Home Loan FAQs

  1. What is a pre-qualified loan?
  • One of the first things a homeowner does is to get pre-qualified for a mortgage. During this procedure, the homebuyer must give all information proving that they are qualified for a house loan of a particular amount. A homebuyer must give their financial situation, including income, debt, and assets, in this section. Banks determine the amount of loan you are eligible for based on this information. If you want to find out what your qualifications are, you may go to the bank’s website or a location near you. The bank usually does not charge a fee for this, and it does not require your credit report. It simply takes a chat between you and a bank representative in which you can disclose your home-buying aim and they can recommend the amount and type of loan that would be best for you.
  • However, keep in mind that the amount stated may or may not be what you are authorised for. This is only the first step in determining whether or not you qualify for a house loan. As a result, being pre-qualified is not the same as getting pre-approved.
  1. What is a pre-approved loan?
  • Pre-approved loans are not the same as pre-qualified loans. It is the following stage once you have been pre-qualified. During the pre-approval procedure, you formally apply for a loan via an application, pay for the application, and provide all needed papers demonstrating your financial status as well as your credit rating.
  • During this procedure, the lender may inform you of the amount of loan available to you as well as the interest rate. Down some cases, the lender may also be able to lock in a set interest rate.
  • The loan amount advised by the lender may assist you in looking for a house that matches your budget for both the down payment and the home loan.
  1. Do I need a guarantor to get a home loan?
  • It depends on one bank asking for 1-2 guarantors. If I have money, is it still necessary to avail of a bank loan for buying a home? It is generally advantageous to go for a home loan as it helps you in availing tax benefits. However, please consult your ca or tax advisor to discuss the advantages and disadvantages in your case.
  1. Do I need to furnish any security to get a home loan?
  • In a majority of the cases, the property to be purchased itself becomes the security and it is mortgaged to the lender till the entire loan is repaid. A number of lenders may ask for additional security such as life insurance policies, fixed deposit receipts and savings certificates.
  1. Can I sell the property, even when the home loan is outstanding?
  • Yes, you can sell the property with the consent of the banking institution. If the buyer wants to take a loan to buy the property, the process is much easier if he approaches the same bank. In these cases, the bank does not need to release the property papers to another bank before getting the payment. If the buyer wants to make a payment outright, he can make it to the bank directly. The property papers will be released only after the bank has recovered the entire loan amount.
  1. What is the down payment?
  • Generally, banking finance institutions pay around 75 to 85 percent of the cost of the property bought. The remaining 20% of the amount is paid up front, which is popularly known as the down payment
  1. What is the difference between fixed rate and floating rate of interest
  • In fixed interest rate, the interest remains constant throughout the loan period irrespective of the changes in market conditions while in the floating interest rate, the interest can decrease or increase depending on market fluctuations.
  1. What are the documents needed to apply for a home loan?
  • Proof of Identity: PAN, Driving License, Voter ID, Aadhar card
  • Proof of Income
  • A. Salaried Applicants: Latest 3 months salary slip showing all deductions and form 16 for last three years
  • B. Self employed applicants: IT reuters for the past 2 years and computation of income for the last 2 years as certified by a CA// or vary as per bank standard.
  • Bank statement: Past 6 months/or vary as per bank statement
  • Guarantor Form/ or vary as per bank standard.

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