages
The Indian government offers tax breaks for mortgage loans. Under Section 80C and Section 24B, respectively, an individual may receive a tax credit of up to Rs. 1.5 lakhs and Rs. 2 lakhs. Homes that are still being built are not eligible for these discounts.
Higher Credit Score
Regularly paying off your EMIs raises your credit score, which expands your eligibility for a home loan should you ever decide to purchase a second property. You are also more likely to qualify for loans for education, health care, etc. if you have a strong track record of prepaying your mortgage.
Interest rates are low
Long-term home loans are available with both fixed and adjustable interest rates. You will probably gain from declining ROIs at some point in your cycle if home loan interest rates are floating.
Enhancing Asset
A growing asset is real estate. You can purchase a home today that is sure to increase in value tomorrow by taking out a mortgage. Residential real estate will continue to be a rewarding business due to India's young population and growing desire to own a home.
Stay Liquid
It is better and more prudent to preserve or invest your liquid assets if you have access to them. Because life is erratic, it frequently throws our plans for a loop. You can experience a liquidity crisis in the future if you use up all of your available cash to buy a home in one go. Home loans enable you to maintain your liquidity while only paying a portion of your income in home loan EMIs.
Rent-related Relief
If you now pay rent, you are aware of its problems. Applying for a home loan and purchasing a property may be the best course of action if you don't need to relocate regularly. Not only will it allow you the freedom to decorate your home and live your life as you like, but it will also allow you to create enough space for each of your children to have their own personal place.
Conclusion
People now have a wide range of expectations for a home loan, and demand for them has multiplied in recent years. Many banks have developed the idea of presenting various home loan schemes in order to meet the needs of various segments of society.
To serve those financial institutions SynoFin came up with great software that makes the work process easier and smooth and provides end-to-end customized lending solutions.
SynoFin the lending software is designed and developed specifically for banks and NBFCs that are devoted to making quick and precise updates to enable the home loan management process with superb technology, configurable, highly effective solutions, and industry knowledge.
SynoFin provides a user-friendly interface and can handle the simplest interest loans to complex commercial loans. It offers a flexible, customized, and seamless home loan journey from onboarding to the repayment of loans. SynoFin Offerings for Home Loan:
Mobility solution for Sales, Credit, and Operations team
Credit Assessment Software System
Loan Management Software
Customer Relationship Management (CRM) System for handling various types of service request workflows
Business Intelligence (BI) Dashboards for better insights into your business
Visit our website https://www.synofin.tech/ to know more about us!