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FAQs - Home Loan

Frequently Asked Questions

General Questions

Q. What is a Home Loan?

A. Home loan is a loan disbursed by a financial institution for purchasing residential property whether for self-occupation or rental income purposes. Here, the lender holds the title of property (as collateral) until the loan is paid back in full along with interest. It is generally for a longer tenure of somewhere between 5 and 25 years as the amount is of higher value which takes time to get repaid.

Q. What is floating rate home loan?

A. If the interest rate on the loan varies during the loan period due to fluctuations in market conditions then it is called floating rate home loan. For instance if the Reserve Bank increases loan rates, then people with flexible rate home loan will suffer an increase in the amount of EMI being paid for the particular loan.

Q. What is a fixed rate home loan?

A. Fixed rate home loan is at a predetermined interest rate during the loan period, irrespective of market conditions.

Q. What is reverse mortgage?

A. A reverse mortgage is for senior citizens (above 60 years of age) to apply for a loan and avail 60% of the value of the residential property he resides in and retain the right to continue to reside there. The maximum tenure for this loan scheme is 15 years.

Q. Is there any tax benefit on getting a home loan?

A. The tax benefit on home loans is given both on repayment of the principal amount and on interest paid:
  1. Repayment of the principal amount - Under Income Tax Section 80C with a maximum tax deduction of Rs. 150,000.
  2. Repayment of the interest rate on home loan- Under Income Tax Section 24, with a maximum deduction limit of Rs. 200,000.

Q. What is an amortization schedule?

A. Amortization is a break-up that shows the proportion of principal and interest payments for each EMI paid on a loan along with the amount outstanding after each payment, till the loan balance reaches zero.

Q. What is EMI? How is it calculated?

A. An equated monthly instalment (EMI) is the amount of money that is paid back to the lender on a monthly basis. It essentially comprises of two parts, the principal amount and the interest on the principal amount equally divided across each month in the loan tenure. The EMI is always paid to the bank or lender on a fixed date each month until the total amount due is paid during the tenure.

Q. What’s the maximum amount that I can avail for a home loan?

A. The amount of loan you can avail depends multiple factors such as your salary, education qualifications, employer/business, years of experience, growth prospects. Generally, most banks use 30-40% of your gross monthly income as your loan EMI amount to decide what amount of loan to give you.

Home Loan Eligibility Questions

Q. What is the eligibility criteria for a home loan?

A. Anyone — whether self-employed or salaried professionals — with a regular source of income can apply for home loans. One must be 21 years old when the loan period begins and should not exceed an age of 65 years when the loan period closes. One must also have a good credit history to be eligible for a home loan. If you are interested in checking your credit history and learning about your credit worthiness before applying for a home loan click here

Q. How do I determine my eligibility?

A. Your repayment capacity determines your eligibility to apply for home loan, lenders considers the following factors:
  1. PAN Card
  2. Aadhaar Card
  3. Driving License/Voter ID
  4. Bank statements for the past 3 months
  5. Educational Qualifications and Job Experience
  6. Resident status (maximum limit for an Indian resident is Rs. 5 crore)
  7. Number of dependants
  8. Credit Score/history (history of past repayment)
  9. Any outstanding loan amount

If you are interested in checking your credit history and determining your eligibility before applying for a home loan click here

Q. What are the documents required for home loan?

A. Documentation requirements and processes vary from one lender to another. The fundamental necessary documents you will be required to submit include:
  1. Completed loan application form (click here to begin applying)
  2. Passport size photographs
  3. Identity proof – PAN Card/Aadhaar Card/Passport Number
  4. Driving License/Voters ID
  5. Residence proof- telephone or electricity bill/property tax receipt
  6. Bank statement and salary certificates
  7. Statements of investments, if any
  8. Copy of plan approved for the proposed construction/extension
  9. Cost estimation/valuation report from Bank's (or finance company) panel Charted Engineer
  10. Allotment letter of housing board/ NOC of the society/Builder, etc.

Home Loan Application Process and Fee Questions

Q. What are the other charges included in the home loan process?

A. IndiaLends does not charge its customers any fees for applying for home loans on its platform. However, financial institutions can charge the following fees along with interest payments:
  1. Processing Fee - The fee is charged on applying for a loan and processing a loan application. The amount paid could be either a percentage of the loan amount or a fixed amount that is irrespective.
  2. Commitment Fee - It is a fee charged by financial institutions for availing a loan after a stipulated time period after it has been processed and sanctioned.
    Pre-payment Charge -Banks/financial institutions might charge a penalty if the full loan amount is paid before the stipulated time. The penalty amount could be a maximum of 5% of the amount pre-paid.
  3. Miscellaneous Charges -Documentation and consultant charges are generally considered as miscellaneous charges by few lenders.

Q. Are registration, stamp duty cost covered under Home Loan?

A. Financial Institutions generally charge registration charges, transfer charges, and stamp duty costs apart from the actual loan amount which is included in the total cost of the home loan.

Q. Can I avail a home extension or improvement loan?

A. Yes. You can avail a home extension loan or home improvement loan.

Q. Can I have a co-applicant for a home loan?

A. Yes, it is good to have a co-applicant (provided your co-applicant has a good credit history). This can help you increase the loan amount you are eligible for as financial institutions also take the income of the co-applicant into consideration.

Q. Who is eligible to be a co-applicant?

A. If you have a co-owner of the property you are going to purchase then, he/she also has to be a co-applicant. However, a co-applicant need not be a co-owner of the property. Financial institutions generally accept a parent or spouse as an ideal choice for a co-applicant. A fiancée can also become a co-applicant but the loan disbursal will begin only after the submission of the marriage certificate.

Q. What factors should I consider while taking a home loan?

A. You need to consider the following factors when you take a home loan:
  1. Purpose of the loan
  2. Whether the house you are willing to purchase is ready for possession or not
  3. Loan eligibility amount
  4. Interest Rate and EMI
  5. Processing Fee
  6. Pre-closure Fees and Pre-payment Fees applicable

IndiaLends - Specific Questions

Q. Will I be charged by IndiaLends for services offered?

A. No. The services offered by IndiaLends are completely free of charge.

Q. After I submit my application to IndiaLends, what next?

A. Once you fill-up our application form, your application will be matched with the best financial institution based on your credit profile, and will be securely sent to them. You will soon be contacted by the lender directly for disbursal.

Q. Do I need to make a down payment with IndiaLends?

A. As per regulations, Banks or financial institutions can lend up to 80% of the cost of the property. 20% of the money is expected to be paid by you as down payment for the loan. This can be paid from your savings, investments, opting for a personal loan, pledging your investments, getting a loan against your insurance policy etc. The down-payment is made directly to the financial institutions, IndiaLends doesn’t charge any fees or commissions for its services.

Q. How do I apply for a loan with IndiaLends?

A. You can fill-up our short application form and get a status update within minutes of applying.

Q. Can I prepay my home loan?

A. Yes, you can repay the loan amount before the scheduled date by making a lump sum payment albeit with a small pre-payment penalty. In such cases, banks generally charge penalties between the ranges of 2-3% of the principal amount outstanding (this amount is paid directly to the financial institution and not IndiaLends). If you are unsure about whether to pre-pay your loan or not, use our pre-payment calculator to assess the benefits of pre-paying your loan.